AN ACT

RELATING TO COMMERCIAL TRANSACTIONS; REVISING THE SECURED TRANSACTIONS ARTICLE OF THE UNIFORM COMMERCIAL CODE; AMENDING OTHER LAWS TO CONFORM TO THE REVISED PROVISIONS; AMENDING, REPEALING AND ENACTING SECTIONS OF THE NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 55-9-101 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-101) is repealed and a new Section 55-9-101 NMSA 1978 is enacted to read:

"55-9-101. SHORT TITLE.--Chapter 55, Article 9 NMSA 1978 may be cited as the "Uniform Commercial Code--Secured Transactions"."

Section 2. Section 55-9-102 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-102, as amended) is repealed and a new Section 55-9-102 NMSA 1978 is enacted to read:

"55-9-102. DEFINITIONS AND INDEX OF DEFINITIONS.--

(a) In Chapter 55, Article 9 NMSA 1978:

(1) "accession" means goods that are physically united with other goods in such a manner that the identity of the original goods is not lost;

(2) "account", except as used in "account for":

(A) means a right to payment of a monetary obligation, whether or not earned by performance:

(i) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of;

(ii) for services rendered or to be rendered;

(iii) for a policy of insurance issued or to be issued;

(iv) for a secondary obligation incurred or to be incurred;

(v) for energy provided or to be

provided;

(vi) for the use or hire of a vessel under a charter or other contract;

(vii) arising out of the use of a credit or charge card or information contained on or for use with the card; or

(viii) as winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state or person licensed or authorized to operate the game by a state or governmental unit of a state; and

(B) includes health-care-insurance receivables; but

(i) rights to payment evidenced by chattel paper or an instrument;

(ii) commercial tort claims;

(iii) deposit accounts;

(iv) investment property;

(v) letter-of-credit rights or letters of credit; or

(vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card;

(3) "account debtor" means a person obligated on an account, chattel paper or general intangible. The term does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper;

(4) "accounting", except as used in "accounting for", means a record:

(A) authenticated by a secured party;

(B) indicating the aggregate unpaid secured obligations as of a date not more than thirty-five days earlier or thirty-five days later than the date of the record; and

(5) "agricultural lien" means an interest, other than a security interest, in farm products:

(A) that secures payment or performance of an obligation for:

(i) goods or services furnished in connection with a debtor's farming operation; or

(ii) rent on real property leased by a debtor in connection with its farming operation;

(B) that is created by statute in favor of a person that:

(i) in the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's farming operation; or

(ii) leased real property to a debtor in connection with the debtor's farming operation; and

(6) "as-extracted collateral" means:

(A) oil, gas or other minerals that are subject to a security interest that:

(i) is created by a debtor having an interest in the minerals before extraction; and

(ii) attaches to the minerals as extracted; or

(B) accounts arising out of the sale at the wellhead or minehead of oil, gas or other minerals in which the debtor had an interest before extraction;

(7) "authenticate" means to:

(A) sign; or

(B) execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record;

(8) "bank" means an organization that is engaged in the business of banking and includes savings banks, savings and loan associations, credit unions and trust companies;

(9) "cash proceeds" means proceeds that are money, checks, deposit accounts or the like;

(10) "certificate of title" means a certificate of title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral;

(11) "chattel paper" means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods or a lease of specific goods and license of software used in the goods. In this paragraph, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of the goods and includes a monetary obligation with respect to software used in the goods. The term does not include:

(A) charters or other contracts involving the use or hire of a vessel; or

(B) records that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper;

(12) "collateral" means the property subject to a security interest or agricultural lien and includes:

(A) proceeds to which a security interest attaches;

(B) accounts, chattel paper, payment intangibles and promissory notes that have been sold; and

(13) "commercial tort claim" means a claim arising in tort with respect to which:

(A) the claimant is an organization; or

(B) the claimant is an individual and the claim:

(i) arose in the course of the claimant's business or profession; and

(ii) does not include damages arising out of personal injury to or the death of an individual;

(14) "commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer;

(15) "commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option or another contract if the contract or option is:

(A) traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to federal commodities laws; or

(B) traded on a foreign commodity board of trade, exchange or market, and is carried on the books of a commodity intermediary for a commodity customer;

(16) "commodity customer" means a person for which a commodity intermediary carries a commodity contract on its books;

(17) "commodity intermediary" means a person that:

(A) is registered as a futures commission merchant under federal commodities law; or

(B) in the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities law;

(18) "communicate" means:

(A) to send a written or other tangible record;

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

(C) in the case of transmission of a record to or by a filing office, to transmit a record by any means prescribed by filing-office rule;

(19) "consignee" means a merchant to which goods are delivered in a consignment;

(20) "consignment" means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:

(A) the merchant:

(i) deals in goods of that kind under a name other than the name of the person making delivery;

(ii) is not an auctioneer; and

(iii) is not generally known by its creditors to be substantially engaged in selling the goods of others;

(B) with respect to each delivery, the aggregate value of the goods is one thousand dollars ($1,000) or more at the time of delivery;

(D) the transaction does not create a security interest that secures an obligation;

(21) "consignor" means a person that delivers goods to a consignee in a consignment;

(22) "consumer debtor" means a debtor in a consumer transaction;

(23) "consumer goods" means goods that are used or bought for use primarily for personal, family or household purposes;

(24) "consumer-goods transaction" means a consumer transaction in which:

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

(B) a security interest in consumer goods secures the obligation;

(25) "consumer obligor" means an obligor who is an individual and who incurred the obligation as part of a transaction entered into primarily for personal, family or household purposes;

(26) "consumer transaction" means a transaction in which:

(i) an individual incurs an obligation primarily for personal, family or household purposes;

(ii) a security interest secures the obligation; and

(iii) the collateral is held or acquired primarily for personal, family or household purposes. The term includes consumer-goods transactions;

(27) "continuation statement" means an amendment of a financing statement that:

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

(B) indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified financing statement;

(28) "debtor" means:

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

(B) a seller of accounts, chattel paper, payment intangibles or promissory notes; or

(29) "deposit account" means a demand, time, savings, passbook or similar account maintained with a bank. The term does not include investment property or accounts evidenced by an instrument;

(30) "document" means a document of title or a receipt of the type described in Subsection (2) of Section 55-7-201 NMSA 1978;

(31) "electronic chattel paper" means chattel paper evidenced by a record or records consisting of information stored in an electronic medium;

(32) "encumbrance" means a right, other than an ownership interest, in real property. The term includes mortgages and other liens on real property;

(33) "equipment" means goods other than inventory, farm products or consumer goods;

(34) "farm products" means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and that are:

(A) crops grown, growing or to be grown, including:

(i) crops produced on trees, vines and bushes; and

(ii) aquatic goods produced in aquacultural operations;

(B) livestock, born or unborn, including aquatic goods produced in aquacultural operations;

(D) products of crops or livestock in their unmanufactured states;

(35) "farming operation" means raising, cultivating, propagating, fattening, grazing or any other farming, livestock or aquacultural operation;

(36) "file number" means the number assigned to an initial financing statement pursuant to Subsection (a) of Section 55-9-519 NMSA 1978;

(37) "filing office" means an office designated in Section 55-9-501 NMSA 1978 as the place to file a financing statement;

(38) "filing-office rule" means a rule adopted pursuant to Section 55-9-526 NMSA 1978;

(39) "financing statement" means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement;

(40) "fixture filing" means the filing of a financing statement covering goods that are or are to become fixtures and satisfying Subsections (a) and (b) of Section 55-9-502 NMSA 1978. The term includes the filing of a financing statement covering goods of a transmitting utility that are or are to become fixtures;

(41) "fixtures" means goods that have become so related to particular real property that an interest in them arises under real property law;

(42) "general intangible" means any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money and oil, gas or other minerals before extraction. The term includes payment intangibles and software;

(43) "good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing;

(44) "goods" means all things that are movable when a security interest attaches and:

(A) includes:

(i) fixtures;

(ii) standing timber that is to be cut and removed under a conveyance or contract for sale;

(iii) the unborn young of animals;

(iv) crops grown, growing or to be grown, even if the crops are produced on trees, vines or bushes;

(v) manufactured homes; and

(vi) a computer program embedded in goods and any supporting information provided in connection with a transaction relating to the program if the program is associated with the goods in such a manner that it customarily is considered part of the goods, or by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods; but

(B) does not include:

(i) a computer program embedded in goods that consist solely of the medium in which the program is embedded; or

(ii) accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money, or oil, gas or other minerals before extraction;

(45) "governmental unit" means a subdivision, agency, department, county, parish, municipality or other unit of the government of the United States, a state or a foreign country. The term includes an organization having a separate corporate existence if the organization is eligible to issue debt on which interest is exempt from income taxation under the laws of the United States;

(46) "health-care-insurance receivable" means an interest in or claim under a policy of insurance that is a right to payment of a monetary obligation for health-care goods or services provided;

(47) "instrument" means a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease and is of a type that in ordinary course of business is transferred by delivery with any necessary indorsement or assignment. The term does not include:

(A) investment property;

(B) letters of credit; or

(C) writings that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card;

(48) "inventory" means goods, other than farm products, that:

(A) are leased by a person as lessor;

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

(D) consist of raw materials, work in process or materials used or consumed in a business;

(49) "investment property" means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract or commodity account;

(50) "jurisdiction of organization", with respect to a registered organization, means the jurisdiction under whose law the organization is organized;

(51) "letter-of-credit right" means a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance. The term does not include the right of a beneficiary to demand payment or performance under a letter of credit;

(52) "lien creditor" means:

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

(B) an assignee for benefit of creditors from the time of assignment;

(D) a receiver in equity from the time of appointment;

(53) "manufactured home" means a structure, transportable in one or more sections, which, in the traveling mode, is eight body feet or more in width or forty body feet or more in length, or, when erected on site, is three hundred twenty or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning and electrical systems contained therein. The term includes any structure that meets all of the requirements of this subsection except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States secretary of housing and urban development and complies with the standards established under 42 USCA;

(54) "manufactured-home transaction" means a secured transaction:

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

(B) in which a manufactured home, other than a manufactured home held as inventory, is the primary collateral;

(55) "mortgage" means a consensual interest in real property, including fixtures, that secures payment or performance of an obligation;

(56) "new debtor" means a person that becomes bound as debtor under Subsection (d) of Section 55-9-203 NMSA 1978 by a security agreement previously entered into by another person;

(57) "new value" means:

(A) money;

(B) money's worth in property, services or new credit; or

(C) release by a transferee of an interest in property previously transferred to the transferee. The term does not include an obligation substituted for another obligation;

(58) "noncash proceeds" means proceeds other than cash proceeds;

(59) "obligor" means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral:

(A) owes payment or other performance of the obligation;

(B) has provided property other than the collateral to secure payment or other performance of the obligation; or

(C) is otherwise accountable in whole or in part for payment or other performance of the obligation. The term does not include issuers or nominated persons under a letter of credit;

(60) "original debtor", except as used in Subsection (c) of Section 55-9-310 NMSA 1978, means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under Subsection (d) of Section 55-9-203 NMSA 1978;

(61) "payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary obligation;

(62) "person related to", with respect to an individual, means:

(A) the spouse of the individual;

(B) a brother, brother-in-law, sister or sister-in-law of the individual;

(D) any other relative, by blood or marriage, of the individual or the individual's spouse who shares the same home with the individual;

(63) "person related to", with respect to an organization, means:

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

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

(C) an officer or director of, or a person performing similar functions with respect to, a person described in Subparagraph (A) of this paragraph;

(D) the spouse of an individual described in Subparagraph (A), (B) or (C) of this paragraph; or

(E) an individual who is related by blood or marriage to an individual described in Subparagraph (A), (B), (C) or (D) of this paragraph and shares the same home with the individual;

(64) "proceeds", except as used in Subsection (b) of Section 55-9-609 NMSA 1978, means:

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

(B) whatever is collected on, or distributed on account of, collateral;

(D) to the extent of the value of collateral, claims arising out of the loss, nonconformity or interference with the use of, defects or infringement of rights in, or damage to, the collateral; or

(E) to the extent of the value of collateral and to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to, the collateral;

(65) "promissory note" means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds;

(66) "proposal" means a record authenticated by a secured party which includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to Sections 55-9-620 through 55-9-622 NMSA 1978;

(67) "public-finance transaction" means a secured transaction in connection with which:

(A) debt securities are issued;

(B) all or a portion of the securities issued have an initial stated maturity of at least twenty years; and

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

(68) "pursuant to commitment", with respect to an advance made or other value given by a secured party, means pursuant to the secured party's obligation, whether or not a subsequent event of default or other event not within the secured party's control has relieved or may relieve the secured party from its obligation;

(69) "record", except as used in "for record", "of record", "record or legal title" and "record owner", means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;

(70) "registered organization" means an organization organized solely under the law of a single state or the United States and as to which the state or the United States must maintain a public record showing the organization to have been organized;

(71) "secondary obligor" means an obligor to the extent that:

(A) the obligor's obligation is secondary; or

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

(72) "secured party" means:

(A) a person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;

(B) a person that holds an agricultural lien;

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

(E) a trustee, indenture trustee, agent, collateral agent or other representative in whose favor a security interest or agricultural lien is created or provided for; or

(F) a person that holds a security interest arising under Section 55-2-401, Section 55-2-505, Subsection (3) of Section 55-2-711, Subsection (5) of Section 55-2A-508, Section 55-4-210 or Section 55-5-118 NMSA 1978;

(73) "security agreement" means an agreement that creates or provides for a security interest;

(74) "send", in connection with a record or notification, means:

(A) to deposit in the mail, deliver for transmission or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or

(B) to cause the record or notification to be received within the time that it would have been received if properly sent under Subparagraph (A) of this paragraph;

(75) "software" means a computer program and any supporting information provided in connection with a transaction relating to the program. The term does not include a computer program that is included in the definition of goods;

(76) "state" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States;

(77) "supporting obligation" means a letter-of-credit right or secondary obligation that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument or investment property;

(78) "tangible chattel paper" means chattel paper evidenced by a record or records consisting of information that is inscribed on a tangible medium;

(79) "termination statement" means an amendment of a financing statement that:

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

(B) indicates either that it is a termination statement or that the identified financing statement is no longer effective; and

(80) "transmitting utility" means a person primarily engaged in the business of:

(A) operating a railroad, subway, street railway or trolley bus;

(B) transmitting communications electrically, electromagnetically or by light;

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

(b) The following definitions in other articles apply to this article:

"applicant" Section

55-5-102 NMSA 1978;

"beneficiary" Section

55-5-102 NMSA 1978;

"broker" Section

55-8-102 NMSA 1978;

"certificated security" Section

55-8-102 NMSA 1978;

"check" Section

55-3-104 NMSA 1978;

"clearing corporation" Section

55-8-102 NMSA 1978;

"contract for sale" Section

55-2-106 NMSA 1978;

"customer" Section

55-4-104 NMSA 1978;

"entitlement holder" Section

55-8-102 NMSA 1978;

"financial asset" Section

55-8-102 NMSA 1978;

"holder in due course" Section

55-3-302 NMSA 1978;

"issuer" (with respect to a letter of credit or letter-of-credit right) Section

55-5-102 NMSA 1978;

"issuer" (with respect to a security) Section

55-8-201 NMSA 1978;

"lease" Section

55-2A-103 NMSA 1978;

"lease agreement" Section

55-2A-103 NMSA 1978;

"lease contract" Section

55-2A-103 NMSA 1978;

"leasehold interest" Section

55-2A-103 NMSA 1978;

"lessee" Section

55-2A-103 NMSA 1978;

"lessee in ordinary course of business" Section

55-2A-103 NMSA 1978;

"lessor" Section

55-2A-103 NMSA 1978;

"lessor's residual interest" Section

55-2A-103 NMSA 1978;

"letter of credit" Section

55-5-102 NMSA 1978;

"merchant" Section

55-2-104 NMSA 1978;

"negotiable instrument" Section

55-3-104 NMSA 1978;

"nominated person" Section

55-5-102 NMSA 1978;

"note" Section

55-3-104 NMSA 1978;

"proceeds of a letter of credit" Section

55-5-114 NMSA 1978;

"prove" Section

55-3-103 NMSA 1978;

"sale" Section

55-2-106 NMSA 1978;

"securities account" Section

55-8-501 NMSA 1978;

"securities intermediary" Section

55-8-102 NMSA 1978;

"security" Section

55-8-102 NMSA 1978;

"security certificate" Section

55-8-102 NMSA 1978;

"security entitlement" Section

55-8-102 NMSA 1978; and

"uncertificated security" Section

55-8-102 NMSA 1978.

(c) Chapter 12, Article 2A and Chapter 55, Article 1 NMSA 1978 contain general definitions and principles of construction and interpretation applicable throughout Chapter 55, Article 9 NMSA 1978."

Section 3. Section 55-9-103 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-103, as amended) is repealed and a new Section 55-9-103 NMSA 1978 is enacted to read:

"55-9-103. PURCHASE-MONEY SECURITY INTEREST--APPLICATION OF PAYMENTS--BURDEN OF ESTABLISHING.--

(a) In this section:

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

(2) "purchase-money obligation" means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.

(b) A security interest in goods is a purchase-money security interest:

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

(2) if the security interest is in inventory that is or was purchase-money collateral, and to the extent that the security interest secures a purchase-money obligation incurred with respect to other inventory in which the secured party holds or held a purchase-money security interest; and

(3) to the extent that the security interest secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest.

(c) A security interest in software is a purchase-money security interest to the extent that the security interest also secures a purchase-money obligation incurred with respect to goods in which the secured party holds or held a purchase-money security interest if:

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

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

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

(e) In a transaction other than a consumer-goods transaction, if the extent to which a security interest is a purchase-money security interest depends on the application of a payment to a particular obligation, the payment must be applied:

(1) in accordance with any reasonable method of application to which the parties agree;

(2) in the absence of the parties' agreement to a reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment; or

(3) in the absence of an agreement to a reasonable method and a timely manifestation of the obligor's intention, in the following order:

(A) to obligations that are not secured; and

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

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

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

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

(3) the purchase-money obligation has been renewed, refinanced, consolidated or restructured.

(g) In a transaction other than a consumer-goods transaction, a secured party claiming a purchase-money security interest has the burden of establishing the extent to which the security interest is a purchase-money security interest.

(h) The limitation of the rules in Subsections (e), (f) and (g) of this section to transactions other than consumer-goods transactions is intended to leave to the court the determination of the proper rules in consumer-goods transactions. The court may not infer from that limitation the nature of the proper rule in consumer-goods transactions and may continue to apply established approaches."

Section 4. Section 55-9-104 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-104, as amended) is repealed and a new Section 55-9-104 NMSA 1978 is enacted to read:

"55-9-104. CONTROL OF DEPOSIT ACCOUNT.--

(a) A secured party has control of a deposit account if:

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

(2) the debtor, secured party and bank have agreed in an authenticated record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor; or

(3) the secured party becomes the bank's customer with respect to the deposit account.

(b) A secured party that has satisfied Subsection (a) of this section has control, even if the debtor retains the right to direct the disposition of funds from the deposit account."

Section 5. Section 55-9-105 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-105, as amended) is repealed and a new Section 55-9-105 NMSA 1978 is enacted to read:

"55-9-105. CONTROL OF ELECTRONIC CHATTEL PAPER.--A secured party has control of electronic chattel paper if the record or records comprising the chattel paper are created, stored and assigned in such a manner that:

(a) a single authoritative copy of the record or records exists which is unique, identifiable and, except as otherwise provided in Subsections (d) through (f) of this section, unalterable;

(b) the authoritative copy identifies the secured party as the assignee of the record or records;

(d) copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the participation of the secured party;

(e) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and

(f) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision."

Section 6. Section 55-9-106 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-106, as amended) is repealed and a new Section 55-9-106 NMSA 1978 is enacted to read:

"55-9-106. CONTROL OF INVESTMENT PROPERTY.--

(a) A person has control of a certificated security, uncertificated security or security entitlement as provided in Section 55-8-106 NMSA 1978.

(b) A secured party has control of a commodity contract if:

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

(2) the commodity customer, secured party and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer.

(c) A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account."

Section 7. Section 55-9-107 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-107) is repealed and a new Section 55-9-107 NMSA 1978 is enacted to read:

"55-9-107. CONTROL OF LETTER-OF-CREDIT RIGHT.--A secured party has control of a letter-of-credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under Subsection (c) of Section 55-5-114 NMSA 1978 or otherwise applicable law or practice."

Section 8. Section 55-9-108 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-108) is repealed and a new Section 55-9-108 NMSA 1978 is enacted to read:

"55-9-108. SUFFICIENCY OF DESCRIPTION.--

(a) Except as otherwise provided in Subsections (c), (d) and (e) of this section, a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.

(b) Except as otherwise provided in Subsection (d) of this section, a description of collateral reasonably identifies the collateral if it identifies the collateral by:

(1) specific listing;

(2) category;

(3) except as otherwise provided in Subsection (e) of this section, a type of collateral defined in the Uniform Commercial Code;

(4) quantity;

(5) computational or allocational formula or procedure; or

(6) except as otherwise provided in Subsection (c) of this section, any other method, if the identity of the collateral is objectively determinable.

(c) A description of collateral as "all the debtor's assets" or "all the debtor's personal property" or using words of similar import does not reasonably identify the collateral.

(d) Except as otherwise provided in Subsection (e) of this section, a description of a security entitlement, securities account or commodity account is sufficient if it describes:

(1) the collateral by those terms or as investment property; or

(2) the underlying financial asset or commodity contract.

(e) A description only by type of collateral defined in the Uniform Commercial Code is an insufficient description of:

(1) a commercial tort claim; or

(2) in a consumer transaction, consumer goods, a security entitlement, a securities account or a commodity account."

Section 9. Section 55-9-109 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-109) is repealed and a new Section 55-9-109 NMSA 1978 is enacted to read:

"55-9-109. SCOPE.--

(a) Except as otherwise provided in Subsections (c) and (d) of this section, Chapter 55, Article 9 NMSA 1978 applies to:

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

(2) an agricultural lien;

(3) a sale of accounts, chattel paper, payment intangibles or promissory notes;

(4) a consignment;

(5) a security interest arising under Section 55-2-401, 55-2-505, Subsection (3) of Section 55-2-711 or Subsection (5) of Section 55-2A-508 NMSA 1978, as provided in Section 55-9-110 NMSA 1978; and

(6) a security interest arising under Section 55-4-210 or 55-5-118 NMSA 1978.

(b) The application of Chapter 55, Article 9 NMSA 1978 to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this article does not apply.

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

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

(3) a statute of another state, a foreign country or a governmental unit of another state or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority or enforcement of a security interest created by the state, country or governmental unit; or

(4) the rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under Section 55-5-114 NMSA 1978.

(d) Chapter 55, Article 9 NMSA 1978 does not apply to:

(1) a landlord's lien, other than an agricultural lien;

(2) a lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but Section 55-9-333 NMSA 1978 applies with respect to priority of the lien;

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

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

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

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

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

(8) a transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health-care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but Sections 55-9-315 and 55-9-322 NMSA 1978 apply with respect to proceeds and priorities in proceeds;

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

(10) a right of recoupment or set-off, but:

(A) Section 55-9-340 NMSA 1978 applies with respect to the effectiveness of rights of recoupment or set-off against deposit accounts; and

(B) Section 55-9-404 NMSA 1978 applies with respect to defenses or claims of an account debtor;

(11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:

(A) liens on real property in Sections 55-9-203 and 55-9-308 NMSA 1978;

(B) fixtures in Section 55-9-334 NMSA 1978;

(D) security agreements covering personal and real property in Section 55-9-604 NMSA 1978;

(12) an assignment of a claim arising in tort, other than a commercial tort claim, but Sections 55-9-315 and 55-9-322 NMSA 1978 apply with respect to proceeds and priorities in proceeds;

(13) an assignment of a deposit account in a consumer transaction, but Sections 55-9-315 and 55-9-322 NMSA 1978 apply with respect to proceeds and priorities in proceeds; or

(14) a transfer by this state or a governmental unit of this state."

