AB111: Bill Text

AB111,115,18 (b) Provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account or chattel paper.

AB111,115,20 (7) Subsection (2) (c) not waivable. Subject to sub. (8), an account debtor may not waive or vary its option under sub. (2) (c).

AB111,115,24 (8) Rule for individual under other law. This section is subject to law other than this chapter which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.

AB111,116,2 (9) Inapplicability to health-care-insurance receivable. This section does not apply to an assignment of a health-care-insurance receivable.

AB111,116,6 409.407 Restrictions on creation or enforcement of security interest in leasehold interest or in leasor's residual interest. (1) Term restricting assignment generally ineffective. Except as otherwise provided in sub. (2), a term in a lease agreement is ineffective to the extent that it:

AB111,116,10 (a) Prohibits, restricts, or requires the consent of a party to the lease to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, an interest of a party under the lease contract or in the lessor's residual interest in the goods; or

AB111,116,14 (b) Provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease.

AB111,116,16 (2) Effectiveness of certain terms. Except as otherwise provided in s. 411.303 (7), a term described in sub. (1) (b) is effective to the extent that there is:

AB111,116,18 (a) A transfer by the lessee of the lessee's right of possession or use of the goods in violation of the term; or

AB111,116,20 (b) A delegation of a material performance of either party to the lease contract in violation of the term.

AB111,117,3 (3) Security interest not material impairment. The creation, attachment, perfection, or enforcement of a security interest in the lessor's interest under the lease contract or the lessor's residual interest in the goods is not a transfer that materially impairs the lessee's prospect of obtaining return performance or materially changes the duty of or materially increases the burden or risk imposed on the lessee within the purview of s. 411.303 (4) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor.

AB111,117,14 409.408 Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain general intangibles ineffective. (1) Term restricting assignment generally ineffective. Except as otherwise provided in sub. (2), a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license, or franchise, and which term prohibits, restricts, or requires the consent of the person obligated on the promissory note or the account debtor to, the assignment or transfer of, or creation, attachment, or perfection of a security interest in, the promissory note, health-care-insurance receivable, or general intangible, is ineffective to the extent that the term:

AB111,117,16 (a) Would impair the creation, attachment, or perfection of a security interest; or

AB111,117,20 (b) Provides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.

AB111,117,23 (2) Applicability of sub. (1) to sales of certain rights to payment. Subsection (1) applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note.

AB111,118,5 (3) Legal restrictions on assignment generally ineffective. A rule of law, statute, or rule that prohibits, restricts, or requires the consent of a government, governmental body or official, person obligated on a promissory note or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable, or general intangible, including a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute, or rule:

AB111,118,7 (a) Would impair the creation, attachment, or perfection of a security interest; or

AB111,118,11 (b) Provides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.

AB111,118,18 (4) Limitation on ineffectiveness under subs. (1) and (3). To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable, or general intangible or a rule of law, statute, or rule described in sub. (3) would be effective under law other than this chapter but is ineffective under sub. (1) or (3), the creation, attachment, or perfection of a security interest in the promissory note, health-care-insurance receivable, or general intangible:

AB111,118,20 (a) Is not enforceable against the person obligated on the promissory note or the account debtor;

AB111,118,22 (b) Does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;

AB111,118,25 (c) Does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;

AB111,119,5 (d) Does not entitle the secured party to use or assign the debtor's rights under the promissory note, health-care-insurance receivable, or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable, or general intangible;

AB111,119,8 (e) Does not entitle the secured party to use, assign, possess, or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and

AB111,119,10 (f) Does not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable, or general intangible.

AB111,119,17 409.409 Restrictions on assignment of letter-of-credit rights ineffective. (1) Term or law restricting assignment generally ineffective. A term in a letter of credit or a rule of law, statute, rule, custom, or practice applicable to the letter of credit which prohibits, restricts, or requires the consent of an applicant, issuer, or nominated person to a beneficiary's assignment of or creation of a security interest in a letter-of-credit right is ineffective to the extent that the term or rule of law, statute, rule, custom, or practice:

AB111,119,19 (a) Would impair the creation, attachment, or perfection of a security interest in the letter-of-credit right; or

AB111,119,23 (b) Provides that the assignment or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the letter-of-credit right.

