Analysis by the Legislative Reference Bureau
In 2001 Wisconsin Act 10, this state adopted the Revised Uniform Commercial
Code (UCC) Article 9-Secured Transactions, which was approved by the National
Conference of Commissioners on Uniform State Laws (NCCUSL) in 1998, with
amendments approved by NCCUSL in 1999 and 2000. UCC Article 9 governs
transactions that involve the granting of credit secured by personal property of a
debtor. The creditor's interest is called a "security interest." UCC Article 9 regulates
the creation and enforcement of security interests in movable property, intangible
property, and fixtures (items of personal property affixed to real property), but not
in real property. Under UCC Article 9, if a debtor defaults, the creditor may
repossess and sell the property (generally called collateral) to satisfy the debt. A
creditor with a "perfected" security interest usually has "priority" in the distribution
of the debtor's assets as compared to creditors with later-acquired security interests
(junior secured creditors) and unsecured creditors. Before or at the time a security
interest is perfected, it must "attach." Attachment arises when the security interest
becomes effective between the creditor and the debtor and usually occurs when their
security agreement becomes effective. Perfection of a security interest establishes
the creditor's priority in relation to other creditors of the debtor in the same collateral
and usually occurs with the filing by the creditor of a "financing statement" in a
central filing office - in Wisconsin, the Department of Financial Institutions (DFI).
(The only local filing of financing statements, in the local real estate records, is for
security interests in fixtures or in certain land-related collateral such as timber.)
However, filing a financing statement is not the only method for perfection,
depending upon the kind of property that is collateral. Possession of collateral by the
secured party is an alternative method of perfection for many kinds of collateral, and
"control" is the method of perfection for certain kinds of collateral.
This bill adopts the 2010 amendments to UCC Article 9 approved by NCCUSL.
Among the changes to UCC Article 9 are the following:
1. The bill makes modifications with respect to how a debtor's name must be
identified on a financing statement. Most significantly, if the debtor is an individual
to whom the Department of Transportation (DOT) has issued an operator's license
or identification card that has not expired, the financing statement, to be sufficient,
must provide the name of the individual as it appears on the operator's license or
identification card. If the debtor is an individual who does not hold an unexpired
DOT-issued operator's license or identification card, the financing statement must
provide the individual name of the debtor or the surname and first personal name
of the debtor. The bill also makes changes as to how the debtor's name must appear
on a financing statement whenever collateral is held in a trust and also requires
certain additional information on the financing statement if collateral is held in a
trust or is being administered by a personal representative. The bill makes other

minor modifications or clarifications relating to how debtor names must appear on
financing statements.
2. Under current law, the law of the jurisdiction (state) where a debtor is
located, while the debtor is located there, governs perfection of a security interest,
the effect of perfection or nonperfection, and the priority of a security interest in
collateral. If the debtor moves to a new state or collateral is transferred to a new
debtor in a new state after a security interest is perfected, the security interest
remains perfected until the earliest of the following, as applicable: the time
perfection would have ceased under the law of the original state; the expiration of
four months after the change of the debtor's location to the new state; or the
expiration of one year after the transfer of collateral to a person that becomes a
debtor and is located in the new state. If the security interest becomes perfected
under the law of the new state before any of these time periods elapse, the security
interest remains perfected; otherwise, the security interest becomes unperfected and
is deemed never to have been perfected as against a purchaser of the collateral for
value.
The bill includes provisions applicable to the filing of a financing statement
when the debtor has changed location to a new state and a security interest attaches
within four months after this change of location. The bill specifies circumstances in
which a financing statement filed before the change of location under the law of the
original state is effective to perfect a security interest and specifies when the security
interest remains perfected under the law of the new state. The bill also includes
provisions applicable if a financing statement naming an original debtor is filed
under the law of the original state where the debtor was located and a new debtor
is located in a new state. The bill specifies circumstances in which a financing
statement is effective to perfect a security interest in collateral acquired by the new
debtor before, and within four months after, the new debtor becomes bound by the
security agreement and specifies when the security interest remains perfected under
the law of the new state.