Section 10. Section 55-9-110 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-110, as amended) is repealed and a new Section 55-9-110 NMSA 1978 is enacted to read:

"55-9-110. SECURITY INTERESTS ARISING UNDER CHAPTER 55, ARTICLE 2 OR 2A NMSA 1978.--A security interest arising under Section 55-2-401, 55-2-505, Subsection (3) of Section 55-2-711 or Subsection (5) of Section 55-2A-508 NMSA 1978 is subject to Chapter 55, Article 9 NMSA 1978. However, until the debtor obtains possession of the goods:

(1) the security interest is enforceable, even if Paragraph (3) of Subsection (b) of Section 55-9-203 NMSA 1978 has not been satisfied;

(2) filing is not required to perfect the security interest;

(3) the rights of the secured party after default by the debtor are governed by Chapter 55, Article 2 or 2A NMSA 1978; and

(4) the security interest has priority over a conflicting security interest created by the debtor."

Section 11. Section 55-9-201 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-201) is repealed and a new Section 55-9-201 NMSA 1978 is enacted to read:

"55-9-201. GENERAL EFFECTIVENESS OF SECURITY AGREEMENT.--

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

(b) A transaction subject to Chapter 55, Article 9 NMSA 1978 is subject to any applicable rule of law which establishes a different rule for consumers, and to the provisions of the Oil and Gas Products Lien Act; Chapter 56, Article 1 NMSA 1978; the Artists' Consignment Act; the Pawnbrokers Act; the New Mexico Bank Installment Loan Act of 1959; the New Mexico Small Loan Act of 1955; the Motor Vehicle Sales Finance Act; and to rules adopted under those statutes.

(c) In case of conflict between Chapter 55, Article 9 NMSA 1978 and a rule of law, statute or rule described in Subsection (b) of this section, the rule of law, statute or rule controls. Failure to comply with a statute or rule described in Subsection (b) of this section has only the effect the statute or rule specifies.

(d) Chapter 55, Article 9 NMSA 1978 does not:

(1) validate any rate, charge, agreement or practice that violates a rule of law, statute or rule described in Subsection (b) of this section; or

(2) extend the application of the rule of law, statute or rule to a transaction not otherwise subject to it.

(e) The filing provisions set forth in the Farm Products Secured Interest Act and in the Public Utility Act are in addition to the filing provisions set forth in Chapter 55, Article 9 NMSA 1978. Failure to comply with the filing provisions in those acts has only the effect specified in those acts."

Section 12. Section 55-9-202 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-202) is repealed and a new Section 55-9-202 NMSA 1978 is enacted to read:

"55-9-202. TITLE TO COLLATERAL IMMATERIAL.--Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment intangibles or promissory notes, the provisions of Chapter 55, Article 9 NMSA 1978 with regard to rights and obligations apply whether title to collateral is in the secured party or the debtor."

Section 13. Section 55-9-203 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-203, as amended) is repealed and a new Section 55-9-203 NMSA 1978 is enacted to read:

"55-9-203. ATTACHMENT AND ENFORCEABILITY OF SECURITY INTEREST--PROCEEDS--SUPPORTING OBLIGATIONS--FORMAL REQUISITES.--

(a) A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.

(b) Except as otherwise provided in Subsections (c) through (i) of this section, a security interest is enforceable against the debtor and third parties with respect to the collateral only if:

(1) value has been given;

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

(3) one of the following conditions is met:

(A) the debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;

(B) the collateral is not a certificated security and is in the possession of the secured party under Section 55-9-313 NMSA 1978 pursuant to the debtor's security agreement;

(C) the collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under Section 55-8-301 NMSA 1978 pursuant to the debtor's security agreement; or

(D) the collateral is deposit accounts, electronic chattel paper, investment property or letter-of-credit rights, and the secured party has control under Section 55-9-104, 55-9-105, 55-9-106 or 55-9-107 NMSA 1978 pursuant to the debtor's security agreement.

(c) Subsection (b) of this section is subject to Section 55-4-210 NMSA 1978 on the security interest of a collecting bank, Section 55-5-118 NMSA 1978 on the security interest of a letter-of-credit issuer or nominated person, Section 55-9-110 NMSA 1978 on a security interest arising under Chapter 55, Article 2 or 2A NMSA 1978 and Section 55-9-206 NMSA 1978 on security interests in investment property.

(d) A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than Chapter 55, Article 9 NMSA 1978 or by contract:

(1) the security agreement becomes effective to create a security interest in the person's property; or

(2) the person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person.

(e) If a new debtor becomes bound as debtor by a security agreement entered into by another person:

(1) the agreement satisfies Paragraph (3) of Subsection (b) of this section with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and

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

(f) The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by Section 55-9-315 NMSA 1978 and is also attachment of a security interest in a supporting obligation for the collateral.

(g) The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage or other lien.

(h) The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account.

(i) The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account."

Section 14. Section 55-9-204 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-204, as amended) is repealed and a new Section 55-9-204 NMSA 1978 is enacted to read:

"55-9-204. AFTER-ACQUIRED PROPERTY--FUTURE ADVANCES.--

(a) Except as otherwise provided in Subsection (b) of this section, a security agreement may create or provide for a security interest in after-acquired collateral.

(b) A security interest does not attach under a term constituting an after-acquired property clause to:

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

(2) a commercial tort claim.

(c) A security agreement may provide that collateral secures, or that accounts, chattel paper, payment intangibles or promissory notes are sold in connection with, future advances or other value, whether or not the advances or value are given pursuant to commitment."

Section 15. Section 55-9-205 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-205, as amended) is repealed and a new Section 55-9-205 NMSA 1978 is enacted to read:

"55-9-205. USE OR DISPOSITION OF COLLATERAL PERMISSIBLE.--

(a) A security interest is not invalid or fraudulent against creditors solely because:

(1) the debtor has the right or ability to:

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

(B) collect, compromise, enforce or otherwise deal with collateral;

(D) use, commingle or dispose of proceeds; or

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

(b) This section does not relax the requirements of possession if attachment, perfection or enforcement of a security interest depends upon possession of the collateral by the secured party."

Section 16. Section 55-9-206 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-206, as amended) is repealed and a new Section 55-9-206 NMSA 1978 is enacted to read:

"55-9-206. SECURITY INTEREST ARISING IN PURCHASE OR DELIVERY OF FINANCIAL ASSET.--

(a) A security interest in favor of a securities intermediary attaches to a person's security entitlement if:

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

(2) the securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary.

(b) The security interest described in Subsection (a) of this section secures the person's obligation to pay for the financial asset.

(c) A security interest in favor of a person that delivers a certificated security or other financial asset represented by a writing attaches to the security or other financial asset if:

(1) the security or other financial asset:

(A) in the ordinary course of business is transferred by delivery with any necessary indorsement or assignment; and

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

(2) the agreement calls for delivery against payment.

(d) The security interest described in Subsection (c) of this section secures the obligation to make payment for the delivery."

Section 17. Section 55-9-207 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-207) is repealed and a new Section 55-9-207 NMSA 1978 is enacted to read:

"55-9-207. RIGHTS AND DUTIES OF SECURED PARTY HAVING POSSESSION OR CONTROL OF COLLATERAL.--

(a) Except as otherwise provided in Subsection (d) of this section, a secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession. In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.

(b) Except as otherwise provided in Subsection (d) of this section, if a secured party has possession of collateral:

(1) reasonable expenses, including the cost of insurance and payment of taxes or other charges, incurred in the custody, preservation, use or operation of the collateral are chargeable to the debtor and are secured by the collateral;

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

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

(4) the secured party may use or operate the collateral:

(A) for the purpose of preserving the collateral or its value;

(B) as permitted by an order of a court having competent jurisdiction; or

(c) Except as otherwise provided in Subsection (d) of this section, a secured party having possession of collateral or control of collateral under Section 55-9-104, 55-9-105, 55-9-106 or 55-9-107 NMSA 1978:

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

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

(3) may create a security interest in the collateral.

(d) If the secured party is a buyer of accounts, chattel paper, payment intangibles or promissory notes or is a consignor:

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

(A) to charge back uncollected collateral; or

(B) otherwise to full or limited recourse against the debtor or a secondary obligor based on the nonpayment or other default of an account debtor or other obligor on the collateral; and

(2) Subsections (b) and (c) of this section do not apply."

Section 18. Section 55-9-208 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-208) is repealed and a new Section 55-9-208 NMSA 1978 is enacted to read:

"55-9-208. ADDITIONAL DUTIES OF SECURED PARTY HAVING CONTROL OF COLLATERAL.--

(a) This section applies to cases in which there is no outstanding secured obligation and the secured party is not committed to make advances, incur obligations or otherwise give value.

(b) Within ten days after receiving an authenticated demand by the debtor:

(1) a secured party having control of a deposit account under Paragraph (2) of Subsection (a) of Section 55-9-104 NMSA 1978 shall send to the bank with which the deposit account is maintained an authenticated statement that releases the bank from any further obligation to comply with instructions originated by the secured party;

(2) a secured party having control of a deposit account under Paragraph (3) of Subsection (a) of Section 55-9-104 NMSA 1978 shall:

(A) pay the debtor the balance on deposit in the deposit account; or

(B) transfer the balance on deposit into a deposit account in the debtor's name;

(3) a secured party, other than a buyer, having control of electronic chattel paper under Section 55-9-105 NMSA 1978 shall:

(A) communicate the authoritative copy of the electronic chattel paper to the debtor or its designated custodian;

(B) if the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic chattel paper is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and

(C) take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party;

(4) a secured party having control of investment property under Paragraph (2) of Subsection (d) of Section 55-8-106 NMSA 1978 or Subsection (b) of Section 55-9-106 NMSA 1978 shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained an authenticated record that releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party; and

(5) a secured party having control of a letter-of-credit right under Section 55-9-107 NMSA 1978 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party an authenticated release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party."

Section 19. A new Section 55-9-209 NMSA 1978 is enacted to read:

"55-9-209. DUTIES OF SECURED PARTY IF ACCOUNT DEBTOR HAS BEEN NOTIFIED OF ASSIGNMENT.--

(a) Except as otherwise provided in Subsection (c) of this section, this section applies if:

(1) there is no outstanding secured obligation; and

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

(b) Within ten days after receiving an authenticated demand by the debtor, a secured party shall send to an account debtor that has received notification of an assignment to the secured party as assignee under Subsection (a) of Section 55-9-406 NMSA 1978 an authenticated record that releases the account debtor from any further obligation to the secured party.

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

Section 20. A new Section 55-9-210 NMSA 1978 is enacted to read:

"55-9-210. REQUEST FOR ACCOUNTING--REQUEST REGARDING LIST OF COLLATERAL OR STATEMENT OF ACCOUNT.--

(a) In this section:

(1) "request" means a record of a type described in Paragraph (2), (3) or (4) of this subsection;

(2) "request for an accounting" means a record authenticated by a debtor requesting that the recipient provide an accounting of the unpaid obligations secured by collateral and reasonably identifying the transaction or relationship that is the subject of the request;

(3) "request regarding a list of collateral" means a record authenticated by a debtor requesting that the recipient approve or correct a list of what the debtor believes to be the collateral securing an obligation and reasonably identifying the transaction or relationship that is the subject of the request; and

(4) "request regarding a statement of account" means a record authenticated by a debtor requesting that the recipient approve or correct a statement indicating what the debtor believes to be the aggregate amount of unpaid obligations secured by collateral as of a specified date and reasonably identifying the transaction or relationship that is the subject of the request.

(b) Subject to Subsections (c), (d), (e) and (f) of this section, a secured party, other than a buyer of accounts, chattel paper, payment intangibles or promissory notes or a consignor, shall comply with a request within fourteen days after receipt:

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

(2) in the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction.

(c) A secured party that claims a security interest in all of a particular type of collateral owned by the debtor may comply with a request regarding a list of collateral by sending to the debtor an authenticated record including a statement to that effect within fourteen days after receipt.

(d) A person that receives a request regarding a list of collateral, claims no interest in the collateral when it receives the request and claimed an interest in the collateral at an earlier time shall comply with the request within fourteen days after receipt by sending to the debtor an authenticated record:

(1) disclaiming any interest in the collateral; and

(2) if known to the recipient, providing the name and mailing address of any assignee of or successor to the recipient's interest in the collateral.

(e) A person that receives a request for an accounting or a request regarding a statement of account, claims no interest in the obligations when it receives the request and claimed an interest in the obligations at an earlier time shall comply with the request within fourteen days after receipt by sending to the debtor an authenticated record:

(1) disclaiming any interest in the obligations; and

(2) if known to the recipient, providing the name and mailing address of any assignee of or successor to the recipient's interest in the obligations.

(f) A debtor is entitled without charge to one response to a request under this section during any six-month period. The secured party may require payment of a charge not exceeding twenty-five dollars ($25.00) for each additional response."

Section 21. Section 55-9-301 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-301, as amended) is repealed and a new Section 55-9-301 NMSA 1978 is enacted to read:

"55-9-301. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS.--Except as otherwise provided in Sections 55-9-303 through 55-9-306 NMSA 1978, the following rules determine the law governing perfection, the effect of perfection or nonperfection and the priority of a security interest in collateral:

(1) except as otherwise provided in this section, while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in collateral;

(2) while collateral is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a possessory security interest in that collateral;

(3) except as otherwise provided in Subsection (4) of this section, while negotiable documents, goods, instruments, money or tangible chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:

(A) perfection of a security interest in the goods by filing a fixture filing;

(B) perfection of a security interest in timber to be cut; and

(C) the effect of perfection or nonperfection and the priority of a nonpossessory security interest in the collateral; and

(4) the local law of the jurisdiction in which the wellhead or minehead is located governs perfection, the effect of perfection or nonperfection and the priority of a security interest in as-extracted collateral."

Section 22. Section 55-9-302 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-302, as amended) is repealed and a new Section 55-9-302 NMSA 1978 is enacted to read:

"55-9-302. LAW GOVERNING PERFECTION AND PRIORITY OF AGRICULTURAL LIENS.--While farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of an agricultural lien on the farm products."

Section 23. Section 55-9-303 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-303) is repealed and a new Section 55-9-303 NMSA 1978 is enacted to read:

"55-9-303. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN GOODS COVERED BY A CERTIFICATE OF TITLE.--

(a) This section applies to goods covered by a certificate of title, even if there is no other relationship between the jurisdiction under whose certificate of title the goods are covered and the goods or the debtor.

(b) Goods become covered by a certificate of title when a valid application for the certificate of title and the applicable fee are delivered to the appropriate authority. Goods cease to be covered by a certificate of title at the earlier of the time the certificate of title ceases to be effective under the law of the issuing jurisdiction or the time the goods become covered subsequently by a certificate of title issued by another jurisdiction.

(c) The local law of the jurisdiction under whose certificate of title the goods are covered governs perfection, the effect of perfection or nonperfection and the priority of a security interest in goods covered by a certificate of title from the time the goods become covered by the certificate of title until the goods cease to be covered by the certificate of title."

Section 24. Section 55-9-304 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-304, as amended) is repealed and a new Section 55-9-304 NMSA 1978 is enacted to read:

"55-9-304. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN DEPOSIT ACCOUNTS.--

(a) The local law of a bank's jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a deposit account maintained with that bank.

(b) The following rules determine a bank's jurisdiction for purposes of Sections 55-9-301 through 55-9-342 NMSA 1978:

(1) if an agreement between the bank and the debtor governing the deposit account expressly provides that a particular jurisdiction is the bank's jurisdiction for purposes of the Uniform Commercial Code, that jurisdiction is the bank's jurisdiction;

(2) if Paragraph (1) of this subsection does not apply and an agreement between the bank and its customer governing the deposit account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the bank's jurisdiction;

(3) if neither Paragraph (1) nor Paragraph (2) of this subsection applies and an agreement between the bank and its customer governing the deposit account expressly provides that the deposit account is maintained at an office in a particular jurisdiction, that jurisdiction is the bank's jurisdiction;

(4) if none of the preceding paragraphs applies, the bank's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the customer's account is located; and

(5) if none of the preceding paragraphs applies, the bank's jurisdiction is the jurisdiction in which the chief executive office of the bank is located."

Section 25. Section 55-9-305 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-305, as amended) is repealed and a new Section 55-9-305 NMSA 1978 is enacted to read:

"55-9-305. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN INVESTMENT PROPERTY.--

(a) Except as otherwise provided in Subsection (c) of this section, the following rules apply:

(1) while a security certificate is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in the certificated security represented thereby;

(2) the local law of the issuer's jurisdiction as specified in Subsection (d) of Section 55-8-110 NMSA 1978 governs perfection, the effect of perfection or nonperfection and the priority of a security interest in an uncertificated security;

(3) the local law of the securities intermediary's jurisdiction as specified in Subsection (e) of Section 55-8-110 NMSA 1978 governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a security entitlement or securities account; and

(4) the local law of the commodity intermediary's jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a commodity contract or commodity account.

(b) The following rules determine a commodity intermediary's jurisdiction for purposes of Sections 55-9-301 through 55-9-342 NMSA 1978:

(1) if an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that a particular jurisdiction is the commodity intermediary's jurisdiction for purposes of the Uniform Commercial Code, that jurisdiction is the commodity intermediary's jurisdiction;

(2) if Paragraph (1) of this subsection does not apply and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction;

(3) if neither Paragraph (1) nor Paragraph (2) of this subsection applies and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction;

(4) if none of the preceding paragraphs applies, the commodity intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the commodity customer's account is located; and

(5) if none of the preceding paragraphs applies, the commodity intermediary's jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is located.

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

(2) automatic perfection of a security interest in investment property created by a broker or securities intermediary; and

(3) automatic perfection of a security interest in a commodity contract or commodity account created by a commodity intermediary."

Section 26. Section 55-9-306 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-306, as amended) is repealed and a new Section 55-9-306 NMSA 1978 is enacted to read:

"55-9-306. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN LETTER-OF-CREDIT RIGHTS.--

(a) Subject to Subsection (c) of this section, the local law of the issuer's jurisdiction or a nominated person's jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in a letter-of-credit right if the issuer's jurisdiction or nominated person's jurisdiction is a state.

(b) For purposes of Sections 55-9-301 through 55-9-342 NMSA 1978, an issuer's jurisdiction or nominated person's jurisdiction is the jurisdiction whose law governs the liability of the issuer or nominated person with respect to the letter-of-credit right as provided in Section 55-5-116 NMSA 1978.

(c) This section does not apply to a security interest that is perfected only under Subsection (d) of Section 55-9-308 NMSA 1978."

Section 27. Section 55-9-307 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-307, as amended) is repealed and a new Section 55-9-307 NMSA 1978 is enacted to read:

"55-9-307. LOCATION OF DEBTOR.--

(a) In this section, "place of business" means a place where a debtor conducts its affairs.

(b) Except as otherwise provided in this section, the following rules determine a debtor's location:

(1) a debtor who is an individual is located at the individual's principal residence;

(2) a debtor that is an organization and has only one place of business is located at its place of business; and

(3) a debtor that is an organization and has more than one place of business is located at its chief executive office.

(c) Subsection (b) of this section applies only if a debtor's residence, place of business or chief executive office, as applicable, is located in a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, recording or registration system as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral. If Subsection (b) of this section does not apply, the debtor is located in the District of Columbia.

(d) A person that ceases to exist, have a residence or have a place of business continues to be located in the jurisdiction specified by Subsections (b) and (c) of this section.

(e) A registered organization that is organized under the law of a state is located in that state.

(f) Except as otherwise provided in Subsection (i) of this section, a registered organization that is organized under the law of the United States and a branch or agency of a bank that is not organized under the law of the United States or a state are located:

(1) in the state that the law of the United States designates if the law designates a state of location;

(2) in the state that the registered organization, branch or agency designates if the law of the United States authorizes the registered organization, branch or agency to designate its state of location; or

(3) in the District of Columbia if neither Paragraph (1) nor Paragraph (2) of this subsection applies.

(g) A registered organization continues to be located in the jurisdiction specified by Subsection (e) or (f) of this section notwithstanding:

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

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

(h) The United States is located in the District of Columbia.

(i) A branch or agency of a bank that is not organized under the law of the United States or a state is located in the state in which the branch or agency is licensed if all branches and agencies of the bank are licensed in only one state.

(j) A foreign air carrier under the Federal Aviation Act of 1958, as amended, is located at the designated office of the agent upon which service of process may be made on behalf of the carrier.

(k) This section applies only for purposes of Sections 55-9-301 through 55-9-342 NMSA 1978."

Section 28. Section 55-9-308 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-308, as amended) is repealed and a new Section 55-9-308 NMSA 1978 is enacted to read:

"55-9-308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED--CONTINUITY OF PERFECTION.--

(a) Except as otherwise provided in this section and Section 55-9-309 NMSA 1978, a security interest is perfected if it has attached and all of the applicable requirements for perfection in Sections 55-9-310 through 55-9-316 NMSA 1978 have been satisfied. A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches.

(b) An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in Section 55-9-310 NMSA 1978 have been satisfied. An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective.

(c) A security interest or agricultural lien is perfected continuously if it is originally perfected by one method under Chapter 55, Article 9 NMSA 1978 and is later perfected by another method under that article, without an intermediate period when it was unperfected.

(d) Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.

(e) Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage or other lien on personal or real property securing the right.

(f) Perfection of a security interest in a securities account also perfects a security interest in the security entitlements carried in the securities account.

(g) Perfection of a security interest in a commodity account also perfects a security interest in the commodity contracts carried in the commodity account."

Section 29. Section 55-9-309 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-309, as amended) is repealed and a new Section 55-9-309 NMSA 1978 is enacted to read:

"55-9-309. SECURITY INTEREST PERFECTED UPON ATTACHMENT.--The following security interests are perfected when they attach:

(1) a purchase-money security interest in consumer goods, except as otherwise provided in Subsection (b) of Section 55-9-311 NMSA 1978 with respect to consumer goods that are subject to a statute or treaty described in Subsection (a) of Section 55-9-311 NMSA 1978;

(2) an assignment of accounts or payment intangibles which does not by itself or in conjunction with other assignments to the same assignee transfer a significant part of the assignor's outstanding accounts or payment intangibles;

(3) a sale of a payment intangible;

(4) a sale of a promissory note;

(5) a security interest created by the assignment of a health-care-insurance receivable to the provider of the health-care goods or services;

(6) a security interest arising under Section 55-2-401, 55-2-505, Subsection (3) of Section 55-2-711 or Subsection (5) of Section 55-2A-508 NMSA 1978, until the debtor obtains possession of the collateral;

(7) a security interest of a collecting bank arising under Section 55-4-210 NMSA 1978;

(8) a security interest of an issuer or nominated person arising under Section 55-5-118 NMSA 1978;

(9) a security interest arising in the delivery of a financial asset under Subsection (c) of Section 55-9-206 NMSA 1978;

(10) a security interest in investment property created by a broker or securities intermediary;

(11) a security interest in a commodity contract or a commodity account created by a commodity intermediary;

(12) an assignment for the benefit of all creditors of the transferor and subsequent transfers by the assignee thereunder; and

(13) a security interest created by an assignment of a beneficial interest in a decedent's estate."

Section 30. Section 55-9-310 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-310) is repealed and a new Section 55-9-310 NMSA 1978 is enacted to read:

"55-9-310. WHEN FILING REQUIRED TO PERFECT SECURITY INTEREST OR AGRICULTURAL LIEN--SECURITY INTERESTS AND AGRICULTURAL LIENS TO WHICH FILING PROVISIONS DO NOT APPLY.--

(a) Except as otherwise provided in Subsection (b) of this section and in Section 55-9-312 NMSA 1978, a financing statement must be filed to perfect all security interests and agricultural liens.