AB111,120,4 (2) Limitation on ineffectiveness under sub. (1). To the extent that a term in a letter of credit is ineffective under sub. (1) but would be effective under law other than this chapter or a custom or practice applicable to the letter of credit, to the transfer of a right to draw or otherwise demand performance under the letter of credit, or to the assignment of a right to proceeds of the letter of credit, the creation, attachment, or perfection of a security interest in the letter-of-credit right:

AB111,120,6 (a) Is not enforceable against the applicant, issuer, nominated person, or transferee beneficiary;

AB111,120,8 (b) Imposes no duties or obligations on the applicant, issuer, nominated person, or transferee beneficiary; and

AB111,120,11 (c) Does not require the applicant, issuer, nominated person, or transferee beneficiary to recognize the security interest, pay or render performance to the secured party, or accept payment or other performance from the secured party.

AB111,120,13 SUBCHAPTER V FILING

AB111,120,17 409.501 Filing office. (1) Filing offices. Except as otherwise provided in sub. (2), if the local law of this state governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is:

AB111,120,19 (a) The office designated for the filing or recording of a record of a mortgage on the related real property, if:

AB111,120,20 1. The collateral is as-extracted collateral or timber to be cut; or

AB111,120,22 2. The financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; or

AB111,121,2 (b) The office of the department of financial institutions or any office duly authorized by the department, in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.

AB111,121,7 (2) Filing office for transmitting utilities. The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the department of financial institutions. The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures.

AB111,121,11 409.502 Contents of financing statement; record of mortgage as financing statement; time of filing financing statement. (1) Sufficiency of financing statement. Subject to sub. (2), a financing statement is sufficient only if it:

AB111,121,12 (a) Provides the name of the debtor;

AB111,121,14 (b) Provides the name of the secured party or a representative of the secured party; and

AB111,121,15 (c) Indicates the collateral covered by the financing statement.

AB111,121,19 (2) Real-property-related financing statements. Except as otherwise provided in s. 409.501 (2), to be sufficient, a financing statement that covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy sub. (1) and also:

AB111,121,20 (a) Indicate that it covers this type of collateral;

AB111,121,21 (b) Indicate that it is to be filed for record in the real property records;

AB111,121,24 (c) Provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage under the law of this state if the description were contained in a record of the mortgage of the real property; and

AB111,122,2 (d) If the debtor does not have an interest of record in the real property, provide the name of a record owner.

AB111,122,6 (3) Record of mortgage as financing statement. A record of a mortgage is effective, from the date of recording, as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if:

AB111,122,7 (a) The record indicates the goods or accounts that it covers;

AB111,122,10 (b) The goods are or are to become fixtures related to the real property described in the record or the collateral is related to the real property described in the record and is as-extracted collateral or timber to be cut;

AB111,122,12 (c) The record satisfies the requirements for a financing statement in this section other than an indication that it is to be filed in the real property records; and

AB111,122,13 (d) The record is duly recorded.

AB111,122,16 (4) Filing before security agreement or attachment. A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.