3. Under current law, among the reasons a filing office (usually DFI) may refuse
filing of an initial financing statement or certain amendments is that, if the debtor
is an organization, the financing statement or amendment does not provide a type
of organization for the debtor, a jurisdiction of organization for the debtor, or an
organizational identification number for the debtor or indicate that the debtor has
no such number. This bill eliminates these omissions as reasons for refusing to file
an initial financing statement or amendment to a financing statement.
4. Under current law, if a person believes that a filed record indexed under the
person's name is inaccurate or was wrongfully filed, the person may file a correction
statement. This bill changes the term from "correction statement" to "information
statement." The bill also specifies that a secured party of record may file an
information statement, containing certain information, relating to a filed record if
the secured party believes that the person that filed the record was not entitled to
file it.
5. Under current law, certain agreement terms involving account debtors
(persons obligated on an account, chattel paper, or general intangible) or in

promissory notes relating to the debtor's consent to certain matters affecting a
security interest are ineffective except with respect to the sale of a promissory note
or payment intangible. This bill narrows this exception so that it does not apply if
the sale is a disposition of collateral after default or is an acceptance of collateral in
satisfaction of the debtor's obligation.
6. The bill makes changes relating to a secured party's control of electronic
chattel paper by specifying that, for a secured party to have control, a system
employed for evidencing the transfer of interests in the chattel paper must reliably
establish the secured party as the person to which the chattel paper was assigned.
7. The bill includes several definitional changes, including changes to improve
compatibility of provisions with the use of electronic records. The bill also creates
a new term and definition of "public organic record" for public records relating to
entity formation or organization.
8. The bill makes various minor and technical changes to UCC Article 9 and
replaces current UCC forms with updated UCC forms that incorporate the changes
in Article 9. The bill also includes transitional provisions relating to the applicability
of the bill's changes to existing security interests.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB416, s. 1 1Section 1. 409.102 (1) (bm) 2. of the statutes is amended to read:
SB416,4,52 409.102 (1) (bm) 2. To execute or otherwise adopt a symbol, or encrypt or
3similarly process a record in whole or in part, with the
With present intent of the
4authenticating person to identify the person and
to adopt or accept a record, to attach
5to or logically associate with the record an electronic sound, symbol, or process
.
SB416, s. 2 6Section 2. 409.102 (1) (cg) of the statutes is amended to read:
SB416,5,27 409.102 (1) (cg) "Certificate of title" means a certificate of title with respect to
8which a statute provides for the security interest in question to be indicated on the
9certificate as a condition or result of the security interest's obtaining priority over the
10rights of a lien creditor with respect to the collateral. The term includes another
11record maintained as an alternative to a certificate of title by the governmental unit
12that issues certificates of title if a statute permits the security interest in question

1to be indicated on the record as a condition or result of the security interest's
2obtaining priority over the rights of a lien creditor with respect to the collateral.
SB416, s. 3 3Section 3. 409.102 (1) (mg) of the statutes is amended to read:
SB416,5,64 409.102 (1) (mg) "Jurisdiction of organization", with respect to a registered
5organization, means the jurisdiction under whose law the organization is formed or
6organized.
SB416, s. 4 7Section 4. 409.102 (1) (qp) of the statutes is created to read:
SB416,5,98 409.102 (1) (qp) "Public organic record" means a record that is available to the
9public for inspection and is:
SB416,5,1210 1. A record consisting of the record initially filed with or issued by a state or
11the United States to form or organize an organization and any record filed with or
12issued by the state or the United States which amends or restates the initial record;
SB416,5,1613 2. An organic record of a business trust consisting of the record initially filed
14with a state and any record filed with the state which amends or restates the initial
15record, if a statute of the state governing business trusts requires that the record be
16filed with the state; or
SB416,5,2017 3. A record consisting of legislation enacted by the legislature of a state or the
18Congress of the United States which forms or organizes an organization, any record
19amending the legislation, and any record filed with or issued by the state or the
20United States which amends or restates the name of the organization.
SB416, s. 5 21Section 5. 409.102 (1) (rg) of the statutes is amended to read:
SB416,6,422 409.102 (1) (rg) "Registered organization" means an organization formed or
23organized solely under the law of a single state or the United States and as to which
24the state or the United States must maintain a public record showing the
25organization to have been organized
by the filing of a public organic record with, the

1issuance of a public organic record by, or the enactment of legislation by the state or
2the United States. The term includes a business trust that is formed or organized
3under the law of a single state if a statute of the state governing business trusts
4requires that the business trust's organic record be filed with the state
.