(b) The filing of a financing statement is not necessary to perfect a security interest:

(1) that is perfected under Subsection (d), (e), (f) or (g) of Section 55-9-308 NMSA 1978;

(2) that is perfected under Section 55-9-309

NMSA 1978 when it attaches;

(3) in property subject to a statute, regulation or treaty described in Subsection (a) of Section 55-9-311 NMSA 1978;

(4) in goods in possession of a bailee which is perfected under Paragraph (1) or (2) of Subsection (d) of Section 55-9-312 NMSA 1978;

(5) in certificated securities, documents, goods or instruments which is perfected without filing or possession under Subsection (e), (f) or (g) of Section 55-9-312 NMSA 1978;

(6) in collateral in the secured party's possession under Section 55-9-313 NMSA 1978;

(7) in a certificated security which is perfected by delivery of the security certificate to the secured party under Section 55-9-313 NMSA 1978;

(8) in deposit accounts, electronic chattel paper, investment property or letter-of-credit rights which is perfected by control under Section 55-9-314 NMSA 1978;

(9) in proceeds that is perfected under Section 55-9-315 NMSA 1978; or

(10) that is perfected under Section 55-9-316 NMSA 1978.

(c) If a secured party assigns a perfected security interest or agricultural lien, a filing under Chapter 55, Article 9 NMSA 1978 is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor."

Section 31. Section 55-9-311 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-311) is repealed and a new Section 55-9-311 NMSA 1978 is enacted to read:

"55-9-311. PERFECTION OF SECURITY INTERESTS IN PROPERTY SUBJECT TO CERTAIN STATUTES, REGULATIONS AND TREATIES.--

(a) Except as otherwise provided in Subsection (d) of this section, the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:

(1) a statute, regulation or treaty of the United States whose requirements for a security interest's obtaining priority over the rights of a lien creditor with respect to the property preempt Subsection (a) of Section 55-9-310 NMSA 1978;

(2) the provisions of Chapter 66 NMSA 1978; or

(3) a certificate-of-title statute of another jurisdiction which provides for a security interest to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the property.

(b) Compliance with the requirements of a statute, regulation or treaty described in Subsection (a) of this section for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under Chapter 55, Article 9 NMSA 1978. Except as otherwise provided in Subsection (d) of this section and in Section 55-9-313 and Subsections (d) and (e) of Section 55-9-316 NMSA 1978 for goods covered by a certificate of title, a security interest in property subject to a statute, regulation or treaty described in Subsection (a) of this section may be perfected only by compliance with those requirements, and a security interest so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral.

(c) Except as otherwise provided in Subsection (d) of this section and Subsections (d) and (e) of Section 55-9-316 NMSA 1978, duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by a statute, regulation or treaty described in Subsection (a) of this section are governed by the statute, regulation or treaty. In other respects, the security interest is subject to Chapter 55, Article 9 NMSA 1978.

(d) During any period in which collateral subject to a statute specified in Paragraph (2) of Subsection (a) of this section is inventory held for sale or lease by a person or leased by that person as lessor and that person is in the business of selling goods of that kind, this section does not apply to a security interest in that collateral created by that person."

Section 32. Section 55-9-312 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-312, as amended) is repealed and a new Section 55-9-312 NMSA 1978 is enacted to read:

"55-9-312. PERFECTION OF SECURITY INTERESTS IN CHATTEL PAPER, DEPOSIT ACCOUNTS, DOCUMENTS, GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT PROPERTY, LETTER-OF-CREDIT RIGHTS AND MONEY--PERFECTION BY PERMISSIVE FILING--TEMPORARY PERFECTION WITHOUT FILING OR TRANSFER OF POSSESSION.--

(a) A security interest in chattel paper, negotiable documents, instruments or investment property may be perfected by filing.

(b) Except as otherwise provided in Subsections (c) and (d) of Section 55-9-315 NMSA 1978 for proceeds:

(1) a security interest in a deposit account may be perfected only by control under Section 55-9-314 NMSA 1978;

(2) and except as otherwise provided in Subsection (d) of Section 55-9-308 NMSA 1978, a security interest in a letter-of-credit right may be perfected only by control under Section 55-9-314 NMSA 1978; and

(3) a security interest in money may be perfected only by the secured party's taking possession under Section 55-9-313 NMSA 1978.

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

(2) a security interest perfected in the document has priority over any security interest that becomes perfected in the goods by another method during that time.

(d) While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by:

(1) issuance of a document in the name of the secured party;

(2) the bailee's receipt of notification of the secured party's interest; or

(3) filing as to the goods.

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

(f) A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for twenty days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of:

(1) ultimate sale or exchange; or

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

(g) A perfected security interest in a certificated security or instrument remains perfected for twenty days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:

(1) ultimate sale or exchange; or

(2) presentation, collection, enforcement, renewal or registration of transfer.

(h) After the twenty-day period specified in Subsection (e), (f) or (g) of this section expires, perfection depends upon compliance with Chapter 55, Article 9 NMSA 1978."

Section 33. Section 55-9-313 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-313, as amended) is repealed and a new Section 55-9-313 NMSA 1978 is enacted to read:

"55-9-313. WHEN POSSESSION BY OR DELIVERY TO SECURED PARTY PERFECTS SECURITY INTEREST WITHOUT FILING.--

(a) Except as otherwise provided in Subsection (b) of this section, a secured party may perfect a security interest in negotiable documents, goods, instruments, money or tangible chattel paper by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under Section 55-8-301 NMSA 1978.

(b) With respect to goods covered by a certificate of title issued by this state, a secured party may perfect a security interest in the goods by taking possession of the goods only in the circumstances described in Subsection (d) of Section 55-9-316 NMSA 1978.

(c) With respect to collateral other than certificated securities and goods covered by a document, a secured party takes possession of collateral in the possession of a person other than the debtor, the secured party or a lessee of the collateral from the debtor in the ordinary course of the debtor's business when:

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

(2) the person takes possession of the collateral after having authenticated a record acknowledging that it will hold possession of collateral for the secured party's benefit.

(d) If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs no earlier than the time the secured party takes possession and continues only while the secured party retains possession.

(e) A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under Section 55-8-301 NMSA 1978 and remains perfected by delivery until the debtor obtains possession of the security certificate.

(f) A person in possession of collateral is not required to acknowledge that it holds possession for a secured party's benefit.

(g) If a person acknowledges that it holds possession for the secured party's benefit:

(1) the acknowledgment is effective under Subsection (c) of this section or Subsection (a) of Section 55-8-301 NMSA 1978, even if the acknowledgment violates the rights of a debtor; and

(2) unless the person otherwise agrees or law other than Chapter 55, Article 9 NMSA 1978 otherwise provides, the person does not owe any duty to the secured party and is not required to confirm the acknowledgment to another person.

(h) A secured party having possession of collateral does not relinquish possession by delivering the collateral to a person other than the debtor or a lessee of the collateral from the debtor in the ordinary course of the debtor's business if the person was instructed before the delivery or is instructed contemporaneously with the delivery:

(1) to hold possession of the collateral for the secured party's benefit; or

(2) to redeliver the collateral to the secured party.

(i) A secured party does not relinquish possession, even if a delivery under Subsection (h) of this section violates the rights of a debtor. A person to which collateral is delivered under Subsection (h) of this section does not owe any duty to the secured party and is not required to confirm the delivery to another person unless the person otherwise agrees or law other than this article otherwise provides."

Section 34. Section 55-9-314 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-314) is repealed and a new Section 55-9-314 NMSA 1978 is enacted to read:

"55-9-314. PERFECTION BY CONTROL.--

(a) A security interest in investment property, deposit accounts, letter-of-credit rights or electronic chattel paper may be perfected by control of the collateral under Section 55-9-104, 55-9-105, 55-9-106 or 55-9-107 NMSA 1978.

(b) A security interest in deposit accounts, electronic chattel paper or letter-of-credit rights is perfected by control under Section 55-9-104, 55-9-105 or 55-9-107 NMSA 1978 when the secured party obtains control and remains perfected by control only while the secured party retains control.

(c) A security interest in investment property is perfected by control under Section 55-9-106 NMSA 1978 from the time the secured party obtains control and remains perfected by control until:

(1) the secured party does not have control; and

(2) one of the following occurs:

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

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

Section 35. Section 55-9-315 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-315) is repealed and a new Section 55-9-315 NMSA 1978 is enacted to read:

"55-9-315. SECURED PARTY'S RIGHTS ON DISPOSITION OF COLLATERAL AND IN PROCEEDS.--

(a) Except as otherwise provided in Chapter 55, Article 9 NMSA 1978, the Farm Products Secured Interest Act and in Subsection (2) of Section 55-2-403 NMSA 1978:

(1) a security interest or agricultural lien continues in collateral notwithstanding sale, lease, license, exchange or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien; and

(2) a security interest attaches to any identifiable proceeds of collateral.

(b) Proceeds that are commingled with other property are identifiable proceeds:

(1) if the proceeds are goods, to the extent provided by Section 55-9-336 NMSA 1978; and

(2) if the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than Chapter 55, Article 9 NMSA 1978 with respect to commingled property of the type involved.

(c) A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.

(d) A perfected security interest in proceeds becomes unperfected on the twenty-first day after the security interest attaches to the proceeds unless:

(1) the following conditions are satisfied:

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

(B) the proceeds are collateral in which a security interest may be perfected by filing in the office in which the financing statement has been filed; and

(2) the proceeds are identifiable cash proceeds; or

(3) the security interest in the proceeds is perfected other than under Subsection (c) of this section when the security interest attaches to the proceeds or within twenty days thereafter.

(e) If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under Paragraph (1) of Subsection (d) of this section becomes unperfected at the later of:

(1) when the effectiveness of the filed financing statement lapses under Section 55-9-515 NMSA 1978 or is terminated under Section 55-9-513 NMSA 1978; or

(2) the twenty-first day after the security interest attaches to the proceeds."

Section 36. Section 55-9-316 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-316) is repealed and a new Section 55-9-316 NMSA 1978 is enacted to read:

"55-9-316. CONTINUED PERFECTION OF SECURITY INTEREST FOLLOWING CHANGE IN GOVERNING LAW.--

(a) A security interest perfected pursuant to the law of the jurisdiction designated in Subsection (1) of Section 55-9-301 or Subsection (c) of Section 55-9-305 NMSA 1978 remains perfected until the earliest of:

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

(2) the expiration of four months after a change of the debtor's location to another jurisdiction; or

(3) the expiration of one year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction.

(b) If a security interest described in Subsection (a) of this section becomes perfected under the law of the other jurisdiction before the earliest time or event described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earliest time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

(c) A possessory security interest in collateral, other than goods covered by a certificate of title and as-extracted collateral consisting of goods, remains continuously perfected if:

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

(2) thereafter the collateral is brought into another jurisdiction; and

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

(d) Except as otherwise provided in Subsection (e) of this section, a security interest in goods covered by a certificate of title which is perfected by any method under the law of another jurisdiction when the goods become covered by a certificate of title from this state remains perfected until the security interest would have become unperfected under the law of the other jurisdiction had the goods not become so covered.

(e) A security interest described in Subsection (d) of this section becomes unperfected as against a purchaser of the goods for value and is deemed never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under Subsection (b) of Section 55-9-311 or Section 55-9-313 NMSA 1978 are not satisfied before the earlier of:

(1) the time the security interest would have become unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this state; or

(2) the expiration of four months after the goods had become so covered.

(f) A security interest in deposit accounts, letter-of-credit rights or investment property which is perfected under the law of the bank's jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, the securities intermediary's jurisdiction or the commodity intermediary's jurisdiction, as applicable, remains perfected until the earlier of:

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

(2) the expiration of four months after a change of the applicable jurisdiction to another jurisdiction.

(g) If a security interest described in Subsection (f) of this section becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value."

Section 37. Section 55-9-317 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-317) is repealed and a new Section 55-9-317 NMSA 1978 is enacted to read:

"55-9-317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE OF SECURITY INTEREST OR AGRICULTURAL LIEN.--

(a) A security interest or agricultural lien is subordinate to the rights of:

(1) a person entitled to priority under Section 55-9-322 NMSA 1978; and

(2) except as otherwise provided in Subsection (e) of this section, a person that becomes a lien creditor before the earlier of the time:

(A) the security interest or agricultural lien is perfected; or

(B) one of the conditions specified in Paragraph (3) of Subsection (b) of Section 55-9-203 NMSA 1978 is met and a financing statement covering the collateral is filed.

(b) Except as otherwise provided in Subsection (e) of this section, a buyer, other than a secured party, of tangible chattel paper, documents, goods, instruments or a security certificate takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

(c) Except as otherwise provided in Subsection (e) of this section, a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

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

(e) Except as otherwise provided in Sections 55-9-320 and 55-9-321 NMSA 1978, if a person files a financing statement with respect to a purchase-money security interest before or within twenty days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee or lien creditor which arise between the time the security interest attaches and the time of filing."

Section 38. Section 55-9-318 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-318, as amended) is repealed and a new Section 55-9-318 NMSA 1978 is enacted to read:

"55-9-318. NO INTEREST RETAINED IN RIGHT TO PAYMENT THAT IS SOLD--RIGHTS AND TITLE OF SELLER OF ACCOUNT OR CHATTEL PAPER WITH RESPECT TO CREDITORS AND PURCHASERS.--

(a) A debtor that has sold an account, chattel paper, payment intangible or promissory note does not retain a legal or equitable interest in the collateral sold.

(b) For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor sold."

Section 39. A new Section 55-9-319 NMSA 1978 is enacted to read:

"55-9-319. RIGHTS AND TITLE OF CONSIGNEE WITH RESPECT TO CREDITORS AND PURCHASERS.--

(a) Except as otherwise provided in Subsection (b) of this section, for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer.

(b) For purposes of determining the rights of a creditor of a consignee, law other than Chapter 55, Article 9 NMSA 1978 determines the rights and title of a consignee while goods are in the consignee's possession if, under Sections 55-9-301 through 55-9-342 NMSA 1978, a perfected security interest held by the consignor would have priority over the rights of the creditor."

Section 40. A new Section 55-9-320 NMSA 1978 is enacted to read:

"55-9-320. BUYER OF GOODS.--

(a) Except as otherwise provided in Subsection (e) of this section or in the Farm Products Secured Interest Act, a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

(b) Except as otherwise provided in Subsection (e) of this section, a buyer of goods from a person who used or bought the goods for use primarily for personal, family or household purposes takes free of a security interest, even if perfected, if the buyer buys:

(1) without knowledge of the security interest;

(2) for value;

(3) primarily for the buyer's personal, family or household purposes; and

(4) before the filing of a financing statement covering the goods.

(c) To the extent that it affects the priority of a security interest over a buyer of goods under Subsection (b) of this section, the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by Subsections (a) and (b) of Section 55-9-316 NMSA 1978.

(d) A buyer in ordinary course of business buying oil, gas or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.

(e) Subsections (a) and (b) of this section do not affect a security interest in goods in the possession of the secured party under Section 55-9-313 NMSA 1978."

Section 41. A new Section 55-9-321 NMSA 1978 is enacted to read:

"55-9-321. LICENSEE OF GENERAL INTANGIBLE AND LESSEE OF GOODS IN ORDINARY COURSE OF BUSINESS.--

(a) In this section, "licensee in ordinary course of business" means a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangibles of that kind. A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor's own usual or customary practices.

(b) A licensee in ordinary course of business takes its rights under a nonexclusive license free of a security interest in the general intangible created by the licensor, even if the security interest is perfected and the licensee knows of its existence.

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

Section 42. A new Section 55-9-322 NMSA 1978 is enacted to read:

"55-9-322. PRIORITIES AMONG CONFLICTING SECURITY INTERESTS IN AND AGRICULTURAL LIENS ON SAME COLLATERAL.--

(a) Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:

(1) Conflicting perfected security interests and agricultural liens rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest or agricultural lien is first perfected, if there is no period thereafter when there is neither filing nor perfection.

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

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

(b) For the purposes of Paragraph (1) of Subsection (a) of this section:

(1) the time of filing or perfection as to a security interest in collateral is also the time of filing or perfection as to a security interest in proceeds; and

(2) the time of filing or perfection as to a security interest in collateral supported by a supporting obligation is also the time of filing or perfection as to a security interest in the supporting obligation.

(c) Except as otherwise provided in Subsection (f) of this section, a security interest in collateral which qualifies for priority over a conflicting security interest under Section 55-9-327, 55-9-328, 55-9-329, 55-9-330 or 55-9-331 NMSA 1978 also has priority over a conflicting security interest in:

(1) any supporting obligation for the collateral; and

(2) proceeds of the collateral if:

(A) the security interest in proceeds is perfected;

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

(C) in the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral or an account relating to the collateral.

(d) Subject to Subsection (e) of this section and except as otherwise provided in Subsection (f) of this section, if a security interest in chattel paper, deposit accounts, negotiable documents, instruments, investment property or letter-of-credit rights is perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank according to priority in time of filing.

(e) Subsection (d) of this section applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property or letter-of-credit rights.

(f) Subsections (a) through (e) of this section are subject to:

(1) Subsection (g) of this section and the other provisions of Sections 55-9-301 through 55-9-342 NMSA 1978;

(2) Section 55-4-210 NMSA 1978 with respect to a security interest of a collecting bank;

(3) Section 55-5-118 NMSA 1978 with respect to a security interest of an issuer or nominated person; and

(4) Section 55-9-110 NMSA 1978 with respect to a security interest arising under Chapter 55, Article 2 or 2A NMSA 1978.

(g) A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides. If a statute other than Chapter 55, Article 9 NMSA 1978 creates an agricultural lien, and the other statute does not specify the priority of the agricultural lien relative to an agricultural lien or security interest in the same collateral created pursuant to Chapter 55, Article 9 NMSA 1978, then Subsection (a)(1) of this section shall govern the priority of the agricultural liens and security interests."

Section 43. A new Section 55-9-323 NMSA 1978 is enacted to read:

"55-9-323. FUTURE ADVANCES.--

(a) Except as otherwise provided in Subsection (c) of this section, for purposes of determining the priority of a perfected security interest under Paragraph (1) of Subsection (a) of Section 55-9-322 NMSA 1978, perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:

(1) is made while the security interest is perfected only:

(A) under Section 55-9-309 NMSA 1978 when it attaches; or

(B) temporarily under Subsection (e), (f) or (g) of Section 55-9-312 NMSA 1978; and

(2) is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under Section 55-9-309 or Subsection (e), (f) or (g) of Section 55-9-312 NMSA 1978.

(b) Except as otherwise provided in Subsection (c) of this section, a security interest is subordinate to the rights of a person that becomes a lien creditor to the extent that the security interest secures an advance made more than forty-five days after the person becomes a lien creditor unless the advance is made:

(1) without knowledge of the lien; or

(2) pursuant to a commitment entered into without knowledge of the lien.

(c) Subsections (a) and (b) of this section do not apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, payment intangibles or promissory notes or a consignor.

(d) Except as otherwise provided in Subsection (e) of this section, a buyer of goods other than a buyer in ordinary course of business takes free of a security interest to the extent that it secures advances made after the earlier of:

(1) the time the secured party acquires knowledge of the buyer's purchase; or

(2) forty-five days after the purchase.

(e) Subsection (d) of this section does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer's purchase and before the expiration of the forty-five-day period.

(f) Except as otherwise provided in Subsection (g) of this section, a lessee of goods, other than a lessee in ordinary course of business, takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of:

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

(2) forty-five days after the lease contract becomes enforceable.

(g) Subsection (f) of this section does not apply if the advance is made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the forty-five-day period."

Section 44. A new Section 55-9-324 NMSA 1978 is enacted to read:

"55-9-324. PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS.--

(a) Except as otherwise provided in Subsection (g) of this section, a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in Section 55-9-327 NMSA 1978, a perfected security interest in its identifiable proceeds also has priority if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within twenty days thereafter.

(b) Subject to Subsection (c) of this section and except as otherwise provided in Subsection (g) of this section, a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so provided in Section 55-9-330 NMSA 1978, and, except as otherwise provided in Section 55-9-327 NMSA 1978, also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if:

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

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

(3) the holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and

(4) the notification states that the person sending the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory.

(c) Paragraphs (2) through (4) of Subsection (b) of this section apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:

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

(2) if the purchase-money security interest is temporarily perfected without filing or possession under Subsection (f) of Section 55-9-312 NMSA 1978, before the beginning of the twenty-day period thereunder.

(d) Subject to Subsection (e) of this section and except as otherwise provided in Subsection (g) of this section, a perfected purchase-money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in Section 55-9-327 NMSA 1978, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:

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

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

(3) the holder of the conflicting security interest receives the notification within six months before the debtor receives possession of the livestock; and

(4) the notification states that the person sending the notification has or expects to acquire a purchase-money security interest in livestock of the debtor and describes the livestock.

(e) Paragraphs (2) through (4) of Subsection (d) of this section apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:

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

(f) Except as otherwise provided in Subsection (g) of this section, a perfected purchase-money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in Section 55-9-327 NMSA 1978, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchase-money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this section.

(g) If more than one security interest qualifies for priority in the same collateral under Subsection (a), (b), (d) or (f) of this section:

(1) a security interest securing an obligation incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and

(2) in all other cases, Subsection (a) of Section 55-9-322 NMSA 1978 applies to the qualifying security interests."

Section 45. A new Section 55-9-325 NMSA 1978 is enacted to read:

"55-9-325. PRIORITY OF SECURITY INTERESTS IN TRANSFERRED COLLATERAL.--

(a) Except as otherwise provided in Subsection (b) of this section, a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if:

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

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

(3) there is no period thereafter when the security interest is unperfected.

(b) Subsection (a) of this section subordinates a security interest only if the security interest:

(1) otherwise would have priority solely under Subsection (a) of Section 55-9-322 NMSA 1978 or under Section 55-9-324 NMSA 1978; or

(2) arose solely under Subsection (3) of Section 55-2-711 or Subsection (5) of Section 55-2A-508 NMSA 1978."

Section 46. A new Section 55-9-326 NMSA 1978 is enacted to read:

"55-9-326. PRIORITY OF SECURITY INTERESTS CREATED BY NEW DEBTOR.--

(a) Subject to Subsection (b) of this section, a security interest created by a new debtor which is perfected by a filed financing statement that is effective solely under Section 55-9-508 NMSA 1978 in collateral in which a new debtor has or acquires rights is subordinate to a security interest in the same collateral which is perfected other than by a filed financing statement that is effective solely under Section 55-9-508 NMSA 1978.

(b) The other provisions of Sections 55-9-301 through 55-9-342 NMSA 1978 determine the priority among conflicting security interests in the same collateral perfected by filed financing statements that are effective solely under Section 55-9-508 NMSA 1978. However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor having become bound."

Section 47. A new Section 55-9-327 NMSA 1978 is enacted to read:

"55-9-327. PRIORITY OF SECURITY INTERESTS IN DEPOSIT ACCOUNT.--The following rules govern priority among conflicting security interests in the same deposit account:

(1) A security interest held by a secured party having control of the deposit account under Section 55-9-104 NMSA 1978 has priority over a conflicting security interest held by a secured party that does not have control.

(2) Except as otherwise provided in Subsections (3) and (4) of this section, security interests perfected by control under Section 55-9-314 NMSA 1978 rank according to priority in time of obtaining control.

(3) Except as otherwise provided in Subsection (4) of this section, a security interest held by the bank with which the deposit account is maintained has priority over a conflicting security interest held by another secured party.

(4) A security interest perfected by control under Paragraph (3) of Subsection (a) of Section 55-9-104 NMSA 1978 has priority over a security interest held by the bank with which the deposit account is maintained."

Section 48. A new Section 55-9-328 NMSA 1978 is enacted to read:

"55-9-328. PRIORITY OF SECURITY INTERESTS IN INVESTMENT PROPERTY.--The following rules govern priority among conflicting security interests in the same investment property:

(1) A security interest held by a secured party having control of investment property under Section 55-9-106 NMSA 1978 has priority over a security interest held by a secured party that does not have control of the investment property.