AB111,122,18 409.503 Name of debtor and secured party. (1) Sufficiency of debtor's name. A financing statement sufficiently provides the name of the debtor:

AB111,122,21 (a) If the debtor is a registered organization, only if the financing statement provides the name of the debtor indicated on the public record of the debtor's jurisdiction of organization which shows the debtor to have been organized;

AB111,122,23 (b) If the debtor is a decedent's estate, only if the financing statement provides the name of the decedent and indicates that the debtor is an estate;

AB111,122,25 (c) If the debtor is a trust or a trustee acting with respect to property held in trust, only if the financing statement:

AB111,123,4 1. Provides the name specified for the trust in its organic documents or, if no name is specified, provides the name of the settlor and additional information sufficient to distinguish the debtor from other trusts having one or more of the same settlors; and

AB111,123,6 2. Indicates, in the debtor's name or otherwise, that the debtor is a trust or is a trustee acting with respect to property held in trust; and

AB111,123,7 (d) In other cases:

AB111,123,9 1. If the debtor has a name, only if it provides the individual or organizational name of the debtor; and

AB111,123,11 2. If the debtor does not have a name, only if it provides the names of the partners, members, associates, or other persons comprising the debtor.

AB111,123,14 (2) Additional debtor-related information. A financing statement that provides the name of the debtor in accordance with sub. (1) is not rendered ineffective by the absence of:

AB111,123,15 (a) A trade name or other name of the debtor; or

AB111,123,17 (b) Unless required under sub. (1) (d) 2., names of partners, members, associates, or other persons comprising the debtor.

AB111,123,19 (3) Debtor's trade name insufficient. A financing statement that provides only the debtor's trade name does not sufficiently provide the name of the debtor.

AB111,123,22 (4) Representative capacity. Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement.

AB111,123,24 (5) Multiple debtors and secured parties. A financing statement may provide the name of more than one debtor and the name of more than one secured party.

AB111,124,2 409.504 Indication of collateral. A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:

AB111,124,3 (1) A description of the collateral pursuant to s. 409.108; or

AB111,124,5 (2) An indication that the financing statement covers all assets or all personal property.

AB111,124,13 409.505 Filing and compliance with other statutes and treaties for consignments, leases, other bailments, and other transactions. (1) Use of terms other than debtor and secured party. A consignor, lessor, or other bailor of goods, a licensor, or a buyer of a payment intangible or promissory note may file a financing statement, or may comply with a statute or treaty described in s. 409.311 (1), using the terms "consignor", "consignee", "lessor", "lessee", "bailor", "bailee", "licensor", "licensee", "owner", "registered owner", "buyer", "seller", or words of similar import, instead of the terms "secured party" and "debtor".

AB111,124,20 (2) Effect of financing statement under sub. (1). This subchapter applies to the filing of a financing statement under sub. (1) and, as appropriate, to compliance that is equivalent to filing a financing statement under s. 409.311 (2), but the filing or compliance is not of itself a factor in determining whether the collateral secures an obligation. If it is determined for another reason that the collateral secures an obligation, a security interest held by the consignor, lessor, bailor, licensor, owner, or buyer which attaches to the collateral is perfected by the filing or compliance

AB111,124,24 409.506 Effect of errors or omissions. (1) Minor errors and omissions. A financing statement substantially satisfying the requirements of this subchapter is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.

AB111,125,3 (2) Financing statement seriously misleading. Except as otherwise provided in sub. (3), a financing statement that fails sufficiently to provide the name of the debtor in accordance with s. 409.503 (1) is seriously misleading.

AB111,125,8 (3) Financing statement not seriously misleading. If a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with s. 409.503 (1), the name provided does not make the financing statement seriously misleading.

AB111,125,10 (4) Debtor's correct name. For purposes of s. 409.508 (2), the "debtor's correct name" in sub. (3) means the correct name of the new debtor.

AB111,125,15 409.507 Effect of certain events on effectiveness of financing statement. (1) Disposition. A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest or agricultural lien continues, even if the secured party knows of or consents to the disposition.

AB111,125,19 (2) Information becoming seriously misleading. Except as otherwise provided in sub. (3) and s. 409.508, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under s. 409.506.

AB111,125,21 (3) Change in debtor's name. If a debtor so changes its name that a filed financing statement becomes seriously misleading under s. 409.506:

AB111,125,23 (a) The financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within 4 months after, the change; and

AB111,126,2 (b) The financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than 4 months after the change, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within 4 months after the change.