SB416, s. 6 5Section 6. 409.105 (intro.) of the statutes is renumbered 409.105 (1m) and
6amended to read:
SB416,6,107 409.105 (1m) General rule: control of electronic chattel paper. A secured
8party has control of electronic chattel paper if a system employed for evidencing the
9transfer of interests in the chattel paper reliably establishes the secured party as the
10person to which the chattel paper was assigned.
SB416,6,13 11(2m) Specific facts giving control. A system satisfies sub. (1m) if the record
12or records comprising the chattel paper are created, stored, and assigned in such a
13manner that:
SB416, s. 7 14Section 7. 409.105 (1) to (6) of the statutes are renumbered 409.105 (2m) (a)
15to (f), and 409.105 (2m) (a), (d) and (f), as renumbered, are amended to read:
SB416,6,1816 409.105 (2m) (a) A single authoritative copy of the record or records exists
17which is unique, identifiable, and, except as otherwise provided in subs. (4) to (6)
18pars. (d) to (f), unalterable;
SB416,6,2119 (d) Copies or revisions amendments that add or change an identified assignee
20of the authoritative copy can be made only with the participation consent of the
21secured party;
SB416,6,2322 (f) Any revision amendment of the authoritative copy is readily identifiable as
23an authorized or unauthorized revision.
SB416, s. 8 24Section 8. 409.307 (6) (b) of the statutes is amended to read:
SB416,7,4
1409.307 (6) (b) In the state that the registered organization, branch, or agency
2designates, if the law of the United States authorizes the registered organization,
3branch, or agency to designate its state of location, including by designating its main
4office, home office, or other comparable office
; or
SB416, s. 9 5Section 9. 409.311 (1) (c) of the statutes is amended to read:
SB416,7,96 409.311 (1) (c) A certificate-of-title statute of another jurisdiction which
7provides for a security interest to be indicated on the a certificate of title as a
8condition or result of the security interest's obtaining priority over the rights of a lien
9creditor with respect to the property.
SB416, s. 10 10Section 10. 409.316 (title) of the statutes is amended to read:
SB416,7,12 11409.316 (title) Continued perfection of security interest following
12Effect of change in governing law.
SB416, s. 11 13Section 11. 409.316 (8) and (9) of the statutes are created to read:
SB416,7,1614 409.316 (8) Effect on filed financing statement of change in governing law.
15The following rules apply to collateral to which a security interest attaches within
164 months after the debtor changes its location to another jurisdiction:
SB416,7,2017 (a) A financing statement filed before the change pursuant to the law of the
18jurisdiction designated in s. 409.301 (1) or 409.305 (3) is effective to perfect a security
19interest in the collateral if the financing statement would have been effective to
20perfect a security interest in the collateral had the debtor not changed its location.
SB416,8,321 (b) If a security interest perfected by a financing statement that is effective
22under par. (a) becomes perfected under the law of the other jurisdiction before the
23earlier of the time the financing statement would have become ineffective under the
24law of the jurisdiction designated in s. 409.301 (1) or 409.305 (3) or the expiration of
25the 4-month period, it remains perfected thereafter. If the security interest does not

1become perfected under the law of the other jurisdiction before the earlier time or
2event, it becomes unperfected and is deemed never to have been perfected as against
3a purchaser of the collateral for value.
SB416,8,7 4(9) Effect of change in governing law on financing statement filed against
5original debtor
. If a financing statement naming an original debtor is filed
6pursuant to the law of the jurisdiction designated in s. 409.301 (1) or 409.305 (3) and
7the new debtor is located in another jurisdiction, the following rules apply:
SB416,8,128 (a) The financing statement is effective to perfect a security interest in
9collateral acquired by the new debtor before, and within 4 months after, the new
10debtor becomes bound under s. 409.203 (4), if the financing statement would have
11been effective to perfect a security interest in the collateral had the collateral been
12acquired by the original debtor.
SB416,8,2013 (b) A security interest perfected by the financing statement and which becomes
14perfected under the law of the other jurisdiction before the earlier of the time the
15financing statement would have become ineffective under the law of the jurisdiction
16designated in s. 409.301 (1) or 409.305 (3) or the expiration of the 4-month period
17remains perfected thereafter. A security interest that is perfected by the financing
18statement but which does not become perfected under the law of the other
19jurisdiction before the earlier time or event becomes unperfected and is deemed
20never to have been perfected as against a purchaser of the collateral for value.