(2) Except as otherwise provided in Subsections (3) and (4) of this section, conflicting security interests held by secured parties, each of which has control under Section 55-9-106 NMSA 1978, rank according to priority in time of:

(A) if the collateral is a security, obtaining control;

(B) if the collateral is a security entitlement carried in a securities account and:

(i) if the secured party obtained control under Paragraph (1) of Subsection (d) of Section 55-8-106 NMSA 1978, the secured party's becoming the person for which the securities account is maintained;

(ii) if the secured party obtained control under Paragraph (2) of Subsection (d) of Section 55-8-106 NMSA 1978, the securities intermediary's agreement to comply with the secured party's entitlement orders with respect to security entitlements carried or to be carried in the securities account; or

(iii) if the secured party obtained control through another person under Paragraph (3) of Subsection (d) of Section 55-8-106 NMSA 1978, the time on which priority would be based under this paragraph if the other person were the secured party; or

(C) if the collateral is a commodity contract carried with a commodity intermediary, the satisfaction of the requirement for control specified in Paragraph (2) of Subsection (b) of Section 55-9-106 NMSA 1978 with respect to commodity contracts carried or to be carried with the commodity intermediary.

(3) A security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party.

(4) A security interest held by a commodity intermediary in a commodity contract or a commodity account maintained with the commodity intermediary has priority over a conflicting security interest held by another secured party.

(5) A security interest in a certificated security in registered form which is perfected by taking delivery under Subsection (a) of Section 55-9-313 NMSA 1978 and not by control under Section 55-9-314 NMSA 1978 has priority over a conflicting security interest perfected by a method other than control.

(6) Conflicting security interests created by a broker, securities intermediary or commodity intermediary which are perfected without control under Section 55-9-106 NMSA 1978 rank equally.

(7) In all other cases, priority among conflicting security interests in investment property is governed by Sections 55-9-322 and 55-9-323 NMSA 1978."

Section 49. A new Section 55-9-329 NMSA 1978 is enacted to read:

"55-9-329. PRIORITY OF SECURITY INTERESTS IN LETTER-OF-CREDIT RIGHT.--The following rules govern priority among conflicting security interests in the same letter-of-credit right:

(1) A security interest held by a secured party having control of the letter-of-credit right under Section 55-9-107 NMSA 1978 has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control.

(2) Security interests perfected by control under Section 55-9-314 NMSA 1978 rank according to priority in time of obtaining control."

Section 50. A new Section 55-9-330 NMSA 1978 is enacted to read:

"55-9-330. PRIORITY OF PURCHASER OF CHATTEL PAPER OR INSTRUMENT.--

(a) A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed merely as proceeds of inventory subject to a security interest if:

(1) in good faith and in the ordinary course of the purchaser's business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under Section 55-9-105 NMSA 1978; and

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

(b) A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under Section 55-9-105 NMSA 1978 in good faith, in the ordinary course of the purchaser's business and without knowledge that the purchase violates the rights of the secured party.

(c) Except as otherwise provided in Section 55-9-327 NMSA 1978, a purchaser having priority in chattel paper under Subsection (a) or (b) of this section also has priority in proceeds of the chattel paper to the extent that:

(1) Section 55-9-322 NMSA 1978 provides for priority in the proceeds; or

(2) the proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser's security interest in the proceeds is unperfected.

(d) Except as otherwise provided in Subsection (a) of Section 55-9-331 NMSA 1978, a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.

(e) For purposes of Subsections (a) and (b) of this section, the holder of a purchase-money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.

(f) For purposes of Subsections (b) and (d) of this section, if chattel paper or an instrument indicates that it has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party."

Section 51. A new Section 55-9-331 NMSA 1978 is enacted to read:

"55-9-331. PRIORITY OF RIGHTS OF PURCHASERS OF INSTRUMENTS, DOCUMENTS AND SECURITIES UNDER OTHER ARTICLES-- PRIORITY OF INTERESTS IN FINANCIAL ASSETS AND SECURITY ENTITLEMENTS UNDER CHAPTER 55, ARTICLE 8 NMSA 1978.--

(a) Chapter 55, Article 9 NMSA 1978 does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated or a protected purchaser of a security. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Chapter 55, Articles 3, 7 and 8 NMSA 1978.

(b) Chapter 55, Article 9 NMSA 1978 does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of an adverse claim under Chapter 55, Article 8 NMSA 1978.

(c) Filing under Chapter 55, Article 9 NMSA 1978 does not constitute notice of a claim or defense to the holders, or purchasers, or persons described in Subsections (a) and (b) of this section."

Section 52. A new Section 55-9-332 NMSA 1978 is enacted to read:

"55-9-332. TRANSFER OF MONEY--TRANSFER OF FUNDS FROM DEPOSIT ACCOUNT.

(a) A transferee of money takes the money free of a security interest unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

(b) A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party."

Section 53. A new Section 55-9-333 NMSA 1978 is enacted to read:

"55-9-333. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION OF LAW.--

(a) In this section, "possessory lien" means an interest, other than a security interest or an agricultural lien:

(1) that secures payment or performance of an obligation for services or materials furnished with respect to goods by a person in the ordinary course of the person's business;

(2) that is created by statute or rule of law in favor of the person; and

(3) whose effectiveness depends on the person's possession of the goods.

(b) A possessory lien on goods has priority over a security interest in the goods unless the lien is created by a statute that expressly provides otherwise."

Section 54. A new Section 55-9-334 NMSA 1978 is enacted to read:

"55-9-334. PRIORITY OF SECURITY INTERESTS IN FIXTURES.--

(a) A security interest under Chapter 55, Article 9 NMSA 1978 may be created in goods that are fixtures or may continue in goods that become fixtures. A security interest does not exist under this article in ordinary building materials incorporated into an improvement on land.

(b) Chapter 55, Article 9 NMSA 1978 does not prevent creation of an encumbrance upon fixtures under real property law.

(c) In cases not governed by Subsections (d) through (h) of this section, a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor.

(d) Except as otherwise provided in Subsection (h) of this section, a perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property and:

(1) the security interest is a purchase-money security interest;

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

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

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

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

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

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

(2) before the goods become fixtures, the security interest is perfected by any method permitted by Chapter 55, Article 9 NMSA 1978, and the fixtures are readily removable:

(A) factory or office machines;

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

(3) the conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this article; or

(4) the security interest is:

(A) created in a manufactured home in a manufactured-home transaction; and

(B) perfected pursuant to a statute described in Paragraph (2) of Subsection (a) of Section 55-9-311 NMSA 1978.

(f) A security interest in fixtures, whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of the real property if:

(1) the encumbrancer or owner has, in an authenticated record, consented to the security interest or disclaimed an interest in the goods as fixtures; or

(2) the debtor has a right to remove the goods as against the encumbrancer or owner.

(g) The priority of the security interest under Paragraph (2) of Subsection (f) of this section continues for a reasonable time if the debtor's right to remove the goods as against the encumbrancer or owner terminates.

(h) A mortgage is a construction mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if a recorded record of the mortgage so indicates. Except as otherwise provided in Subsections (e) and (f) of this section, a security interest in fixtures is subordinate to a construction mortgage if a record of the mortgage is recorded before the goods become fixtures and the goods become fixtures before the completion of the construction. A mortgage has this priority to the same extent as a construction mortgage to the extent that it is given to refinance a construction mortgage."

Section 55. A new Section 55-9-335 NMSA 1978 is enacted to read:

"55-9-335. ACCESSIONS.--

(a) A security interest may be created in an accession and continues in collateral that becomes an accession.

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

(c) Except as otherwise provided in Subsection (d) of this section, the other provisions of this part determine the priority of a security interest in an accession.

(d) A security interest in an accession is subordinate to a security interest in the whole which is perfected by compliance with the requirements of a certificate-of-title statute under Subsection (b) of Section 55-9-311 NMSA 1978.

(e) After default, subject to Sections 55-9-601 through 55-9-628 NMSA 1978, a secured party may remove an accession from other goods if the security interest in the accession has priority over the claims of every person having an interest in the whole.

(f) A secured party that removes an accession from other goods under Subsection (e) of this section shall promptly reimburse any holder of a security interest or other lien on, or owner of, the whole or of the other goods, other than the debtor, for the cost of repair of any physical injury to the whole or the other goods. The secured party need not reimburse the holder or owner for any diminution in value of the whole or the other goods caused by the absence of the accession removed or by any necessity for replacing it. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse."

Section 56. A new Section 55-9-336 NMSA 1978 is enacted to read:

"55-9-336. COMMINGLED GOODS.--

(a) In this section, "commingled goods" means goods that are physically united with other goods in such a manner that their identity is lost in a product or mass.

(b) A security interest does not exist in commingled goods as such. However, a security interest may attach to a product or mass that results when goods become commingled goods.

(d) If a security interest in collateral is perfected before the collateral becomes commingled goods, the security interest that attaches to the product or mass under Subsection (c) of this section is perfected.

(e) Except as otherwise provided in Subsection (f) of this section, the other provisions of Sections 55-9-301 through 55-9-342 NMSA 1978 determine the priority of a security interest that attaches to the product or mass under Subsection (c) of this section.

(f) If more than one security interest attaches to the product or mass under Subsection (c) of this section, the following rules determine priority:

(1) a security interest that is perfected under Subsection (d) of this section has priority over a security interest that is unperfected at the time the collateral becomes commingled goods; or

(2) if more than one security interest is perfected under Subsection (d) of this section, the security interests rank equally in proportion to the value of the collateral at the time it became commingled goods."

Section 57. A new Section 55-9-337 NMSA 1978 is enacted to read:

"55-9-337. PRIORITY OF SECURITY INTERESTS IN GOODS COVERED BY CERTIFICATE OF TITLE.--If, while a security interest in goods is perfected by any method under the law of another jurisdiction, this state issues a certificate of title that does not show that the goods are subject to the security interest or contain a statement that they may be subject to security interests not shown on the certificate:

(1) a buyer of the goods, other than a person in the business of selling goods of that kind, takes free of the security interest if the buyer gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest; and

(2) the security interest is subordinate to a conflicting security interest in the goods that attaches, and is perfected under Subsection (b) of Section 55-9-311 NMSA 1978, after issuance of the certificate and without the conflicting secured party's knowledge of the security interest."

Section 58. A new Section 55-9-338 NMSA 1978 is enacted to read:

"55-9-338. PRIORITY OF SECURITY INTEREST OR AGRICULTURAL LIEN PERFECTED BY FILED FINANCING STATEMENT PROVIDING CERTAIN INCORRECT INFORMATION.--If a security interest or agricultural lien is perfected by a filed financing statement providing information described in Paragraph (5) of Subsection (b) of Section 55-9-516 NMSA 1978 which is incorrect at the time the financing statement is filed:

(1) the security interest or agricultural lien is subordinate to a conflicting perfected security interest in the collateral to the extent that the holder of the conflicting security interest gives value in reasonable reliance upon the incorrect information; and

(2) a purchaser, other than a secured party, of the collateral takes free of the security interest or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives value and, in the case of chattel paper, documents, goods, instruments or a security certificate, receives delivery of the collateral."

Section 59. A new Section 55-9-339 NMSA 1978 is enacted to read:

"55-9-339. PRIORITY SUBJECT TO SUBORDINATION.--Chapter 55, Article 9 NMSA 1978 does not preclude subordination by agreement by a person entitled to priority."

Section 60. A new Section 55-9-340 NMSA 1978 is enacted to read:

"55-9-340. EFFECTIVENESS OF RIGHT OF RECOUPMENT OR SET-OFF AGAINST DEPOSIT ACCOUNT.--

(a) Except as otherwise provided in Subsection (c) of this section, a bank with which a deposit account is maintained may exercise any right of recoupment or set-off against a secured party that holds a security interest in the deposit account.

(b) Except as otherwise provided in Subsection (c) of this section, the application of Chapter 55, Article 9 NMSA 1978 to a security interest in a deposit account does not affect a right of recoupment or set-off of the secured party as to a deposit account maintained with the secured party.

(c) The exercise by a bank of a set-off against a deposit account is ineffective against a secured party that holds a security interest in the deposit account which is perfected by control under Paragraph (3) of Subsection (a) of Section 55-9-104 NMSA 1978, if the set-off is based on a claim against the debtor."

Section 61. A new Section 55-9-341 NMSA 1978 is enacted to read:

"55-9-341. BANK'S RIGHTS AND DUTIES WITH RESPECT TO DEPOSIT ACCOUNT.--Except as otherwise provided in Subsection (c) of Section 55-9-340 NMSA 1978, and unless the bank otherwise agrees in an authenticated record, a bank's rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended or modified by:

(1) the creation, attachment or perfection of a security interest in the deposit account;

(2) the bank's knowledge of the security interest; or

(3) the bank's receipt of instructions from the secured party."

Section 62. A new Section 55-9-342 NMSA 1978 is enacted to read:

"55-9-342. BANK'S RIGHT TO REFUSE TO ENTER INTO OR DISCLOSE EXISTENCE OF CONTROL AGREEMENT.--Chapter 55, Article 9 NMSA 1978 does not require a bank to enter into an agreement of the kind described in Paragraph (2) of Subsection (a) of Section 55-9-104 NMSA 1978, even if its customer so requests or directs. A bank that has entered into such an agreement is not required to confirm the existence of the agreement to another person unless requested to do so by its customer."

Section 63. Section 55-9-401 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-401, as amended) is repealed and a new Section 55-9-401 NMSA 1978 is enacted to read:

"55-9-401. ALIENABILITY OF DEBTOR'S RIGHTS.--

(a) Except as otherwise provided in Subsection (b) of this section and Sections 55-9-406 through 55-9-409 NMSA 1978, whether a debtor's rights in collateral may be voluntarily or involuntarily transferred is governed by law other than Chapter 55, Article 9 NMSA 1978.

(b) An agreement between the debtor and secured party which prohibits a transfer of the debtor's rights in collateral or makes the transfer a default does not prevent the transfer from taking effect."

Section 64. Section 55-9-402 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-402, as amended) is repealed and a new Section 55-9-402 NMSA 1978 is enacted to read:

"55-9-402. SECURED PARTY NOT OBLIGATED ON CONTRACT OF DEBTOR OR IN TORT.--The existence of a security interest, agricultural lien or authority given to a debtor to dispose of or use collateral, without more, does not subject a secured party to liability in contract or tort for the debtor's acts or omissions."

Section 65. Section 55-9-403 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-403, as amended) is repealed and a new Section 55-9-403 NMSA 1978 is enacted to read:

"55-9-403. AGREEMENT NOT TO ASSERT DEFENSES AGAINST ASSIGNEE.--

(a) In this section, "value" has the meaning provided in Subsection (a) of Section 55-3-303 NMSA 1978.

(b) Except as otherwise provided in this section, an agreement between an account debtor and an assignor not to assert against an assignee any claim or defense that the account debtor may have against the assignor is enforceable by an assignee that takes an assignment:

(1) for value;

(2) in good faith;

(3) without notice of a claim of a property or possessory right to the property assigned; and

(4) without notice of a defense or claim in recoupment of the type that may be asserted against a person entitled to enforce a negotiable instrument under Subsection (a) of Section 55-3-305 NMSA 1978.

(c) Subsection (b) of this section does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under Subsection (b) of Section 55-3-305 NMSA 1978.

(d) In a consumer transaction, if a record evidences the account debtor's obligation, law other than Chapter 55, Article 9 NMSA 1978 requires that the record include a statement to the effect that the rights of an assignee are subject to claims or defenses that the account debtor could assert against the original obligee, and if the record does not include such a statement:

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

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

(e) This section is subject to law other than Chapter 55, Article 9 NMSA 1978 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.

(f) Except as otherwise provided in Subsection (d) of this section, this section does not displace law other than Chapter 55, Article 9 NMSA 1978 which gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee."

Section 66. Section 55-9-404 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-404, as amended) is repealed and a new Section 55-9-404 NMSA 1978 is enacted to read:

"55-9-404. RIGHTS ACQUIRED BY ASSIGNEE-- CLAIMS AND DEFENSES AGAINST ASSIGNEE.--

(a) Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to Subsections (b) through (e) of this section, the rights of an assignee are subject to:

(1) all terms of the agreement between the account debtor and assignor and any defense or claim in recoupment arising from the transaction that gave rise to the contract; and

(2) any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives a notification of the assignment authenticated by the assignor or the assignee.

(b) Subject to Subsection (c) of this section and except as otherwise provided in Subsection (d) of this section, the claim of an account debtor against an assignor may be asserted against an assignee under Subsection (a) of this section only to reduce the amount the account debtor owes.

(c) This section is subject to law other than Chapter 55, Article 9 NMSA 1978 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.

(d) In a consumer transaction, if a record evidences the account debtor's obligation, law other than Chapter 55, Article 9 NMSA 1978 requires that the record include a statement to the effect that the account debtor's recovery against an assignee with respect to claims and defenses against the assignor may not exceed amounts paid by the account debtor under the record, and if the record does not include such a statement, the extent to which a claim of an account debtor against the assignor may be asserted against an assignee is determined as if the record included such a statement.

(e) This section does not apply to an assignment of a health-care-insurance receivable."

Section 67. Section 55-9-405 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-405, as amended) is repealed and a new Section 55-9-405 NMSA 1978 is enacted to read:

"55-9-405. MODIFICATION OF ASSIGNED CONTRACT.--

(a) A modification of or substitution for an assigned contract is effective against an assignee if made in good faith. The assignee acquires corresponding rights under the modified or substituted contract. The assignment may provide that the modification or substitution is a breach of contract by the assignor. This subsection is subject to Subsections (b) through (d) of this section.

(b) Subsection (a) of this section applies to the extent that:

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

(2) the right to payment or a part thereof has been fully earned by performance and the account debtor has not received notification of the assignment under Subsection (a) of Section 55-9-406 NMSA 1978.

(d) This section does not apply to an assignment of a health-care-insurance receivable."

Section 68. Section 55-9-406 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-406, as amended) is repealed and a new Section 55-9-406 NMSA 1978 is enacted to read:

"55-9-406. DISCHARGE OF ACCOUNT DEBTOR--NOTIFICATION OF ASSIGNMENT--IDENTIFICATION AND PROOF OF ASSIGNMENT--RESTRICTIONS ON ASSIGNMENT OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES AND PROMISSORY NOTES INEFFECTIVE.--

(a) Subject to Subsections (b) through (i) of this section, an account debtor on an account, chattel paper or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, authenticated by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.

(b) Subject to Subsection (h) of this section, notification is ineffective under Subsection (a) of this section:

(1) if it does not reasonably identify the rights assigned;

(2) to the extent that an agreement between an account debtor and a seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than Chapter 55, Article 9 NMSA 1978; or

(3) at the option of an account debtor, if the notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee, even if:

(A) only a portion of the account, chattel paper or payment intangible has been assigned to that assignee;

(B) a portion has been assigned to another assignee; or

(c) Subject to Subsection (h) of this section, if requested by the account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor, even if the account debtor has received a notification under Subsection (a) of this section.

(d) Except as otherwise provided in Subsection (e) of this section and Sections 55-2A-303 and 55-9-407 NMSA 1978, and subject to Subsection (h) of this section, a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it:

(1) prohibits, restricts or requires the consent of the account debtor or person obligated on the promissory note to the assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in, the account, chattel paper, payment intangible or promissory note; or

(2) 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, chattel paper, payment intangible or promissory note.

(e) Subsection (d) of this section does not apply to the sale of a payment intangible or promissory note.

(f) Except as otherwise provided in Sections 55-2A-303 and 55-9-407 NMSA 1978 and subject to Subsections (h) and (i) of this section, a rule of law, statute or regulation that prohibits, restricts or requires the consent of a government, governmental body or official, or account debtor to the assignment or transfer of, or creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule of law, statute or regulation:

(1) prohibits, restricts or requires the consent of the government, governmental body or official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection or enforcement of a security interest in the account or chattel paper; or

(g) Subject to Subsection (h) of this section, an account debtor may not waive or vary its option under Paragraph (3) of Subsection (b) of this section.

(h) This section is subject to law other than Chapter 55, Article 9 NMSA 1978 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.

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

(j) This section is subject to laws other than Chapter 55, Article 9 NMSA 1978 to the extent that those laws prohibit or restrict the assignment, transfer of or creation of a security interest in benefits, compensation, any other account or chattel paper."

Section 69. Section 55-9-407 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-407, as amended) is repealed and a new Section 55-9-407 NMSA 1978 is enacted to read:

"55-9-407. RESTRICTIONS ON CREATION OR ENFORCEMENT OF SECURITY INTEREST IN LEASEHOLD INTEREST OR IN LESSOR'S RESIDUAL INTEREST.--

(a) Except as otherwise provided in Subsection (b) of this section, a term in a lease agreement is ineffective to the extent that it:

(1) 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

(b) Except as otherwise provided in Subsection (7) of Section 55-2A-303 NMSA 1978, a term described in Paragraph (2) of Subsection (a) of this section is effective to the extent that there is:

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

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

(c) The creation, attachment, perfection or enforcement of a security interest in the lessor's interest under the lease contract or the lessor's residual interest in the goods is not a transfer that materially impairs the lessee's prospect of obtaining return performance or materially changes the duty of or materially increases the burden or risk imposed on the lessee within the purview of Subsection (4) of Section 55-2A-303 NMSA 1978 unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor."

Section 70. Section 55-9-408 NMSA 1978 (being Laws 1985, Chapter 193, Section 33) is repealed and a new Section 55-9-408 NMSA 1978 is enacted to read:

"55-9-408. RESTRICTIONS ON ASSIGNMENT OF PROMISSORY NOTES, HEALTH-CARE-INSURANCE RECEIVABLES AND CERTAIN GENERAL INTANGIBLES INEFFECTIVE.--

(a) Except as otherwise provided in Subsection (b) of this section, 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:

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

(2) 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.

(b) Subsection (a) of this section 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.

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

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

(d) To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law, statute or regulation described in Subsection (c) of this section would be effective under law other than Chapter 55, Article 9 NMSA 1978 but is ineffective under Subsection (a) or (c) of this section, the creation, attachment or perfection of a security interest in the promissory note, health-care-insurance receivable or general intangible:

(1) is not enforceable against the person obligated on the promissory note or the account debtor;

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

(3) 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;

(4) 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;

(5) 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

(6) does not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable or general intangible. The provisions of this section shall prevail over an inconsistent provision of an existing or future statute or rule of this state, unless the inconsistent provision is set forth in a statute of this state that refers expressly to this section and states that the inconsistent provision shall prevail over the provisions of this section."

Section 71. A new Section 55-9-409 NMSA 1978 is enacted to read:

"55-9-409. RESTRICTIONS ON ASSIGNMENT OF LETTER-OF-CREDIT RIGHTS INEFFECTIVE.--

(a) A term in a letter of credit or a rule of law, statute, regulation, custom or practice applicable to the letter of credit which prohibits, restricts or requires the consent of an applicant, issuer or nominated person to a beneficiary's assignment of or creation of a security interest in a letter-of-credit right is ineffective to the extent that the term or rule of law, statute, regulation, custom or practice:

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

(2) 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.

(b) To the extent that a term in a letter of credit is ineffective under Subsection (a) of this section but would be effective under law other than Chapter 55, Article 9 NMSA 1978 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:

(1) is not enforceable against the applicant, issuer, nominated person or transferee beneficiary;

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

(3) 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."

Section 72. Section 55-9-501 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-501, as amended) is repealed and a new Section 55-9-501 NMSA 1978 is enacted to read:

"55-9-501. FILING OFFICE.--

(a) Except as otherwise provided in Subsection (b) of this section, 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:

(1) the office of the county clerk where a record of a mortgage on the related real property would be recorded if:

(A) the collateral is as-extracted collateral or timber to be cut; or

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

(2) the office of the secretary of state in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.

(b) The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the secretary of state. The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures."

Section 73. Section 55-9-502 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-502, as amended) is repealed and a new Section 55-9-502 NMSA 1978 is enacted to read:

"55-9-502. CONTENTS OF FINANCING

STATEMENT--RECORD OF MORTGAGE AS FINANCING STATEMENT--TIME OF FILING FINANCING STATEMENT.--

(a) Subject to Subsection (b) of this section, a financing statement is sufficient only if it:

(1) provides the name of the debtor;

(2) provides the name of the secured party or a representative of the secured party; and

(3) indicates the collateral covered by the financing statement.