SB416, s. 12 21Section 12. 409.317 (2) and (4) of the statutes are amended to read:
SB416,9,222 409.317 (2) Buyers that receive delivery. Except as otherwise provided in
23sub. (5), a buyer, other than a secured party, of tangible chattel paper, tangible
24documents, goods, instruments, or a certificated security certificate takes free of a
25security interest or agricultural lien if the buyer gives value and receives delivery of

1the collateral without knowledge of the security interest or agricultural lien and
2before it is perfected.
SB416,9,8 3(4) Licensees and buyers of certain collateral. A licensee of a general
4intangible or a buyer, other than a secured party, of accounts, electronic chattel
5paper, electronic documents, general intangibles, or investment property
collateral
6other than tangible chattel paper, tangible documents, goods, instruments, or a
7certificated security takes free of a security interest if the licensee or buyer gives
8value without knowledge of the security interest and before it is perfected.
SB416, s. 13 9Section 13. 409.326 of the statutes is amended to read:
SB416,9,18 10409.326 Priority of security interests created by new debtor. (1)
11Subordination of security interest created by new debtor. Subject to sub. (2), a
12security interest that is created by a new debtor which is in collateral in which the
13new debtor has or acquires rights and is
perfected solely by a filed financing
14statement that is effective solely under s. 409.508 in collateral in which a new debtor
15has or acquires rights
would be ineffective to perfect the security interest but for the
16application of s. 409.316 (9) (a) or 409.508
is subordinate to a security interest in the
17same collateral which is perfected other than by such a filed financing statement that
18is effective solely under s. 409.508
.
SB416,9,25 19(2) Priority under other provisions; multiple original debtors. The other
20provisions of this subchapter determine the priority among conflicting security
21interests in the same collateral perfected by filed financing statements that are
22effective solely under s. 409.508
described in sub. (1). However, if the security
23agreements to which a new debtor became bound as debtor were not entered into by
24the same original debtor, the conflicting security interests rank according to priority
25in time of the new debtor's having become bound.
SB416, s. 14
1Section 14. 409.406 (5) of the statutes is amended to read:
SB416,10,52 409.406 (5) Inapplicability of sub. (4) to certain sales. Subsection (4) does not
3apply to the sale of a payment intangible or promissory note, other than a sale
4pursuant to a disposition under s. 409.610 or an acceptance of collateral under s.
5409.620
.
SB416, s. 15 6Section 15. 409.408 (2) of the statutes is amended to read:
SB416,10,117 409.408 (2) Applicability of sub. (1) to sales of certain rights to payment.
8Subsection (1) applies to a security interest in a payment intangible or promissory
9note only if the security interest arises out of a sale of the payment intangible or
10promissory note, other than a sale pursuant to a disposition under s. 409.610 or an
11acceptance of collateral under s. 409.620
.
SB416, s. 16 12Section 16. 409.502 (3) (c) of the statutes is renumbered 409.502 (3) (c) (intro.)
13and amended to read:
SB416,10,1514 409.502 (3) (c) (intro.) The record satisfies the requirements for a financing
15statement in this section other than an indication, but:
SB416,10,17 161. The record need not indicate that it is to be filed in the real property records;
17and
SB416, s. 17 18Section 17. 409.502 (3) (c) 2. of the statutes is created to read:
SB416,10,2219 409.502 (3) (c) 2. The record sufficiently provides the name of a debtor who is
20an individual if it provides the individual name of the debtor or the surname and first
21personal name of the debtor, even if the debtor is an individual to whom s. 409.503
22(1) (dm) applies; and
SB416, s. 18 23Section 18. 409.503 (1) (a) of the statutes is amended to read:
SB416,11,524 409.503 (1) (a) If Except as otherwise provided in par. (c), if the debtor is a
25registered organization or the collateral is held in a trust that is a registered

1organization
, only if the financing statement provides the name of the debtor
2indicated
that is stated to be the registered organization's name on the public organic
3record of the debtor's most recently filed with or issued or enacted by the registered
4organization's
jurisdiction of organization which shows the debtor to have been
5organized
purports to state, amend, or restate the registered organization's name;
SB416, s. 19 6Section 19. 409.503 (1) (b) of the statutes is amended to read:
SB416,11,117 409.503 (1) (b) If the debtor is a decedent's estate Subject to sub. (6), if the
8collateral is being administered by the personal representative of a decedent
, only
9if the financing statement provides, as the name of the debtor, the name of the
10decedent and, in a separate part of the financing statement, indicates that the debtor
11is an estate
collateral is being administered by a personal representative;
SB416, s. 20 12Section 20. 409.503 (1) (c) (intro.) of the statutes is amended to read:
SB416,11,1513 409.503 (1) (c) (intro.) If the debtor is a trust or a trustee acting with respect
14to property held in trust, only if the financing statement
collateral is held in a trust
15that is not a registered organization, only if the financing statement
:
SB416, s. 21 16Section 21. 409.503 (1) (c) 1. and 2. of the statutes are repealed.