(b) Except as otherwise provided in Subsection (b) of Section 55-9-501 NMSA 1978, to be sufficient a financing statement that covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy Subsection (a) of this section and also:

(1) indicate that it covers this type of collateral;

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

(3) provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage pursuant to the laws of this state if the description were contained in a record of the mortgage of the real property; and

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

(c) A record of a mortgage is effective, from the date it is filed for record, 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:

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

(2) 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;

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

(4) the record is recorded.

(d) A financing statement may be filed before a security agreement is made or a security interest otherwise attaches."

Section 74. Section 55-9-503 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-503) is repealed and a new Section 55-9-503 NMSA 1978 is enacted to read:

"55-9-503. NAME OF DEBTOR AND SECURED PARTY.--

(a) A financing statement sufficiently provides the name of the debtor:

(1) 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;

(2) 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;

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

(A) 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

(B) 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

(4) in other cases:

(A) if the debtor has a name, only if it provides the individual or organizational name of the debtor; and

(B) 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.

(b) A financing statement that provides the name of the debtor in accordance with Subsection (a) of this section is not rendered ineffective by the absence of:

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

(2) unless required under Subparagraph (B) of Paragraph (4) of Subsection (a) of this section, names of partners, members, associates or other persons comprising the debtor.

(c) A financing statement that provides only the debtor's trade name does not sufficiently provide the name of the debtor.

(d) 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.

(e) A financing statement may provide the name of more than one debtor and the name of more than one secured party."

Section 75. Section 55-9-504 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-504, as amended) is repealed and a new Section 55-9-504 NMSA 1978 is enacted to read:

"55-9-504. INDICATION OF COLLATERAL.--A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:

(1) a description of the collateral pursuant to Section 55-9-108 NMSA 1978; or

(2) an indication that the financing statement covers all assets or all personal property."

Section 76. Section 55-9-505 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-505, as amended) is repealed and a new Section 55-9-505 NMSA 1978 is enacted to read:

"55-9-505. FILING AND COMPLIANCE WITH OTHER STATUTES AND TREATIES FOR CONSIGNMENTS, LEASES, OTHER BAILMENTS AND OTHER TRANSACTIONS.--

(a) 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, regulation or treaty described in Subsection (a) of Section 55-9-311 NMSA 1978, 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".

(b) Sections 55-9-501 through 55-9-526 NMSA 1978 apply to the filing of a financing statement under Subsection (a) of this section and, as appropriate, to compliance that is equivalent to filing a financing statement under Subsection (b) of Section 55-9-311 NMSA 1978, 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."

Section 77. Section 55-9-506 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-506) is repealed and a new Section 55-9-506 NMSA 1978 is enacted to read:

"55-9-506. EFFECT OF ERRORS OR OMISSIONS.--

(a) A financing statement substantially satisfying the requirements of Sections 55-9-501 through 55-9-526 NMSA 1978 is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.

(b) Except as otherwise provided in Subsection (c) of this section, a financing statement that fails sufficiently to provide the name of the debtor in accordance with Subsection (a) of Section 55-9-503 NMSA 1978 is seriously misleading.

(c) If a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with Subsection (a) of Section 55-9-503 NMSA 1978, the name provided does not make the financing statement seriously misleading.

(d) For purposes of Subsection (b) of Section 55-9-508 NMSA 1978, the "debtor's correct name" in Subsection (c) of this section means the correct name of the new debtor."

Section 78. Section 55-9-507 NMSA 1978 (being Laws 1961, Chapter 96, Section 9-507) is repealed and a new Section 55-9-507 NMSA 1978 is enacted to read:

"55-9-507. EFFECT OF CERTAIN EVENTS ON EFFECTIVENESS OF FINANCING STATEMENT.--

(a) 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.

(b) Except as otherwise provided in Subsection (c) of this section and Section 55-9-508 NMSA 1978, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 55-9-506 NMSA 1978.

(c) If a debtor so changes its name that a filed financing statement becomes seriously misleading under Section 55-9-506 NMSA 1978:

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

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

Section 79. A new Section 55-9-508 NMSA 1978 is enacted to read:

"55-9-508. EFFECTIVENESS OF FINANCING STATEMENT IF NEW DEBTOR BECOMES BOUND BY SECURITY AGREEMENT.--

(a) Except as otherwise provided in this section, a filed financing statement naming an original debtor is effective to perfect a security interest in collateral in which a new debtor has or acquires rights to the extent that the financing statement would have been effective had the original debtor acquired rights in the collateral.

(b) If the difference between the name of the original debtor and that of the new debtor causes a filed financing statement that is effective under Subsection (a) of this section to be seriously misleading under Section 55-9-506 NMSA 1978:

(1) the 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 under Subsection (d) of Section 55-9-203 NMSA 1978; and

(2) the financing statement is not effective to perfect a security interest in collateral acquired by the new debtor more than four months after the new debtor becomes bound under Subsection (d) of Section 55-9-203 NMSA 1978 unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time.

(c) This section does not apply to collateral as to which a filed financing statement remains effective against the new debtor under Subsection (a) of Section 55-9-507 NMSA 1978."

Section 80. A new Section 55-9-509 NMSA 1978 is enacted to read:

"55-9-509. PERSONS ENTITLED TO FILE A RECORD.--

(a) A person may file an initial financing statement, amendment that adds collateral covered by a financing statement or amendment that adds a debtor to a financing statement only if:

(1) the debtor authorizes the filing in an authenticated record or pursuant to Subsection (b) or (c) of this section; or

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

(b) By authenticating or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering:

(1) the collateral described in the security agreement; and

(2) property that becomes collateral under Paragraph (2) of Subsection (a) of Section 55-9-315 NMSA 1978, whether or not the security agreement expressly covers proceeds.

(c) By acquiring collateral in which a security interest or agricultural lien continues under Paragraph (1) of Subsection (a) of Section 55-9-315 NMSA 1978, a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under Paragraph (2) of Subsection (a) of Section 55-9-315 NMSA 1978.

(d) A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if:

(1) the secured party of record authorizes the filing; or

(2) the amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement as required by Subsection (a) or (c) of Section 55-9-513 NMSA 1978, the debtor authorizes the filing and the termination statement indicates that the debtor authorized it to be filed.

(e) If there is more than one secured party of record for a financing statement, each secured party of record may authorize the filing of an amendment under Subsection (d) of this section."

Section 81. A new Section 55-9-510 NMSA 1978 is enacted to read:

"55-9-510. EFFECTIVENESS OF FILED RECORD.--

(a) A filed record is effective only to the extent that it was filed by a person that may file it under Section 55-9-509 NMSA 1978.

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

(c) A continuation statement that is not filed within the six-month period prescribed by Subsection (d) of Section 55-9-515 NMSA 1978 is ineffective."

Section 82. A new Section 55-9-511 NMSA 1978 is enacted to read:

"55-9-511. SECURED PARTY OF RECORD.--

(a) A secured party of record with respect to a financing statement is a person whose name is provided as the name of the secured party or a representative of the secured party in an initial financing statement that has been filed. If an initial financing statement is filed under Subsection (a) of Section 55-9-514 NMSA 1978, the assignee named in the initial financing statement is the secured party of record with respect to the financing statement.

(b) If an amendment of a financing statement which provides the name of a person as a secured party or a representative of a secured party is filed, the person named in the amendment is a secured party of record. If an amendment is filed under Subsection (b) of Section 55-9-514 NMSA 1978, the assignee named in the amendment is a secured party of record.

(c) A person remains a secured party of record until the filing of an amendment of the financing statement which deletes the person."

Section 83. A new Section 55-9-512 NMSA 1978 is enacted to read:

"55-9-512. AMENDMENT OF FINANCING STATEMENT.--

(a) Subject to Section 55-9-509 NMSA 1978, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to Subsection (e) of this section, otherwise amend the information provided in, a financing statement by filing an amendment that:

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

(2) if the amendment relates to an initial financing statement filed in a county clerk's office, provides the information specified in Subsection (b) of Section 55-9-502 NMSA 1978.

(b) Except as otherwise provided in Section 55-9-515 NMSA 1978, the filing of an amendment does not extend the period of effectiveness of the financing statement.

(c) A financing statement that is amended by an amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment.

(d) A financing statement that is amended by an amendment that adds a debtor is effective as to the added debtor only from the date of the filing of the amendment.

(e) An amendment is ineffective to the extent it:

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

(2) purports to delete all secured parties of record and fails to provide the name of a new secured party of record."

Section 84. A new Section 55-9-513 NMSA 1978 is enacted to read:

"55-9-513. TERMINATION STATEMENT.--

(a) A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if the financing statement covers consumer goods and:

(1) there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation or otherwise give value; or

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

(b) To comply with Subsection (a) of this section, a secured party shall cause the secured party of record to file the termination statement:

(1) within one month after there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation or otherwise give value; or

(2) if earlier, within twenty days after the secured party receives an authenticated demand from a debtor.

(c) In cases not governed by Subsection (a) of this section, within twenty days after a secured party receives an authenticated demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if:

(1) except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation or otherwise give value;

(2) the financing statement covers accounts or chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation;

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

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

(d) Except as otherwise provided in Section 55-9-510 NMSA 1978, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective. Except as otherwise provided in Section 55-9-510 NMSA 1978, for purposes of Subsection (c) of Section 55-9-519, Subsection (a) of Section 55-9-522 and Subsection (b) of Section 55-9-523 NMSA 1978, the filing with the filing office of a termination statement relating to a financing statement that indicates that the debtor is a transmitting utility also causes the effectiveness of the financing statement to lapse."

Section 85. A new Section 55-9-514 NMSA 1978 is enacted to read:

"55-9-514. ASSIGNMENT OF POWERS OF SECURED PARTY OF RECORD.--

(a) Except as otherwise provided in Subsection (c) of this section, an initial financing statement may reflect an assignment of all of the secured party's power to authorize an amendment to the financing statement by providing the name and mailing address of the assignee as the name and address of the secured party.

(b) Except as otherwise provided in Subsection (c) of this section, a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which:

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

(2) provides the name of the assignor; and

(3) provides the name and mailing address of the assignee.

(c) An assignment of a record of a security interest in a fixture covered by a record of a mortgage which is effective as a financing statement filed as a fixture filing pursuant to the provisions of Subsection (c) of Section 55-9-502 NMSA 1978 may be made only by an assignment of record of the mortgage in the manner provided by law of this state other than the Uniform Commercial Code."

Section 86. A new Section 55-9-515 NMSA 1978 is enacted to read:

"55-9-515. DURATION AND EFFECTIVENESS OF FINANCING STATEMENT--EFFECT OF LAPSED FINANCING STATEMENT.--

(a) Except as otherwise provided in Subsections (b), (e), (f) and (g) of this section, a filed financing statement is effective for a period of five years after the date of filing.

(b) Except as otherwise provided in Subsections (e), (f) and (g) of this section, an initial financing statement filed in connection with a public-finance transaction or manufactured-home transaction is effective for a period of thirty years after the date of filing if it indicates that it is filed in connection with a public-finance transaction or manufactured-home transaction.

(c) The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless before the lapse a continuation statement is filed pursuant to Subsection (d) of this section. Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement becomes unperfected unless the security interest is perfected otherwise. If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the collateral for value.

(d) A continuation statement may be filed only within six months before the expiration of the five-year period specified in Subsection (a) of this section or the thirty-year period specified in Subsection (b) of this section, whichever is applicable.

(e) Except as otherwise provided in Section 55-9-510 NMSA 1978, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five years commencing on the day on which the financing statement would have become ineffective in the absence of the filing. Upon the expiration of the five-year period, the financing statement lapses in the same manner as provided in Subsection (c) of this section, unless, before the lapse, another continuation statement is filed pursuant to Subsection (d) of this section. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.

(f) If a debtor is a transmitting utility and a filed financing statement so indicates, the financing statement is effective until a termination statement is filed. The filing officer may require proof of the debtor's authority to operate as a transmitting utility as a condition of filing the financing statement.

(g) A record of a mortgage that is effective as a financing statement filed as a fixture filing under Subsection (c) of Section 55-9-502 NMSA 1978 remains effective as a financing statement filed as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property."

Section 87. A new Section 55-9-516 NMSA 1978 is enacted to read:

"55-9-516. WHAT CONSTITUTES FILING-- EFFECTIVENESS OF FILING.--

(a) Except as otherwise provided in Subsection (b) of this section, communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing.

(b) Filing does not occur with respect to a record that the secretary of state refuses to accept because:

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

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

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

(A) in the case of an initial financing statement, the record does not provide a name for the debtor; or

(B) in the case of an amendment or correction statement, the record:

(i) does not identify the initial financing statement as required by Section 55-9-512 or 55-9-518 NMSA 1978, as applicable; or

(ii) identifies an initial financing statement whose effectiveness has lapsed under Section 55-9-515 NMSA 1978;

(4) in the case of an initial financing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record;

(5) in the case of an initial financing statement or an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not:

(A) provide a mailing address for the debtor;

(B) indicate whether the debtor is an individual or an organization; or

(i) a type of organization for the debtor;

(ii) a jurisdiction of organization for the debtor; and

(iii) an organizational identification number for the debtor or indicate that the debtor has none;

(6) in the case of an assignment reflected in an initial financing statement under Subsection (a) of Section 55-9-514 NMSA 1978 or an amendment filed under Subsection (b) of Section 55-9-514 NMSA 1978, the record does not provide a name and mailing address for the assignee; or

(7) in the case of a continuation statement, the record is not filed within the six-month period prescribed by Subsection (d) of Section 55-9-515 NMSA 1978.

(1) a record does not provide information if the secretary of state is unable to read or decipher the information; and

(2) a record that does not indicate that it is an amendment or identify an initial financing statement to which it relates, as required by Section 55-9-512, 55-9-514 or 55-9-518 NMSA 1978, is an initial financing statement.

(d) A record that is communicated to the filing office with tender of the filing fee, but which the secretary of state refuses to accept for a reason other than one set forth in Subsection (b) of this section, is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files."

Section 88. A new Section 55-9-517 NMSA 1978 is enacted to read:

"55-9-517. EFFECT OF INDEXING ERRORS.-- The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record."

Section 89. A new Section 55-9-518 NMSA 1978 is enacted to read:

"55-9-518. CLAIM CONCERNING INACCURATE OR WRONGFULLY FILED RECORD.--

(a) A person may file in the filing office a correction statement with respect to a record indexed there under the person's name if the person believes that the record is inaccurate or was wrongfully filed.

(b) A correction statement must:

(1) identify the record to which it relates by the file number assigned to the initial financing statement to which the record relates;

(2) indicate that it is a correction statement; and

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

(c) The filing of a correction statement does not affect the effectiveness of an initial financing statement or other filed record."

Section 90. A new Section 55-9-519 NMSA 1978 is enacted to read:

"55-9-519. NUMBERING, MAINTAINING AND INDEXING RECORDS--COMMUNICATING INFORMATION PROVIDED IN RECORDS.--

(a) For each record filed in a filing office, the filing office shall:

(1) assign a unique number to the filed record;

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

(3) maintain the filed record for public inspection.

(b) The filing office shall maintain a capability to retrieve a record by the name of the debtor and by the file number assigned to the initial financing statement to which the record relates. The secretary of state shall also maintain a capability to associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement.

(c) The filing office may not remove a debtor's name from the index until one year after the effectiveness of a financing statement naming the debtor lapses under Section 55-9-515 NMSA 1978 with respect to all secured parties of record.

(d) The secretary of state shall perform the acts required by Subsections (a) through (c) of this section at the time and in the manner prescribed by filing-office rule, but not later than three business days after the filing office receives the record in question."

Section 91. A new Section 55-9-520 NMSA 1978 is enacted to read:

"55-9-520. ACCEPTANCE AND REFUSAL TO ACCEPT RECORD.--

(a) The secretary of state shall refuse to accept a record for filing for a reason set forth in Subsection (b) of Section 55-9-516 NMSA 1978 and may refuse to accept a record for filing only for a reason set forth in that subsection.

(b) If a filing office refuses to accept a record for filing, it shall communicate to the person that presented the record the fact of and reason for the refusal and the date and time the record would have been filed had the filing office accepted it. The communication must be made at the time and in the manner prescribed by filing-office rule or by other law.

(c) A filed financing statement satisfying Subsections (a) and (b) of Section 55-9-502 NMSA 1978 is effective, even if the secretary of state is required to refuse to accept it for filing under Subsection (a) of this section. However, Section 55-9-338 NMSA 1978 applies to a filed financing statement providing information described in Paragraph (5) of Subsection (b) of Section 55-9-516 NMSA 1978 which is incorrect at the time the financing statement is filed.

(d) If a record communicated to a filing office provides information that relates to more than one debtor, this part applies as to each debtor separately."

Section 92. A new Section 55-9-521 NMSA 1978 is enacted to read:

"55-9-521. FORM OF FINANCING STATEMENT AND AMENDMENT--RECORDS.--

(a) A filing office that accepts written records may not refuse to accept a financing statement or amendment that is in the form and format prescribed by the secretary of state, except for a reason set forth in Subsection (b) of Section 55-9-516 NMSA 1978.

(b) Prior to July 1, 2001, the secretary of state shall prescribe by rule the form and format of a written financing statement and amendment.

(c) A filing officer shall prescribe by rule the use of one other medium, other than writing, for filing records under Chapter 55, Article 9 NMSA 1978. The filing officer may also prescribe by rule mandatory requirements for the medium to ensure compatibility with the filing officer's system of transmission, receipt, storage, indexing and retrieval of records.

(d) A rule prescribed pursuant to this section is subject to the provisions of Section 55-9-526 NMSA 1978."

Section 93. A new Section 55-9-522 NMSA 1978 is enacted to read:

"55-9-522. MAINTENANCE AND DESTRUCTION OF RECORDS.--

(a) The filing office shall maintain a record of the information provided in a filed financing statement for at least one year after the effectiveness of the financing statement has lapsed under Section 55-9-515 NMSA 1978 with respect to all secured parties of record. The record must be retrievable by using the name of the debtor and by using the file number assigned to the initial financing statement to which the record relates.

(b) Except to the extent that a statute governing disposition of public records provides otherwise, the filing office immediately may destroy any written record evidencing a financing statement. However, if the filing office destroys a written record, it shall maintain another record of the financing statement which complies with Subsection (a) of this section."

Section 94. A new Section 55-9-523 NMSA 1978 is enacted to read:

"55-9-523. INFORMATION FROM SECRETARY OF STATE.--

(a) If a person that files a written record requests an acknowledgment of the filing, the secretary of state shall send to the person an image of the record showing the number assigned to the record pursuant to Paragraph (1) of Subsection (a) of Section 55-9-519 NMSA 1978 and the date and time of the filing of the record. However, if the person furnishes a copy of the record to the filing office, the filing office may instead:

(1) note upon the copy the number assigned to the record pursuant to Paragraph (1) of Subsection (a) of Section 55-9-519 NMSA 1978 and the date and time of the filing of the record; and

(2) send the copy to the person.

(b) The secretary of state shall make available to the general public records indexed both by the names of debtors and by unique file numbers, based upon which copies may be obtained.

(c) In complying with its duty under Subsection (b) of this section, the secretary of state may communicate information in any medium. However, if requested, the filing office shall communicate information by issuing its written certificate.

(d) If a person files a record other than a written record that is communicated by a method or medium of communication authorized by the filing office, the filing office shall communicate to the person an acknowledgment that provides:

(1) the information in the record;

(2) the number assigned to the record pursuant to Paragraph (1) of Subsection (a) of Section 55-9-519 NMSA 1978; and

(3) the date and time of the filing of the record.

(e) The secretary of state shall perform the action required by Subsections (a) through (d) of this section at the time and in the manner prescribed by filing-office rule, but not later than three business days after the filing office receives the request."

Section 95. A new Section 55-9-524 NMSA 1978 is enacted to read:

"55-9-524. DELAY BY SECRETARY OF STATE.--Delay by the secretary of state beyond the time limits prescribed in Section 55-9-519 NMSA 1978 and Section 55-9-523 NMSA 1978 is excused if:

(1) the delay is caused by interruption of communication or computer facilities, war, emergency conditions, failure of equipment, lack of appropriations or other circumstances beyond control of the secretary of state; and

(2) the secretary of state exercises reasonable diligence under the circumstances."

Section 96. A new Section 55-9-525 NMSA 1978 is enacted to read:

"55-9-525. FEES.--

(a) Except as provided in Subsections (b) and (d) of this section, the fee for filing and indexing a record pursuant to Section 55-9-501 through 55-9-526 NMSA 1978 is:

(1) if the record is communicated in writing in a form prescribed by the secretary of state:

(i) twenty dollars ($20.00) if the record consists of one, two or three pages;

(ii) forty dollars ($40.00) if the record consists of at least four pages, but no more than twenty-five pages; and

(iii) one hundred dollars ($100) if the record consists of more than twenty-five pages, plus five dollars ($5.00) for each page;

(2) if the record is communicated in writing, but not in a form prescribed by the secretary of state, double the amount specified in Paragraph (1) of this subsection for a record of the same length;

(3) if the record is communicated by facsimile or a similar medium and the use of that medium is authorized by filing-office rule, the amount specified in Paragraph (1) of this subsection for a record of the same length; and

(4) if the record is communicated in any other medium authorized by filing-office rule:

(i) ten dollars ($10.00) if the record consists of fifteen thousand or fewer bytes;

(ii) twenty dollars ($20.00) if the record consists of more than fifteen thousand bytes, but no more than thirty thousand bytes; and

(iii) fifty dollars ($50.00) if the record consists of more than thirty thousand bytes, plus five dollars ($5.00) per each thousand bytes of the record.

(b) Except as otherwise provided in Subsection (d) of this section, the fee for filing and indexing an initial financing statement of the following kind is the amount specified in Subsection (a) of this section plus:

(1) one hundred dollars ($100) if the financing statement indicates that it is filed in connection with a public-finance transaction;

(2) one hundred dollars ($100) if the financing statement states that a debtor is a transmitting utility; and

(3) one hundred dollars ($100) if the financing statement indicates that it is filed in connection with a manufactured-home transaction.

(c) The number of names required to be indexed does not affect the amount the fee set forth in Subsections (a) and (b) of this section.

(d) This section does not require a fee with respect to a record of a mortgage which is effective as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut under Subsection (c) of Section 55-9-502 NMSA 1978. However, the recording fees that otherwise would be applicable to the record of the mortgage apply."

Section 97. A new Section 55-9-526 NMSA 1978 is enacted to read:

"55-9-526. FILING-OFFICE RULES.--The secretary of state shall adopt and publish rules to implement Sections 55-9-501 through 55-9-526 NMSA 1978. The filing-office rules must be:

(a) consistent with Chapter 55, Article 9 NMSA 1978; and

(b) adopted and published in accordance with the State Rules Act."

Section 98. A new Section 55-9-601 NMSA 1978 is enacted to read:

"55-9-601. RIGHTS AFTER DEFAULT--JUDICIAL ENFORCEMENT--CONSIGNOR OR BUYER OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES OR PROMISSORY NOTES.--

(a) After default, a secured party has the rights provided in Sections 55-9-601 through 55-9-628 NMSA 1978 and, except as otherwise provided in Section 55-9-602 NMSA 1978, those provided by agreement of the parties. A secured party:

(1) may reduce a claim to judgment, foreclose or otherwise enforce the claim, security interest or agricultural lien by any available judicial procedure; and

(2) if the collateral is documents, may proceed either as to the documents or as to the goods they cover.

(b) A secured party in possession of collateral or control of collateral under Section 55-9-104, 55-9-105, 55-9-106 or 55-9-107 NMSA 1978 has the rights and duties provided in Section 55-9-207 NMSA 1978.

(d) Except as otherwise provided in Subsection (g) of this section and Section 55-9-605 NMSA 1978, after default, a debtor and an obligor have the rights provided in Sections 55-9-601 through 55-9-628 NMSA 1978 and by agreement of the parties.

(e) If a secured party has reduced its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an execution based upon the judgment relates back to the earliest of:

(1) the date of perfection of the security interest or agricultural lien in the collateral;

(2) the date of filing a financing statement covering the collateral; or

(3) any date specified in a statute under which the agricultural lien was created.

(f) A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of Chapter 55, Article 9 NMSA 1978.

(g) Except as otherwise provided in Subsection (c) of Section 55-9-607 NMSA 1978 this part imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles or promissory notes."

Section 99. A new Section 55-9-602 NMSA 1978 is enacted to read:

"55-9-602. WAIVER AND VARIANCE OF RIGHTS AND DUTIES.--Except as otherwise provided in Section 55-9-624 NMSA 1978, to the extent that they give rights to a debtor or obligor and impose duties on a secured party, the debtor or obligor may not waive or vary the rules stated in the following listed sections:

(1) Subparagraph (C) of Paragraph (4) of Subsection (b) of Section 55-9-207 NMSA 1978, which deals with use and operation of the collateral by the secured party;

(2) Section 55-9-210 NMSA 1978, which deals with requests for an accounting and requests concerning a list of collateral and statement of account;

(3) Subsection (c) of Section 55-9-607 NMSA 1978, which deals with collection and enforcement of collateral;

(4) Subsection (a) of Section 55-9-608 and Subsection (c) of Section 55-9-615 NMSA 1978 to the extent that they deal with application or payment of noncash proceeds of collection, enforcement or disposition;

(5) Subsection (a) of Section 55-9-608 and Subsection (d) of Section 55-9-615 NMSA 1978 to the extent that they require accounting for or payment of surplus proceeds of collateral;

(6) Section 55-9-609 NMSA 1978 to the extent that it imposes upon a secured party that takes possession of collateral without judicial process the duty to do so without breach of the peace;

(7) Subsection (b) of Section 55-9-610, Sections

55-9-611, 55-9-613 and 55-9-614 NMSA 1978, which deal with disposition of collateral;

(8) Subsection (f) of Section 55-9-615 NMSA 1978, which deals with calculation of a deficiency or surplus when a disposition is made to the secured party, a person related to the secured party or a secondary obligor;

(9) Section 55-9-616 NMSA 1978, which deals with explanation of the calculation of a surplus or deficiency;

(10) Sections 55-9-620 through 55-9-622 NMSA 1978, which deal with acceptance of collateral in satisfaction of obligation;

(11) Section 55-9-623 NMSA 1978, which deals with redemption of collateral;

(12) Section 55-9-624 NMSA 1978, which deals with permissible waivers; and

(13) Sections 55-9-625 and 55-9-626 NMSA 1978, which deal with the secured party's liability for failure to comply with Chapter 55, Article 9 NMSA 1978."

Section 100. A new Section 55-9-603 NMSA 1978 is enacted to read:

"55-9-603. AGREEMENT ON STANDARDS CONCERNING RIGHTS AND DUTIES.--

(a) The parties may determine by agreement the standards measuring the fulfillment of the rights of a debtor or obligor and the duties of a secured party under a rule stated in Section 55-9-602 NMSA 1978 if the standards are not manifestly unreasonable.

(b) Subsection (a) of this section does not apply to the duty under Section 55-9-609 NMSA 1978 to refrain from breaching the peace."

Section 101. A new Section 55-9-604 NMSA 1978 is enacted to read:

"55-9-604. PROCEDURE IF SECURITY AGREEMENT COVERS REAL PROPERTY OR FIXTURES.--

(a) If a security agreement covers both personal and real property, a secured party may proceed:

(1) under Sections 55-9-601 through 55-9-628 NMSA 1978 as to the personal property without prejudicing any rights with respect to the real property; or

(2) as to both the personal property and the real property in accordance with the rights with respect to the real property, in which case the other provisions of Sections 55-9-601 through 55-9-628 NMSA 1978 do not apply.

(b) Subject to Subsection (c) of this section, if a security agreement covers goods that are or become fixtures, a secured party may proceed:

(1) under Sections 55-9-601 through 55-9-628 NMSA 1978; or

(2) in accordance with the rights with respect to real property, in which case the other provisions of Sections 55-9-601 through 55-9-628 NMSA 1978 do not apply.

(c) Subject to the other provisions of Sections 55-9-601 through 55-9-628 NMSA 1978, if a secured party holding a security interest in fixtures has priority over all owners and encumbrancers of the real property, the secured party, after default, may remove the collateral from the real property.

(d) A secured party that removes collateral shall promptly reimburse any encumbrancer or owner of the real property, other than the debtor, for the cost of repair of any physical injury caused by the removal. The secured party need not reimburse the encumbrancer or owner for any diminution in value of the real property caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse."

Section 102. A new Section 55-9-605 NMSA 1978 is enacted to read:

"55-9-605. UNKNOWN DEBTOR OR SECONDARY OBLIGOR.--A secured party does not owe a duty based on its status as secured party:

(1) to a person that is a debtor or obligor, unless the secured party knows:

(A) that the person is a debtor or obligor;

(B) the identity of the person; and

(2) to a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:

(A) that the person is a debtor; and

(B) the identity of the person."

Section 103. A new Section 55-9-606 NMSA 1978 is enacted to read:

"55-9-606. TIME OF DEFAULT FOR AGRICULTURAL LIEN.--For purposes of Sections 55-9-601 through 55-9-628 NMSA 1978, a default occurs in connection with an agricultural lien at the time the secured party becomes entitled to enforce the lien in accordance with the statute under which it was created."

Section 104. A new Section 55-9-607 NMSA 1978 is enacted to read:

"55-9-607. COLLECTION AND ENFORCEMENT BY SECURED PARTY.--

(a) If so agreed, and in any event after default, a secured party:

(1) may notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party;

(2) may take any proceeds to which the secured party is entitled under Section 55-9-315 NMSA 1978;

(3) may enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral;

(4) if it holds a security interest in a deposit account perfected by control under Paragraph (1) of Subsection (a) of Section 55-9-104 NMSA 1978, may apply the balance of the deposit account to the obligation secured by the deposit account; and

(5) if it holds a security interest in a deposit account perfected by control under Paragraphs (2) or (3) of Subsection (a) of Section 55-9-104 NMSA 1978, may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.

(b) If necessary to enable a secured party to exercise under Paragraph (3) of Subsection (a) of this section the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded:

(1) a copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and

(2) the secured party's sworn affidavit in recordable form stating that:

(A) a default has occurred; and

(B) the secured party is entitled to enforce the mortgage nonjudicially.

(1) undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and

(2) is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.

(d) A secured party may deduct from the collections made pursuant to Subsection (c) of this section reasonable expenses of collection and enforcement, including reasonable attorney fees and legal expenses incurred by the secured party.

(e) This section does not determine whether an account debtor, bank or other person obligated on collateral owes a duty to a secured party."

Section 105. A new Section 55-9-608 NMSA 1978 is enacted to read:

"55-9-608. APPLICATION OF PROCEEDS OF COLLECTION OR ENFORCEMENT--LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS.--

(a) If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:

(1) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under Section 55-9-607 NMSA 1978 in the following order to:

(A) the reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party;

(B) the satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and

(C) the satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives an authenticated demand for proceeds before distribution of the proceeds is completed.

(2) If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder's demand under Subparagraph (C) of Paragraph (1) of Subsection (a) of this section.

(3) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under Section 55-9-607 NMSA 1978 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

(4) A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.

(b) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency."

Section 106. A new Section 55-9-609 NMSA 1978 is enacted to read:

"55-9-609. SECURED PARTY'S RIGHT TO TAKE POSSESSION AFTER DEFAULT.--

(a) After default, a secured party:

(1) may take possession of the collateral; and

(2) without removal, may render equipment unusable and dispose of collateral on a debtor's premises under Section 55-9-610 NMSA 1978.

(b) A secured party may proceed under Subsection (a) of this section:

(1) pursuant to judicial process; or

(2) without judicial process, if it proceeds without breach of the peace.

(c) If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties."

Section 107. A new Section 55-9-610 NMSA 1978 is enacted to read:

"55-9-610. DISPOSITION OF COLLATERAL AFTER DEFAULT.--

(a) After default, a secured party may sell, lease, license or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing.

(b) Every aspect of a disposition of collateral, including the method, manner, time, place and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.

(1) at a public disposition; or

(2) at a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.

(d) A contract for sale, lease, license or other disposition includes the warranties relating to title, possession, quiet enjoyment and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract.

(e) A secured party may disclaim or modify warranties under Subsection (d) of this section:

(1) in a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or

(2) by communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.

(f) A record is sufficient to disclaim warranties under Subsection (e) of this section if it indicates "There is no warranty relating to title, possession, quiet enjoyment or the like in this disposition" or uses words of similar import."

Section 108. A new Section 55-9-611 NMSA 1978 is enacted to read:

"55-9-611. NOTIFICATION BEFORE DISPOSITION OF COLLATERAL.--

(a) In this section, "notification date" means the earlier of the date on which:

(1) a secured party sends to the debtor and any secondary obligor an authenticated notification of disposition; or

(2) the debtor and any secondary obligor waive the right to notification.

(b) Except as otherwise provided in Subsection (d) of this section, a secured party that disposes of collateral under Section 55-9-610 NMSA 1978 shall send to the persons specified in Subsection (c) of this section a reasonable authenticated notification of disposition.

(c) To comply with Subsection (b) of this section, the secured party shall send an authenticated notification of disposition to:

(1) the debtor;

(2) any secondary obligor; and

(3) if the collateral is other than consumer goods:

(A) any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral;

(B) any other secured party or lienholder that, ten days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:

(i) identified the collateral;

(ii) was indexed under the debtor's name as of that date; and

(iii) was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date; and

(C) any other secured party that, ten days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation or treaty described in Subsection (a) of Section 55-9-311 NMSA 1978.

(d) Subsection (b) of this section does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.

(e) A secured party complies with the requirement for notification prescribed by Subparagraph (B) of Paragraph (3) of Subsection (c) of this section if:

(1) not later than twenty days or earlier than thirty days before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor's name in the office indicated in Subparagraph (B) of Paragraph (3) of Subsection (c) of this section; and

(2) before the notification date, the secured party:

(A) did not receive a response to the request for information; or

(B) received a response to the request for information and sent an authenticated notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral."

Section 109. A new Section 55-9-612 NMSA 1978 is enacted to read:

"55-9-612. TIMELINESS OF NOTIFICATION BEFORE DISPOSITION OF COLLATERAL.--

(a) Except as otherwise provided in Subsection (b) of this section, whether a notification is sent within a reasonable time is a question of fact.

(b) In a transaction other than a consumer transaction, a notification of disposition sent after default and ten days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition."

Section 110. A new Section 55-9-613 NMSA 1978 is enacted to read:

"55-9-613. CONTENTS AND FORM OF NOTIFICATION BEFORE DISPOSITION OF COLLATERAL--GENERAL.--Except in a consumer-goods transaction, the following rules apply:

(1) The contents of a notification of disposition are sufficient if the notification:

(A) describes the debtor and the secured party;

(B) describes the collateral that is the subject of the intended disposition;

(D) states that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and

(E) states the time and place of a public disposition or the time after which any other disposition is to be made.

(2) Whether the contents of a notification that lacks any of the information specified in Subsection (1) of this section are nevertheless sufficient is a question of fact.

(3) The contents of a notification providing substantially the information specified in Subsection (1) of this section are sufficient, even if the notification includes:

(A) information not specified by that subsection; or

(B) minor errors that are not seriously misleading.

(4) A particular phrasing of the notification is not required.

(5) The following form of notification and the form appearing in Subsection (3) of Section 55-9-614 NMSA 1978, when completed, each provides sufficient information:

NOTIFICATION OF DISPOSITION OF COLLATERAL

To: (Name of debtor, obligor or other person to which the notification is sent)

From: (Name, address and telephone number of secured party)

Name of Debtor(s): (Include only if debtor(s) are not an addressee)

(For a public disposition:)

We will sell (or lease or license, as applicable) the (describe collateral) to the highest qualified bidder in public as follows:

Day and Date:

Time:

Place:

(For a private disposition:)

We will sell (or lease or license, as applicable) the (describe collateral) privately sometime after (day and date) .

You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell (or lease or license, as applicable) (for a charge of $ __________). You may request an accounting by calling us at (telephone number) ."

Section 111. A new Section 55-9-614 NMSA 1978 is enacted to read:

"55-9-614. CONTENTS AND FORM OF NOTIFICATION BEFORE DISPOSITION OF COLLATERAL--CONSUMER-GOODS TRANSACTION.--In a consumer-goods transaction, the following rules apply:

(1) A notification of disposition must provide the following information:

(A) the information specified in Subsection (1) of Section 55-9-613 NMSA 1978;

(B) a description of any liability for a deficiency of the person to which the notification is sent;

(C) a telephone number from which the amount that must be paid to the secured party to redeem the collateral under Section 55-9-623 NMSA 1978 is available; and

(D) a telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available.

(2) A particular phrasing of the notification is not required.

(3) The following form of notification, when completed, provides sufficient information:

(Name and address of secured party)

(Date)

NOTICE OF OUR PLAN TO SELL PROPERTY

(Name and address of any obligor who is also a debtor)

Subject: (Identification of Transaction)

We have your (describe collateral) , because you broke promises in our agreement.

(For a public disposition:)

We will sell (describe collateral) at public sale. A sale could include a lease or license. The sale will be held as follows:

Date:

Time:

Place:

You may attend the sale and bring bidders if you want.

(For a private disposition:)

We will sell (describe collateral) at private sale sometime after (date) . A sale could include a lease or license.

The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.

You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at (telephone number) .

If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at (telephone number) (or write us at (secured party's address) ) and request a written explanation. (We will charge you $ for the explanation if we sent you another written explanation of the amount you owe us within the last six months.)

If you need more information about the sale call us at (telephone number) (or write us at (secured party's address) ).

We are sending this notice to the following other people who have an interest in (describe collateral) or who owe money under your agreement:

(Names of all other debtors and obligors, if any) .

(4) the form of notification provided in Subsection (3) of this section is sufficient even if additional information appears at the end of the form.

(5) The form of notification provided in Subsection (3) of this section is sufficient even if it includes an error regarding information that is not required pursuant to Subsection (1) of this section, unless the error is misleading with respect to rights that arise pursuant to Chapter 55, Article 9 NMSA 1978.

(6) If notification under this section is not in the form provided in Subsection (3) of this section, law other than Chapter 55, Article 9 NMSA 1978 shall determine the effect of including information that is not required pursuant to Subsection (1) of this section."

Section 112. A new Section 55-9-615 NMSA 1978 is enacted to read:

"55-9-615. APPLICATION OF PROCEEDS OF DISPOSITION--LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS.--

(a) A secured party shall apply or pay over for application the cash proceeds of disposition pursuant to Section 55-9-610 NMSA 1978 in the following order to:

(1) the reasonable expenses of retaking, holding, preparing for disposition, processing and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party;

(2) the satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made;

(3) the satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if:

(A) the secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and

(B) in a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor; and

(4) a secured party that is a consignor of the collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.

(b) If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder's demand under Paragraph (3) of Subsection (a) of this section.

(c) A secured party need not apply or pay over for application noncash proceeds of disposition under Section 55-9-610 NMSA 1978 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

(d) If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by Subsection (a) of this section and permitted by Subsection (c) of this section:

(1) unless Paragraph (4) of Subsection (a) of this section requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and

(2) the obligor is liable for any deficiency.

(e) If the underlying transaction is a sale of accounts, chattel paper, payment intangibles or promissory notes:

(1) the debtor is not entitled to any surplus; and

(2) the obligor is not liable for any deficiency.

(f) The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with this part to a transferee other than the secured party, a person related to the secured party or a secondary obligor if:

(1) the transferee in the disposition is the secured party, a person related to the secured party or a secondary obligor; and

(2) the amount of proceeds of the disposition is significantly below the range of proceeds that a complying disposition to a person other than the secured party, a person related to the secured party or a secondary obligor would have brought.

(g) A secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made:

(1) takes the cash proceeds free of the security interest or other lien;

(2) is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and

(3) is not obligated to account to or pay the holder of the security interest or other lien for any surplus."

Section 113. A new Section 55-9-616 NMSA 1978 is enacted to read:

"55-9-616. EXPLANATION OF CALCULATION OF SURPLUS OR DEFICIENCY.--

(a) In this section:

(1) "explanation" means a writing that:

(A) states the amount of the surplus or deficiency;

(B) provides an explanation in accordance with Subsection (c) of this section of how the secured party calculated the surplus or deficiency;

(C) states, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates and expenses may affect the amount of the surplus or deficiency; and

(D) provides a telephone number or mailing address from which additional information concerning the transaction is available; and

(2) "request" means a record:

(A) authenticated by a debtor or consumer obligor;

(B) requesting that the recipient provide an explanation; and

(b) In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under Section 55-9-615 NMSA 1978, the secured party shall:

(1) send an explanation to the debtor or consumer obligor, as applicable, after the disposition and:

(A) before or when the secured party accounts to the debtor and pays any surplus or first makes written demand on the consumer obligor after the disposition for payment of the deficiency; and

(B) within fourteen days after receipt of a request; or

(2) in the case of a consumer obligor who is liable for a deficiency, within fourteen days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency.

(c) To comply with Subparagraph (B) of Paragraph (1) of Subsection (a) of this section, a writing must provide the following information in the following order:

(1) the aggregate amount of obligations secured by the security interest under which the disposition was made and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date:

(A) if the secured party takes or receives possession of the collateral after default, not more than thirty-five days before the secured party takes or receives possession; or

(B) if the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than thirty-five days before the disposition;

(2) the amount of proceeds of the disposition;

(3) the aggregate amount of the obligations after deducting the amount of proceeds;

(4) the amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing and disposing of the collateral, and attorney's fees secured by the collateral which are known to the secured party and relate to the current disposition;

(5) the amount, in the aggregate or by type, and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in Paragraph (1) of this subsection; and

(6) the amount of the surplus or deficiency.

(d) A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of Subsection (a) of this section is sufficient, even if it includes minor errors that are not seriously misleading.

(e) A debtor or consumer obligor is entitled without charge to one response to a request under this section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to Paragraph (1) of Subsection (b) of this section. The secured party may require payment of a charge not exceeding twenty-five dollars ($25.00) for each additional response."

Section 114. A new Section 55-9-617 NMSA 1978 is enacted to read:

"55-9-617. RIGHTS OF TRANSFEREE OF COLLATERAL.--

(a) A secured party's disposition of collateral after default:

(1) transfers to a transferee for value all of the debtor's rights in the collateral;

(2) discharges the security interest under which the disposition is made; and

(3) discharges any subordinate security interest or other subordinate lien.

(b) A transferee that acts in good faith takes free of the rights and interests described in Subsection (a) of this section, even if the secured party fails to comply with this article or the requirements of any judicial proceeding.

(c) If a transferee does not take free of the rights and interests described in Subsection (a) of this section, the transferee takes the collateral subject to:

(1) the debtor's rights in the collateral;

(2) the security interest or agricultural lien under which the disposition is made; and

(3) any other security interest or other lien."

Section 115. A new Section 55-9-618 NMSA 1978 is enacted to read:

"55-9-618. RIGHTS AND DUTIES OF CERTAIN SECONDARY OBLIGORS.--

(a) A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after the secondary obligor:

(1) receives an assignment of a secured obligation from the secured party;

(2) receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party; or

(3) is subrogated to the rights of a secured party with respect to collateral.

(b) An assignment, transfer or subrogation described in Subsection (a) of this section:

(1) is not a disposition of collateral under Section 55-9-610 NMSA 1978; and

(2) relieves the secured party of further duties under Chapter 55, Article 9 NMSA 1978."

Section 116. A new Section 55-9-619 NMSA 1978 is enacted to read:

"55-9-619. TRANSFER OF RECORD OR LEGAL TITLE.--

(a) In this section, "transfer statement" means a record authenticated by a secured party stating:

(1) that the debtor has defaulted in connection with an obligation secured by specified collateral;

(2) that the secured party has exercised its post-default remedies with respect to the collateral;

(3) that, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral; and

(4) the name and mailing address of the secured party, debtor and transferee.

(b) A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in any official filing, recording, registration or certificate-of-title system covering the collateral. If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall:

(1) accept the transfer statement;

(2) promptly amend its records to reflect the transfer; and

(3) if applicable, issue a new appropriate certificate of title in the name of the transferee.

(c) A transfer of the record or legal title to collateral to a secured party under Subsection (b) of this section or otherwise is not of itself a disposition of collateral under Chapter 55, Article 9 NMSA 1978 and does not of itself relieve the secured party of its duties under that article."

Section 117. A new Section 55-9-620 NMSA 1978 is enacted to read:

"55-9-620. ACCEPTANCE OF COLLATERAL IN FULL OR PARTIAL SATISFACTION OF OBLIGATION--COMPULSORY DISPOSITION OF COLLATERAL.--

(a) Except as otherwise provided in Subsection (g) of this section, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

(1) the debtor consents to the acceptance under Subsection (c) of this section;

(2) the secured party does not receive, within the time set forth in Subsection (d) of this section, a notification of objection to the proposal authenticated by:

(A) a person to which the secured party was required to send a proposal under Section 55-9-621 NMSA 1978; or

(B) any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;

(3) the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and

(4) Subsection (e) of this section does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to Section 55-9-624 NMSA 1978.

(b) A purported or apparent acceptance of collateral under this section is ineffective unless:

(1) the secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and

(2) the conditions of Subsection (a) of this section are met.

(1) a debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and

(2) a debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party:

(A) sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;

(B) in the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

(C) does not receive a notification of objection authenticated by the debtor within twenty days after the proposal is sent.

(d) To be effective under Paragraph (2) of Subsection (a) of this section, a notification of objection must be received by the secured party:

(1) in the case of a person to which the proposal was sent pursuant to Section 55-9-621 NMSA 1978, within twenty days after notification was sent to that person; and

(2) in other cases:

(A) within twenty days after the last notification was sent pursuant to Section 55-9-621 NMSA 1978; or

(B) if a notification was not sent, before the debtor consents to the acceptance under Subsection (c) of this section.

(e) A secured party that has taken possession of collateral shall dispose of the collateral pursuant to Section 55-9-610 NMSA 1978 within the time specified in Subsection (f) of this section if:

(1) sixty percent of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or

(2) sixty percent of the principal amount of the obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.

(f) To comply with Subsection (e) of this section, the secured party shall dispose of the collateral:

(1) within ninety days after taking possession; or

(2) within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.

(g) In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures."

Section 118. A new Section 55-9-621 NMSA 1978 is enacted to read:

"55-9-621. NOTIFICATION OF PROPOSAL TO ACCEPT COLLATERAL.--

(a) A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to:

(1) any person from which the secured party has received, before the debtor consented to the acceptance, an authenticated notification of a claim of an interest in the collateral;

(2) any other secured party or lienholder that, ten days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:

(A) identified the collateral;

(B) was indexed under the debtor's name as of that date; and

(C) was filed in the office or offices in which to file a financing statement against the debtor covering the collateral as of that date; and

(3) any other secured party that, ten days before the debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation or treaty described in Subsection (a) of Section 55-9-311 NMSA 1978.

(b) A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in Subsection (a) of this section."

Section 119. A new Section 55-9-622 NMSA 1978 is enacted to read:

"55-9-622. EFFECT OF ACCEPTANCE OF COLLATERAL.--

(a) A secured party's acceptance of collateral in full or partial satisfaction of the obligation it secures:

(1) discharges the obligation to the extent consented to by the debtor;

(2) transfers to the secured party all of a debtor's rights in the collateral;

(3) discharges the security interest or agricultural lien that is the subject of the debtor's consent and any subordinate security interest or other subordinate lien; and

(4) terminates any other subordinate interest.

(b) A subordinate interest is discharged or terminated under Subsection (a) of this section, even if the secured party fails to comply with Chapter 55, Article 9 NMSA 1978."