SB416, s. 22 17Section 22. 409.503 (1) (c) 1m. and 2m. of the statutes are created to read:
SB416,11,1818 409.503 (1) (c) 1m. Provides, as the name of the debtor:
SB416,11,2019 a. If the organic record of the trust specifies a name for the trust, the name
20specified; or
SB416,11,2221 b. If the organic record of the trust does not specify a name for the trust, the
22name of the settlor or testator; and
SB416,11,2323 2m. In a separate part of the financing statement:
SB416,11,2524 a. If the name is provided in accordance with subd. 1m. a., indicates that the
25collateral is held in a trust; or
SB416,12,4
1b. If the name is provided in accordance with subd. 1m. b., provides additional
2information sufficient to distinguish the trust from other trusts having one or more
3of the same settlors or the same testator and indicates that the collateral is held in
4a trust, unless the additional information so indicates;
SB416, s. 23 5Section 23. 409.503 (1) (d) of the statutes is renumbered 409.503 (1) (f), and
6409.503 (1) (f) 1. and 2., as renumbered, are amended to read:
SB416,12,87 409.503 (1) (f) 1. If the debtor has a name, only if it the financing statement
8provides the individual or organizational name of the debtor; and
SB416,12,129 2. If the debtor does not have a name, only if it the financing statement provides
10the names of the partners, members, associates, or other persons comprising the
11debtor, in a manner that each name provided would be sufficient if the person named
12were the debtor
.
SB416, s. 24 13Section 24. 409.503 (1) (dm) and (e) of the statutes are created to read:
SB416,12,1714 409.503 (1) (dm) Subject to sub. (7), if the debtor is an individual to whom this
15state has issued an operator's license under ch. 343 or identification card under s.
16343.50 that has not expired, only if the financing statement provides the name of the
17individual which is indicated on the operator's license or identification card;
SB416,12,2018 (e) If the debtor is an individual to whom par. (dm) does not apply, only if the
19financing statement provides the individual name of the debtor or the surname and
20first personal name of the debtor; and
SB416, s. 25 21Section 25. 409.503 (2) (b) of the statutes is amended to read:
SB416,12,2322 409.503 (2) (b) Unless required under sub. (1) (d) (f) 2., names of partners,
23members, associates, or other persons comprising the debtor.
SB416, s. 26 24Section 26. 409.503 (6), (7) and (8) of the statutes are created to read:
SB416,13,4
1409.503 (6) Name of decedent. The name of the decedent indicated on the
2order appointing the personal representative of the decedent issued by the court
3having jurisdiction over the collateral is sufficient as the "name of the decedent"
4under sub. (1) (b).
SB416,13,8 5(7) Multiple licenses or identification cards. If this state has issued to an
6individual more than one operator's license under ch. 343 or identification card
7under s. 343.50 of a kind described in sub. (1) (dm), the one that was issued most
8recently is the one to which sub. (1) (dm) refers.
SB416,13,9 9(8) Definition. In this section, the "name of the settlor or testator" means:
SB416,13,1310 (a) If the settlor is a registered organization, the name that is stated to be the
11settlor's name on the public organic record most recently filed with or issued or
12enacted by the settlor's jurisdiction of organization which purports to state, amend,
13or restate the settlor's name;
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