Section 120. A new Section 55-9-623 NMSA 1978 is enacted to read:

"55-9-623. RIGHT TO REDEEM COLLATERAL.--

(a) A debtor, any secondary obligor or any other secured party or lienholder may redeem collateral.

(b) To redeem collateral, a person shall tender:

(1) fulfillment of all obligations secured by the collateral; and

(2) the reasonable expenses and attorney fees described in Paragraph (1) of Subsection (a) of Section 55-9-615 NMSA 1978.

(1) has collected collateral under Section 55-9-607 NMSA 1978;

(2) has disposed of collateral or entered into a contract for its disposition under Section 55-9-610 NMSA 1978; or

(3) has accepted collateral in full or partial satisfaction of the obligation it secures under Section 55-9-622 NMSA 1978."

Section 121. A new Section 55-9-624 NMSA 1978 is enacted to read:

"55-9-624. WAIVER.--

(a) A debtor or secondary obligor may waive the right to notification of disposition of collateral under Section 55-9-611 NMSA 1978 only by an agreement to that effect entered into and authenticated after default.

(b) A debtor may waive the right to require disposition of collateral under Subsection (e) of Section 55-9-620 NMSA 1978 only by an agreement to that effect entered into and authenticated after default.

(c) Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under Section 55-9-623 NMSA 1978 only by an agreement to that effect entered into and authenticated after default."

Section 122. A new Section 55-9-625 NMSA 1978 is enacted to read:

"55-9-625. REMEDIES FOR SECURED PARTY'S FAILURE TO COMPLY WITH ARTICLE.--

(a) If it is established that a secured party is not proceeding in accordance with Chapter 55, Article 9 NMSA 1978, a court may order or restrain collection, enforcement or disposition of collateral on appropriate terms and conditions.

(b) Subject to Subsections (c), (d) and (f) of this section, a person is liable for damages in the amount of any loss caused by a failure to comply with Chapter 55, Article 9 NMSA 1978. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.

(1) a person that, at the time of the failure, was a debtor, was an obligor or held a security interest in or other lien on the collateral may recover damages under Subsection (b) of this section for its loss; and

(2) if the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with this part may recover for that failure in any event an amount not less than the credit service charge plus ten percent of the principal amount of the obligation or the time-price differential plus ten percent of the cash price.

(d) A debtor whose deficiency is eliminated under Section 55-9-626 NMSA 1978 may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under Section 55-9-626 NMSA 1978 may not otherwise recover under Subsection (b) of this section for noncompliance with the provisions of Sections 55-9-601 through 55-9-628 NMSA 1978 relating to collection, enforcement, disposition or acceptance.

(e) In addition to any damages recoverable under Subsection (b) of this section, the debtor, consumer obligor or person named as a debtor in a filed record, as applicable, may recover five hundred dollars ($500) in each case from a person that:

(1) fails to comply with Section 55-9-208 NMSA 1978;

(2) fails to comply with Section 55-9-209 NMSA 1978;

(3) files a record that the person is not entitled to file under Subsection (a) of Section 55-9-509 NMSA 1978;

(4) fails to cause the secured party of record to file or send a termination statement as required by Subsection (a) or (c) of Section 55-9-513 NMSA 1978;

(5) fails to comply with Paragraph (1) of Subsection (b) of Section 55-9-616 NMSA 1978 and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or

(6) fails to comply with Paragraph (2) of Subsection (b) of Section 55-9-616 NMSA 1978.

(f) A debtor or consumer obligor may recover damages under Subsection (b) of this section and, in addition, five hundred dollars ($500) in each case from a person that, without reasonable cause, fails to comply with a request under Section 55-9-210 NMSA 1978. A recipient of a request under Section 55-9-210 NMSA 1978 that never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subsection.

(g) If a secured party fails to comply with a request regarding a list of collateral or a statement of account under Section 55-9-210 NMSA 1978, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure."

Section 123. A new Section 55-9-626 NMSA 1978 is enacted to read:

"55-9-626. ACTION IN WHICH DEFICIENCY OR SURPLUS IS IN ISSUE.--

(a) In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply:

(1) A secured party need not prove compliance with the provisions of this part relating to collection, enforcement, disposition or acceptance unless the debtor or a secondary obligor places the secured party's compliance in issue.

(2) If the secured party's compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition or acceptance was conducted in accordance with Sections 55-9-601 through 55-9-628 NMSA 1978.

(3) Except as otherwise provided in Section 55-9-628 NMSA 1978, if a secured party fails to prove that the collection, enforcement, disposition or acceptance was conducted in accordance with the provisions of Sections 55-9-601 through 55-9-628 NMSA 1978 relating to collection, enforcement, disposition or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses and attorney fees exceeds the greater of:

(A) the proceeds of the collection, enforcement, disposition or acceptance; or

(B) the amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this part relating to collection, enforcement, disposition or acceptance.

(4) For purposes of Subparagraph (B) of Paragraph (3) of this subsection, the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses and attorney's fees unless the secured party proves that the amount is less than that sum.

(5) If a deficiency or surplus is calculated under Subsection (f) of Section 55-9-615 NMSA 1978, the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party or a secondary obligor would have brought.

(b) The limitation of the rules in Subsection (a) of this section to transactions other than consumer transactions is intended to leave to the court the determination of the proper rules in consumer transactions. The court may not infer from that limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches."

Section 124. A new Section 55-9-627 NMSA 1978 is enacted to read:

"55-9-627. DETERMINATION OF WHETHER CONDUCT WAS COMMERCIALLY REASONABLE.--

(a) The fact that a greater amount could have been obtained by a collection, enforcement, disposition or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition or acceptance was made in a commercially reasonable manner.

(b) A disposition of collateral is made in a commercially reasonable manner if the disposition is made:

(1) in the usual manner on any recognized market;

(2) at the price current in any recognized market at the time of the disposition; or

(3) otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.

(1) in a judicial proceeding;

(2) by a bona fide creditors' committee;

(3) by a representative of creditors; or

(4) by an assignee for the benefit of creditors.

(d) Approval under Subsection (c) of this section need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition or acceptance is not commercially reasonable."

Section 125. A new Section 55-9-628 NMSA 1978 is enacted to read:

"55-9-628. NONLIABILITY AND LIMITATION ON LIABILITY OF SECURED PARTY--LIABILITY OF SECONDARY OBLIGOR.--

(a) Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person and knows how to communicate with the person:

(1) the secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with Chapter 55, Article 9 NMSA 1978; and

(2) the secured party's failure to comply with Chapter 55, Article 9 NMSA 1978 does not affect the liability of the person for a deficiency.

(b) A secured party is not liable because of its status as secured party:

(1) to a person that is a debtor or obligor, unless the secured party knows:

(A) that the person is a debtor or obligor;

(B) the identity of the person; and

(2) to a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:

(A) that the person is a debtor; and

(B) the identity of the person.

(c) A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on:

(1) a debtor's representation concerning the purpose for which collateral was to be used, acquired or held; or

(2) an obligor's representation concerning the purpose for which a secured obligation was incurred.

(d) A secured party is not liable to any person under Paragraph (2) of Subsection (c) of Section 55-9-625 NMSA 1978 for its failure to comply with Section 55-9-616 NMSA 1978.

(e) A secured party is not liable under Paragraph (2) of Subsection (c) of Section 55-9-625 NMSA 1978 more than once with respect to any one secured obligation."

Section 126. Section 55-1-105 NMSA 1978 (being Laws 1961, Chapter 96, Section 1-105, as amended) is amended to read:

"55-1-105. TERRITORIAL APPLICATION OF THE ACT--PARTIES' POWER TO CHOOSE APPLICABLE LAW.--

(1) Except as provided in this section, when a transaction bears a reasonable relation to this state and also to another state or nation, the parties may agree that the law either of this state or such other state or nation shall govern their rights and duties. Failing such agreement, the Uniform Commercial Code applies to transactions bearing an appropriate relation to this state.

(2) Where one of the following provisions of the Uniform Commercial Code specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law (including the conflict of laws rules) so specified:

rights of creditors against sold goods. Section 55-2-402 NMSA 1978;

applicability of the article on leases. Sections 55-2A-105 and 55-2A-106 NMSA 1978;

applicability of the article on bank deposits and collections. Section 55-4-102 NMSA 1978;

governing law in the article on fund transfers. Section 55-4A-507 NMSA 1978;

letters of credit. Section 55-5-116 NMSA 1978;

applicability of the article on investment securities. Section 55-8-110 NMSA 1978; and

law governing perfection, the effect of perfection or nonperfection, and the priority of security interests and agricultural liens. Sections 55-9-301 through 55-9-307 NMSA 1978."

Section 127. Section 55-1-201 NMSA 1978 (being Laws 1961, Chapter 96, Section 1-201, as amended) is amended to read:

"55-1-201. GENERAL DEFINITIONS.--Subject to additional definitions contained in the subsequent articles of the Uniform Commercial Code which are applicable to specific articles or parts thereof and unless the context otherwise requires, in that act:

(1) "action" in the sense of a judicial proceeding includes recoupment, counterclaim, set-off, suit in equity and any other proceedings in which rights are determined;

(2) "aggrieved party" means a party entitled to resort to a remedy;

(3) "agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances, including course of dealing or usage of trade or course of performance as provided in Sections 55-1-205, 55-2-208 and 55-2A-207 NMSA 1978. Whether an agreement has legal consequences is determined by the provisions of the Uniform Commercial Code, if applicable; otherwise by the law of contracts (Section 55-1-103 NMSA 1978). (Compare "contract".);

(4) "bank" means any person engaged in the business of banking;

(5) "bearer" means the person in possession of an instrument, document of title or certificated security payable to bearer or indorsed in blank;

(6) "bill of lading" means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods and includes an airbill. "Airbill" means a document serving for air transportation as a bill of lading does for marine or rail transportation and includes an air consignment note or air waybill;

(7) "branch" includes a separately incorporated foreign branch of a bank;

(8) "burden of establishing" a fact means the burden of persuading the triers of fact that the existence of the fact is more probable than its nonexistence;

(9) "buyer in ordinary course of business" means a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods and in ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. A person that sells oil, gas or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. A buyer in the ordinary course of business may buy for cash, by exchange of other property or on secured or unsecured credit and may acquire goods or documents of title under a pre-existing contract for sale. Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under Chapter 55, Article 2 NMSA 1978 may be a buyer in ordinary course of business. A person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt is not a buyer in ordinary course of business;

(10) "conspicuous": A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: NON-NEGOTIABLE BILL OF LADING) is conspicuous. Language in the body of a form is "conspicuous" if it is in larger or other contrasting type or color. But in a telegram any stated term is "conspicuous". Whether a term or clause is "conspicuous" or not is for decision by the court;

(11) "contract" means the total legal obligation which results from the parties' agreement as affected by this act and any other applicable rules of law. (Compare "agreement".);

(12) "creditor" includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity and an executor or administrator of an insolvent debtor's or assignor's estate;

(13) "defendant" includes a person in the position of defendant in a cross-action or counterclaim;

(14) "delivery" with respect to instruments, documents of title, chattel paper or certificated securities means voluntary transfer of possession;

(15) "document of title" includes bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers. To be a document of title a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass;

(16) "fault" means wrongful act, omission or breach;

(17) "fungible" with respect to goods or securities means goods or securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not fungible shall be deemed fungible for the purposes of this act to the extent that under a particular agreement or document unlike units are treated as equivalents;

(18) "genuine" means free of forgery or counterfeiting;

(19) "good faith" means honesty in fact in the conduct or transaction concerned;

(20) "holder", with respect to a negotiable instrument, means the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession. "Holder", with respect to a document of title, means the person in possession if the goods are deliverable to bearer or to the order of the person in possession;

(21) to "honor" is to pay or to accept and pay, or where a credit so engages, to purchase or discount a draft complying with the terms of the credit;

(22) "insolvency proceedings" includes any assignment for the benefit of creditors or other proceedings intended to liquidate or rehabilitate the estate of the person involved;

(23) a person is "insolvent" who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of the federal bankruptcy law;

(24) "money" means a medium of exchange authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations;

(25) a person has "notice" of a fact when:

(a) he has actual knowledge of it;

(b) he has received a notice or notification of it; or

A person "knows" or has "knowledge" of a fact when he has actual knowledge of it. "Discover" or "learn" or a word or phrase of similar import refers to knowledge rather than to reason to know. The time and circumstances under which a notice or notification may cease to be effective are not determined by the Uniform Commercial Code;

(26) a person "notifies" or "gives" a notice or notification to another by taking such steps as may be reasonably required to inform the other in ordinary course whether or not such other actually comes to know of it. A person "receives" a notice or notification when:

(a) it comes to his attention; or

(b) it is duly delivered at the place of business through which the contract was made or at any other place held out by him as the place for receipt of such communications;

(27) notice, knowledge or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction, and in any event from the time when it would have been brought to his attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless such communication is part of his regular duties or unless he has reason to know of the transaction and that the transaction would be materially affected by the information;

(28) "organization" includes a corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, two or more persons having a joint or common interest or any other legal or commercial entity;

(29) "party", as distinct from "third party", means a person who has engaged in a transaction or made an agreement within the Uniform Commercial Code;

(30) "person" includes an individual or an organization (see Section 55-1-102 NMSA 1978);

(31) "presumption" or "presumed" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence;

(32) "purchase" includes taking by sale, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift or any other voluntary transaction creating an interest in property;

(33) "purchaser" means a person who takes by purchase;

(34) "remedy" means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal;

(35) "representative" includes an agent, an officer of a corporation or association and a trustee, executor or administrator of an estate or any other person empowered to act for another;

(36) "rights" includes remedies;

(37) "security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation. The term also includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible or a promissory note in a transaction that is subject to Chapter 55, Article 9 NMSA 1978. The special property interest of a buyer of goods on identification of those goods to a contract for sale under Section 55-2-401 NMSA 1978 is not a "security interest", but a buyer may also acquire a "security interest" by complying with Chapter 55, Article 9 NMSA 1978. Except as otherwise provided in Section 55-2-505 NMSA 1978, the right of a seller or lessor of goods under Chapter 55, Article 2 or 2A NMSA 1978 to retain or acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire a "security interest" by complying with Chapter 55, Article 9 NMSA 1978. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (Section 55-2-401 NMSA 1978) is limited in effect to a reservation of a "security interest".

Whether a transaction creates a lease or security interest is determined by the facts of each case; however, a transaction creates a security interest if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and:

(a) the original term of the lease is equal to or greater than the remaining economic life of the goods;

(b) the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;

(c) the lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement; or

(d) the lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement.

A transaction does not create a security interest merely because it provides that:

(a) the present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into;

(b) the lessee assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing, recording or registration fees or service or maintenance costs with respect to the goods;

(d) the lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed; or

(e) the lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.

For purposes of this Subsection (37):

(x) additional consideration is not nominal if: (i) when the option to renew the lease is granted to the lessee, the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed; or (ii) when the option to become the owner of the goods is granted to the lessee, the price is stated to be the fair market value of the goods determined at the time the option is to be performed. Additional consideration is nominal if it is less than the lessee's reasonably predictable cost of performing under the lease agreement if the option is not exercised;

(y) "reasonably predictable" and "remaining economic life of the goods" are to be determined with reference to the facts and circumstances at the time the transaction is entered into; and

(z) "present value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate is not manifestly unreasonable at the time the transaction is entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into;

(38) "send" in connection with any writing or notice means to deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and in the case of an instrument to an address specified thereon or otherwise agreed, or if there be none, to any address reasonable under the circumstances. The receipt of any writing or notice within the time at which it would have arrived if properly sent has the effect of a proper sending;

(39) "signed" includes any symbol executed or adopted by a party with present intention to authenticate a writing;

(40) "surety" includes guarantor;

(41) "telegram" includes a message transmitted by radio, teletype, cable, any mechanical method of transmission or the like;

(42) "term" means that portion of an agreement which relates to a particular matter;

(43) "unauthorized" signature means one made without actual, implied or apparent authority and includes a forgery;

(44) "value". Except as otherwise provided with respect to negotiable instruments and bank collections (Sections 55-3-303, 55-4-210 and 55-4-211 NMSA 1978) a person gives "value" for rights if he acquires them:

(a) in return for a binding commitment to extend credit or for the extension of immediately available credit whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection;

(b) as security for or in total or partial satisfaction of a pre-existing claim;

pre-existing contract for purchase; or

(d) generally, in return for any consideration sufficient to support a simple contract;

(45) "warehouse receipt" means a receipt issued by a person engaged in the business of storing goods for hire; and

(46) "written" or "writing" includes printing, typewriting or any other intentional reduction to tangible form."

Section 128. Section 55-2-103 NMSA 1978 (being Laws 1961, Chapter 96, Section 2-103, as amended) is amended to read:

"55-2-103. DEFINITIONS AND INDEX OF DEFINITIONS.--

(1) In this article, unless the context otherwise requires:

(a) "buyer" means a person who buys or contracts to buy goods;

(b) "good faith" in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade;

(d) "seller" means a person who sells or contracts to sell goods.

(2) Other definitions applying to this article or to specified parts thereof, and the sections in which they appear are:

"Acceptance". . . . . . . . . . . . .Section

55-2-606 NMSA 1978;

"Banker's credit". . . . . . . . . . Section

55-2-325 NMSA 1978;

"Between merchants". . . . . . . . . Section

55-2-104 NMSA 1978;

"Cancellation". . . . . . . . . . . .Section

55-2-106(4) NMSA 1978;

"Commercial unit". . . . . . . . . . Section

55-2-105 NMSA 1978;

"Confirmed credit". . . . . . . . . .Section 55-2-325 NMSA 1978;

"Conforming to contract". . . . . . .Section

55-2-106 NMSA 1978;

"Contract for sale". . . . . . . . . Section

55-2-106 NMSA 1978;

"Cover". . . . . . . . . . . . . . . Section

55-2-712 NMSA 1978;

"Entrusting". . . . . . . . . . . . .Section

55-2-403 NMSA 1978;

"Financing agency". . . . . . . . . .Section

55-2-104 NMSA 1978;

"Future goods". . . . . . . . . . . .Section

55-2-105 NMSA 1978;

"Goods". . . . . . . . . . . . . . . Section

55-2-105 NMSA 1978;

"Identification". . . . . . . . . . .Section

55-2-501 NMSA 1978;

"Installment contract". . . . . . . .Section

55-2-612 NMSA 1978;

"Letter of Credit". . . . . . . . . .Section

55-2-325 NMSA 1978;

"Lot". . . . . . . . . . . . . . . . Section

55-2-105 NMSA 1978;

"Merchant". . . . . . . . . . . . . .Section

55-2-104 NMSA 1978;

"Overseas". . . . . . . . . . . . . .Section 55-2-323 NMSA 1978;

"Person in the position of a

seller". . . . . . . . . . . . . . . .Section

55-2-707 NMSA 1978;

"Present sale". . . . . . . . . . . .Section

55-2-106 NMSA 1978;

"Sale". . . . . . . . . . . . . . . .Section

55-2-106 NMSA 1978;

"Sale on approval". . . . . . . . . .Section

55-2-326 NMSA 1978;

"Sale or return". . . . . . . . . . .Section 55-2-326 NMSA 1978;

"Termination". . . . . . . . . . . . Section

55-2-106 NMSA 1978;

(3) The following definitions in other articles apply to this article:

"Check". . . . . . . . . . . . . . . Section

55-3-104 NMSA 1978;

"Consignee". . . . . . . . . . . . . Section

55-7-102 NMSA 1978;

"Consignor". . . . . . . . . . . . . Section

55-7-102 NMSA 1978;

"Consumer goods". . . . . . . . . . Section 55-9-102 NMSA 1978;

"Dishonor". . . . . . . . . . . . . .Section

55-3-502 NMSA 1978; and

"Draft". . . . . . . . . . . . . . . Section

55-3-104 NMSA 1978.

(4) In addition, Chapter 55, Article 1 NMSA 1978 contains general definitions and principles of construction and interpretation applicable throughout this article."

Section 129. Section 55-2-210 NMSA 1978 (being Laws 1961, Chapter 96, Section 2-210) is amended to read:

"55-2-210. DELEGATION OF PERFORMANCE--ASSIGNMENT OF RIGHTS.--

(1) A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.

(2) Except as otherwise provided in Section 55-9-406 NMSA 1978, unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party or increase materially the burden or risk imposed on him by his contract or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise.

(3) The creation, attachment, perfection or enforcement of a security interest in the seller's interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer's chance of obtaining return performance within the purview of Subsection (2) of this section unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the seller. Even in that event, the creation, attachment, perfection and enforcement of the security interest remain effective, but (i) the seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer, and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.

(4) Unless the circumstances indicate the contrary a prohibition of assignment of "the contract" is to be construed as barring only the delegation to the assignee of the assignor's performance.

(5) An assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of rights unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.

(6) The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his rights against the assignor demand assurances from the assignee (Section 55-2-609 NMSA 1978)."

Section 130. Section 55-2-326 NMSA 1978 (being Laws 1961, Chapter 96, Section 2-326, as amended) is amended to read:

"55-2-326. SALE ON APPROVAL AND SALE OR RETURN--RIGHTS OF CREDITORS.--

(1) Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is:

(a) a "sale on approval" if the goods are delivered primarily for use; and

(b) a "sale or return" if the goods are delivered primarily for resale.

(2) Goods held on approval are not subject to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer's possession.

(3) Any "or return" term of a contract for sale is to be treated as a separate contract for sale within the statute of frauds section of this article (Section 55-2-201 NMSA 1978) and as contradicting the sale aspect of the contract within the provisions of this article on parol or extrinsic evidence (Section 55-2-202 NMSA 1978)."

Section 131. Section 55-2-502 NMSA 1978 (being Laws 1961, Chapter 96, Section 2-502) is amended to read:

"55-2-502. BUYER'S RIGHT TO GOODS ON SELLER'S REPUDIATION, FAILURE TO DELIVER OR INSOLVENCY.--

(1) Subject to Subsections (2) and (3) of this section and even though the goods have not been shipped, a buyer who has paid a part or all of the price of goods in which he has a special property under the provisions of the immediately preceding section may on making and keeping good a tender of any unpaid portion of their price recover them from the seller if:

(a) in the case of goods bought for personal, family or household purposes, the seller repudiates or fails to deliver as required by the contract; or

(b) in all cases, the seller becomes insolvent within ten days after receipt of the first installment on their price.

(2) The buyer's right to recover goods pursuant to Paragraph (a) of Subsection (1) of this section vests upon acquisition of a special property even if the seller has not then repudiated or failed to deliver.

(3) If the identification creating his special property has been made by the buyer he acquires the right to recover the goods only if they conform to the contract for sale."

Section 132. Section 55-2-716 NMSA 1978 (being Laws 1961, Chapter 96, Section 2-716) is amended to read:

"55-2-716. BUYER'S RIGHT TO SPECIFIC PERFORMANCE OR REPLEVIN.--

(1) Specific performance may be decreed where the goods are unique or in other proper circumstances.

(2) The decree for specific performance may include such terms and conditions as to payment of the price, damages or other relief as the court may deem just.

(3) The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. In the case of goods bought for personal, family or household purposes, the buyer's right of replevin vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver."

Section 133. Section 55-2A-103 NMSA 1978 (being Laws 1992, Chapter 114, Section 10, as amended) is amended to read:

"55-2A-103. DEFINITIONS AND INDEX OF DEFINITIONS.--

(1) In this article unless the context otherwise requires:

(a) "buyer in ordinary course of business" means a person who, in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind, but does not include a pawnbroker. "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt;

(b) "cancellation" occurs when either party puts an end to the lease contract for default by the other party;

(c) "commercial unit" means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole;

(d) "conforming" goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract;

(e) "consumer lease" means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for a personal, family or household purpose;

(f) "fault" means wrongful act, omission, breach or default;

(g) "finance lease" means a lease with respect to which:

(i) the lessor does not select, manufacture or supply the goods;

(ii) the lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and

(iii) one of the following occurs:

(A) the lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract;

(B) the lessee's approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract;

(C) the lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations or modifications of remedies, or liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or

(D) if the lease is not a consumer lease, the lessor, before the lessee signs the lease contract, informs the lessee in writing (a) of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person, (b) that the lessee is entitled under this article to the promises and warranties, including those of any third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods, and (c) that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies;

(h) "goods" means all things that are movable at the time of identification to the lease contract or are fixtures (Section 55-2A-309 NMSA 1978), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals;

(i) "installment lease contract" means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause "each delivery is a separate lease" or its equivalent;

(j) "lease" means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease; unless the context clearly indicates otherwise, the term includes a sublease;

(k) "lease agreement" means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances, including course of dealing or usage or trade or course of performance as provided in this article; unless the context clearly indicates otherwise, the term includes a sublease agreement;

(l) "lease contract" means the total legal obligation that results from the lease agreement as affected by this article and any other applicable rules of law; unless the context clearly indicates otherwise, the term includes a sublease contract;

(m) "leasehold interest" means the interest of the lessor or the lessee under a lease contract;

(n) "lessee" means a person who acquires the right to possession and use of goods under a lease; unless the context clearly indicates otherwise, the term includes a sublessee;

(o) "lessee in ordinary course of business" means a person who in good faith and without knowledge that the lease to him is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, leases in ordinary course from a person in the business of selling or leasing goods of that kind, but does not include a pawnbroker; "leasing" may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving goods or documents of title under a pre-existing lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt;

(p) "lessor" means a person who transfers the right to possession and use of goods under a lease; unless the context clearly indicates otherwise, the term includes a sublessor;

(q) "lessor's residual interest" means the lessor's interest in the goods after expiration, termination or cancellation of the lease contract;

(r) "lien" means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest;

(s) "lot" means a parcel or a single article that is the subject matter of a separate lease or delivery whether or not it is sufficient to perform the lease contract;

(t) "merchant lessee" means a lessee that is a merchant with respect to goods of the kind subject to the lease;

(u) "present value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain; the discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into;

(v) "purchase" includes taking by sale, lease, mortgage, security interest, pledge, gift or any other voluntary transaction creating an interest in goods;

(w) "sublease" means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease;

(x) "supplier" means a person from whom a lessor buys or leases goods to be leased under a finance lease;

(y) "supply contract" means a contract under which a lessor buys or leases goods to be leased; and

(z) "termination" occurs when either party pursuant to a power created by agreement or law puts an end to the lease contract otherwise than for default.

(2) Other definitions applying to this article and the sections in which they appear are:

"Accessions" Section

55-2A-310(1) NMSA 1978.

"Construction mortgage" Section

55-2A-309(1)(d) NMSA 1978.

"Encumbrance" Section

55-2A-309(1)(e) NMSA 1978.

"Fixtures". Section

55-2A-309(1)(a) NMSA 1978.

"Fixture filing". Section

55-2A-309(1)(b) NMSA 1978.

"Purchase money lease" Section

55-2A-309(1)(c) NMSA 1978.

(3) The following definitions in other articles apply to this article:

"Account" . . . . . . . . . . . . . . Paragraph (2) of Subsection (a) of Section 55-9-102 NMSA 1978.

"Between merchants" . . . . . . . . .Subsection (3) of Section 55-2-104 NMSA 1978.

"Buyer" . . . . . . . . . . . . . . .Paragraph (a) of Subsection (1) of Section 55-2-103 NMSA 1978.

"Chattel paper" . . . . . . . . . . .Paragraph (11) of Subsection (a) of Section 55-9-102 NMSA 1978.

"Consumer goods". . . . . . . . . . .Paragraph (23) of Subsection (a) of Section 55-9-102 NMSA 1978.

"Document". . . . . . . . . . . . . .Paragraph (30) of Subsection (a) of Section 55-9-102 NMSA 1978.

"Entrusting". . . . . . . . . . . . .Subsection (3) of Section 55-2-403 NMSA 1978.

"General intangible". . . . . . . . .Paragraph (42) of Subsection (a) of Section 55-9-102 NMSA 1978.

"Good faith". . . . . . . . . . . . .Paragraph (b) of Subsection (1) of Section 55-2-103 NMSA 1978.

"Instrument". . . . . . . . . . . . .Paragraph (47) of Subsection (a) of Section 55-9-102 NMSA 1978.

"Merchant". . . . . . . . . . . . . .Subsection (1) of Section 55-2-104 NMSA 1978.

"Mortgage". . . . . . . . . . . . . .Paragraph (55) of Subsection (a) of Section 55-9-102 NMSA 1978.

"Pursuant to commitment". . . . . . .Paragraph (68) of Subsection (a) of Section 55-9-102 NMSA 1978.

"Receipt" . . . . . . . . . . . . . .Paragraph (c) of Subsection (1) of Section 55-2-103 NMSA 1978.

"Sale". . . . . . . . . . . . . . . .Subsection (1) of Section 55-2-106 NMSA 1978.

"Sale on approval". . . . . . . . . .Section

55-2-326 NMSA 1978.

"Sale or return". . . . . . . . . . .Section

55-2-326 NMSA 1978.

"Seller". . . . . . . . . . . . . . .Paragraph (d) of Subsection (1) of Section 55-2-103 NMSA 1978.

(4) In addition, Chapter 55, Article 1 NMSA 1978 contains general definitions and principles of construction and interpretation applicable throughout this article."

Section 134. Section 55-2A-303 NMSA 1978 (being Laws 1992, Chapter 114, Section 40) is amended to read:

"55-2A-303. ALIENABILITY OF PARTY'S INTEREST UNDER LEASE CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS--DELEGATION OF PERFORMANCE--TRANSFER OF RIGHTS.--

(1) As used in this section, "creation of a security interest" includes the sale of a lease contract that is subject to Chapter 55, Article 9 NMSA 1978 by reason of Paragraph (3) of Subsection (a) of Section 55-9-109 NMSA 1978.

(2) Except as provided in Subsection (3) of this section and Section 55-9-407 NMSA 1978, a provision in a lease agreement which (i) prohibits the voluntary or involuntary transfer, including a transfer by sale, sublease, creation or enforcement of a security interest, or attachment, levy or other judicial process, of an interest of a party under the lease contract or of the lessor's residual interest in the goods, or (ii) makes such a transfer an event of default, gives rise to the rights and remedies provided in Subsection (4) of this section, but a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective.

(3) A provision in a lease agreement which (i) prohibits a transfer of a right to damages for default with respect to the whole lease contract or of a right to payment arising out of the transferor's due performance of the transferor's entire obligation, or (ii) makes such a transfer an event of default, is not enforceable, and such a transfer is not a transfer that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract within the purview of Subsection (4) of this section.

(4) Subject to Subsection (3) of this section and Section 55-9-407 NMSA 1978:

(a) if a transfer is made which is made an event of default under a lease agreement, the party to the lease contract not making the transfer, unless that party waives the default or otherwise agrees, has the rights and remedies described in Subsection (2) of Section 55-2A-501 NMSA 1978; and

(b) if Paragraph (a) of this subsection is not applicable and if a transfer is made that (i) is prohibited under a lease agreement, or (ii) materially impairs the prospect of obtaining return performance by, materially changes the duty of or materially increases the burden or risk imposed on the other party to the lease contract, unless the party not making the transfer agrees at any time to the transfer in the lease contract or otherwise, then, except as limited by contract, (i) the transferor is liable to the party not making the transfer for damages caused by the transfer to the extent that the damages could not reasonably be prevented by the party not making the transfer, and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.

(5) A transfer of "the lease" or of "all my rights under the lease", or a transfer in similar general terms, is a transfer of rights, and, unless the language or the circumstances, as in a transfer for security, indicate the contrary, the transfer is a delegation of duties by the transferor to the transferee. Acceptance by the transferee constitutes a promise by the transferee to perform those duties. The promise is enforceable by either the transferor or the other party to the lease contract.

(6) Unless otherwise agreed by the lessor and the lessee, a delegation of performance does not relieve the transferor as against the other party of any duty to perform or of any liability for default.

(7) In a consumer lease, to prohibit the transfer of an interest of a party under the lease contract or to make a transfer an event of default, the language must be specific, by a writing and conspicuous."

Section 135. Section 55-2A-307 NMSA 1978 (being Laws 1992, Chapter 114, Section 44) is amended to read:

"55-2A-307. PRIORITY OF LIENS ARISING BY ATTACHMENT OR LEVY ON, SECURITY INTERESTS IN AND OTHER CLAIMS TO GOODS.--

(1) Except as otherwise provided in Section 55-2A-306 NMSA 1978, a creditor of a lessee takes subject to the lease contract.

(2) Except as otherwise provided in Subsection (3) of this section and in Sections 55-2A-306 and 55-2A-308 NMSA 1978, a creditor of a lessor takes subject to the lease contract unless

the creditor holds a lien that attached to the goods before the lease contract became enforceable.

(3) Except as otherwise provided in Sections 55-9-317, 55-9-321 and 55-9-323 NMSA 1978, a lessee takes a leasehold interest subject to a security interest held by a creditor of the lessor."

Section 136. Section 55-2A-309 NMSA 1978 (being Laws 1992, Chapter 114, Section 46) is amended to read:

"55-2A-309. LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME FIXTURES.--

(1) In this section:

(a) goods are "fixtures" when they become so related to particular real estate that an interest in them arises under real estate law;

(b) a "fixture filing" is the filing, in the office where a record of a mortgage on the real estate would be filed or recorded, of a financing statement covering goods that are or are to become fixtures and conforming to the requirements of Subsections (a) and (b) of Section 55-9-502 NMSA 1978;

(c) a lease is a "purchase money lease" unless the lessee has possession or use of the goods or the right to possession or use of the goods before the lease agreement is enforceable;

(d) a mortgage is a "construction mortgage" to the extent it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if the recorded writing so indicates; and

(e) "encumbrance" includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests.

(2) Under this article a lease may be of goods that are fixtures or may continue in goods that become fixtures, but no lease exists under this article of ordinary building materials incorporated into an improvement on land.

(3) This article does not prevent creation of a lease of fixtures pursuant to real estate law.

(4) The perfected interest of a lessor of fixtures has priority over a conflicting interest of an encumbrancer or owner of the real estate if:

(a) the lease is a purchase money lease, the conflicting interest of the encumbrancer or owner arises before the goods become fixtures, the interest of the lessor is perfected by a fixture filing before the goods become fixtures or within ten days thereafter and the lessee has an interest of record in the real estate or is in possession of the real estate; or

(b) the interest of the lessor is perfected by a fixture filing before the interest of the encumbrancer or owner is of record, the lessor's interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the lessee has an interest of record in the real estate or is in possession of the real estate.

(5) The interest of a lessor of fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate if:

(a) the fixtures are readily removable factory or office machines, readily removable equipment that is not primarily used or leased for use in the operation of the real estate or readily removable replacements of domestic appliances that are goods subject to a consumer lease, and before the goods become fixtures the lease contract is enforceable; or

(b) the conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the lease contract is enforceable; or

(c) the encumbrancer or owner has consented in writing to the lease or has disclaimed an interest in the goods as fixtures; or

(d) the lessee has a right to remove the goods as against the encumbrancer or owner. If the lessee's right to remove terminates, the priority of the interest of the lessor continues for a reasonable time.

(6) Notwithstanding Paragraph (a) of Subsection (4) of this section but otherwise subject to Subsections (4) and (5) of this section, the interest of a lessor of fixtures, including the lessor's residual interest, is subordinate to the conflicting interest of an encumbrancer of the real estate under a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction. To the extent given to refinance a construction mortgage, the conflicting interest of an encumbrancer of the real estate under a mortgage has this priority to the same extent as the encumbrancer of the real estate under the construction mortgage.

(7) In cases not within the preceding subsections, priority between the interest of a lessor of fixtures, including the lessor's residual interest, and the conflicting interest of an encumbrancer or owner of the real estate who is not the lessee is determined by the priority rules governing conflicting interests in real estate.

(8) If the interest of a lessor of fixtures, including the lessor's residual interest, has priority over all conflicting interests of all owners and encumbrancers of the real estate, the lessor or the lessee may (i) on default, expiration, termination or cancellation of the lease agreement but subject to the lease agreement and this article, or (ii) if necessary to enforce other rights and remedies of the lessor or lessee under this article, remove the goods from the real estate, free and clear of all conflicting interests of all owners and encumbrancers of the real estate, but the lessor or lessee must reimburse any encumbrancer or owner of the real estate who is not the lessee and who has not otherwise agreed for the cost of repair of any physical injury, but not for any diminution in value of the real estate caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to reimbursement may refuse permission to remove until the party seeking removal gives adequate security for the performance of this obligation.

(9) Even though the lease agreement does not create a security interest, the interest of a lessor of fixtures, including the lessor's residual interest, is perfected by filing a financing statement as a fixture filing for leased goods that are or are to become fixtures in accordance with the relevant provisions of Chapter 55, Article 9 NMSA 1978."

Section 137. Section 55-4-210 NMSA 1978 (being Laws 1961, Chapter 96, Section 4-208, as amended) is amended to read:

"55-4-210. SECURITY INTEREST OF COLLECTING BANK IN ITEMS, ACCOMPANYING DOCUMENTS AND PROCEEDS.--

(a) A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:

(1) in case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied;

(2) in case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given, whether or not the credit is drawn upon or there is a right of charge-back; or

(3) if it makes an advance on or against the item.

(b) If credit given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part, the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.

(c) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents and proceeds. So long as the bank does not receive final settlement for the item or give up possession of the item or accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to Chapter 55, Article 9 NMSA 1978, but:

(1) no security agreement is necessary to make the security interest enforceable (Subparagraph (A) of Paragraph (3) of Subsection (b) of Section 55-9-203 NMSA 1978);

(2) no filing is required to perfect the security interest; and

(3) the security interest has priority over conflicting perfected security interests in the item, accompanying documents or proceeds."

Section 138. A new Section 55-5-118 NMSA 1978 is enacted to read:

"55-5-118. SECURITY INTEREST OF ISSUER OR NOMINATED PERSON.--

(a) An issuer or nominated person has a security interest in a document presented under a letter of credit to the extent that the issuer or nominated person honors or gives value for the presentation.

(b) So long as and to the extent that an issuer or nominated person has not been reimbursed or has not otherwise recovered the value given with respect to a security interest in a document under Subsection (a) of this section, the security interest continues and is subject to Chapter 55, Article 9 NMSA 1978, but:

(1) a security agreement is not necessary to make the security interest enforceable under Paragraph (3) of Subsection (b) of Section 55-9-203 NMSA 1978;

(2) if the document is presented in a medium other than a written or other tangible medium, the security interest is perfected; and

(3) if the document is presented in a written or other tangible medium and is not a certificated security, chattel paper, a document of title, an instrument or a letter of credit, the security interest is perfected and has priority over a conflicting security interest in the document so long as the debtor does not have possession of the document."

Section 139. Section 55-7-503 NMSA 1978 (being Laws 1961, Chapter 96, Section 7-503) is amended to read:

"55-7-503. DOCUMENT OF TITLE TO GOODS DEFEATED IN CERTAIN CASES.--

(1) A document of title confers no right in goods against a person who before issuance of the document had a legal interest or a perfected security interest in them and who neither:

(a) delivered or entrusted them or any document of title covering them to the bailor or his nominee with actual or apparent authority to ship, store or sell or with power to obtain delivery under this article (Section 55-7-403 NMSA 1978) or with power of disposition under Sections 55-2-403 and 55-9-320 NMSA 1978 or other statute or rule of law; nor

(b) acquiesced in the procurement by the bailor or his nominee of any document of title.

(2) Title to goods based upon an unaccepted delivery order is subject to the rights of anyone to whom a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated. Such a title may be defeated under Section 55-7-504 NMSA 1978 to the same extent as the rights of the issuer or a transferee from the issuer.

(3) Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of anyone to whom a bill issued by the freight forwarder is duly negotiated; but delivery by the carrier in accordance with Sections 55-7-401 through 55-7-404 NMSA 1978 pursuant to its own bill of lading discharges the carrier's obligation to deliver."

Section 140. Section 55-8-103 NMSA 1978 (being Laws 1996, Chapter 47, Section 7) is amended to read:

"55-8-103. RULES FOR DETERMINING WHETHER CERTAIN OBLIGATIONS AND INTERESTS ARE SECURITIES OR FINANCIAL ASSETS.--

(a) A share or similar equity interest issued by a corporation, business trust, joint stock company or similar entity is a security.

(b) An "investment company security" is a security. "Investment company security" means a share or similar equity interest issued by an entity that is registered as an investment company under the federal investment company laws, an interest in a unit investment trust that is so registered or a face-amount certificate issued by a face-amount certificate company that is so registered. Investment company security does not include an insurance policy or endowment policy or annuity contract issued by an insurance company.

(c) An interest in a partnership or limited liability company is not a security unless it is dealt in or traded on securities exchanges or in securities markets, its terms expressly provide that it is a security governed by this article or it is an investment company security. However, an interest in a partnership or limited liability company is a financial asset if it is held in a securities account.

(d) A writing that is a security certificate is governed by this article and not by Chapter 55, Article 3 NMSA 1978, even though it also meets the requirements of that article. However, a negotiable instrument governed by Chapter 55, Article 3 NMSA 1978 is a financial asset if it is held in a securities account.

(e) An option or similar obligation issued by a clearing corporation to its participants is not a security. It is a financial asset.

(f) A commodity contract, as defined in Paragraph (15) of Subsection (a) of Section 55-9-102 NMSA 1978, is not a security or a financial asset."

Section 141. Section 55-8-106 NMSA 1978 (being Laws 1996, Chapter 47, Section 10) is amended to read:

"55-8-106. CONTROL.--

(a) A purchaser has "control" of a certificated security in bearer form if the certificated security is delivered to the purchaser.

(b) A purchaser has "control" of a certificated security in registered form if the certificated security is delivered to the purchaser and:

(1) the certificate is indorsed to the purchaser or in blank by an effective indorsement; or

(2) the certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer.

(1) the uncertificated security is delivered to the purchaser; or

(2) the issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner.

(d) A purchaser has "control" of a security entitlement if:

(1) the purchaser becomes the entitlement holder;

(2) the securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or

(3) another person has control of the security entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges that it has control on behalf of the purchaser.

(e) If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the securities intermediary has control.

(f) A purchaser who has satisfied the requirements of Subsection (c) or (d)of this section has control even if the registered owner in the case of Subsection (c)of this section or the entitlement holder in the case of Subsection (d) of this section retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary or otherwise to deal with the uncertificated security or security entitlement.

(g) An issuer or a securities intermediary may not enter into an agreement of the kind described in Paragraph (2) of Subsection (c)or Paragraph (2) of Subsection (d)of this section without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs. An issuer or securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder."

Section 142. Section 55-8-110 NMSA 1978 (being Laws 1996, Chapter 47, Section 14) is amended to read:

"55-8-110. APPLICABILITY--CHOICE OF LAW.--

(a) The local law of the issuer's jurisdiction, as specified in Subsection (d) of this section, governs:

(1) the validity of a security;

(2) the rights and duties of the issuer with respect to registration of transfer;

(3) the effectiveness of registration of transfer by the issuer;

(4) whether the issuer owes any duties to an adverse claimant to a security; and

(5) whether an adverse claim can be asserted against a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security.

(b) The local law of the securities intermediary's jurisdiction, as specified in Subsection (e) of this section, governs:

(1) acquisition of a security entitlement from the securities intermediary;

(2) the rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement;

(3) whether the securities intermediary owes any duties to an adverse claimant to a security entitlement; and

(4) whether an adverse claim can be asserted against a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest therein from an entitlement holder.

(c) The local law of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim can be asserted against a person to whom the security certificate is delivered.

(d) "Issuer's jurisdiction" means the jurisdiction under which the issuer of the security is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer. An issuer organized under the law of this state may specify the law of another jurisdiction as the law governing the matters specified in Paragraphs (2) through (5) of Subsection (a) of this section.

(e) The following rules determine a "securities intermediary's jurisdiction" for purposes of this section:

(1) if an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for purposes of Sections 55-8-101 through 55-8-116 NMSA 1978,

that jurisdiction is the securities intermediary's jurisdiction;

(2) if Paragraph (1) of this subsection does not apply and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction;

(3) if neither Paragraph (1) nor Paragraph (2) of this subsection applies and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction;

(4) if none of the preceding paragraphs applies, the securities intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the entitlement holder's account is located; or

(5) if none of the preceding paragraphs applies, the securities intermediary's jurisdiction is the jurisdiction in which the chief executive office of the securities intermediary is located.

(f) A securities intermediary's jurisdiction is not determined by the physical location of certificates representing financial assets or by the jurisdiction in which is organized the issuer of the financial asset with respect to which an entitlement holder has a security entitlement or by the location of facilities for data processing or other record keeping concerning the account."

Section 143. Section 55-8-301 NMSA 1978 (being Laws 1996, Chapter 47, Section 31) is amended to read:

"55-8-301. DELIVERY.--

(a) Delivery of a certificated security to a purchaser occurs when:

(1) the purchaser acquires possession of the security certificate;

(2) another person, other than a securities intermediary, either acquires possession of the security certificate on behalf of the purchaser or, having previously acquired possession of the certificate, acknowledges that it holds for the purchaser; or

(3) a securities intermediary acting on behalf of the purchaser acquires possession of the security certificate, only if the certificate is in registered form and is (i) registered in the name of the purchaser, (ii) payable to the order of the purchaser or (iii) specially indorsed to the purchaser by an effective indorsement and has not been indorsed to the securities intermediary or in blank.

(b) Delivery of an uncertificated security to a purchaser occurs when:

(1) the issuer registers the purchaser as the registered owner, upon original issue or registration of transfer; or

(2) another person, other than a securities intermediary, either becomes the registered owner of the uncertificated security on behalf of the purchaser or, having previously become the registered owner, acknowledges that it holds for the purchaser."

Section 144. Section 55-8-302 NMSA 1978 (being Laws 1996, Chapter 47, Section 32) is amended to read:

"55-8-302. RIGHTS OF PURCHASER.--

(a) Except as otherwise provided in Subsections (b) and (c) of this section, a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer.

(b) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

(c) A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve its position by taking from a protected purchaser."

Section 145. Section 55-8-510 NMSA 1978 (being Laws 1996, Chapter 47, Section 54) is amended to read:

"55-8-510. RIGHTS OF PURCHASER OF SECURITY ENTITLEMENT FROM ENTITLEMENT HOLDER.--

(a) In a case not covered by the priority rules in Chapter 55, Article 9 NMSA 1978 or the rules stated in Subsection (c) of this section, an action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against a person who purchases a security entitlement, or an interest therein, from an entitlement holder if the purchaser gives value, does not have notice of the adverse claim and obtains control.

(b) If an adverse claim could not have been asserted against an entitlement holder under Section 55-8-502 NMSA 1978, the adverse claim cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder.

(c) In a case not covered by the priority rules in Chapter 55, Article 9 NMSA 1978, a purchaser for value of a security entitlement, or an interest therein, who obtains control has priority over a purchaser of a security entitlement, or an interest therein, who does not obtain control. Except as otherwise provided in Subsection (d) of this section, purchasers who have control rank according to priority in time of:

(1) the purchaser's becoming the person for whom the securities account, in which the security entitlement is carried, is maintained, if the purchaser obtained control under Paragraph (1) of Subsection (d) of Section 55-8-106 NMSA 1978;

(2) the securities intermediary's agreement to comply with the purchaser's entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried, if the purchaser obtained control under Paragraph (2) of Subsection (d) of Section 55-8-106 NMSA 1978; or

(3) if the purchaser obtained control through another person under Paragraph (3) of Subsection (d) of Section 55-8-106 NMSA 1978, the time on which priority would be based under this subsection if the other person were the secured party.

(d) A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary."

Section 146. SAVING CLAUSE.--

(a) Except as otherwise provided in Sections 146 through 155 of this act, its provisions apply to a transaction or lien within its scope, even if the transaction or lien was entered into or created before July 1, 2001.

(b) Except as otherwise provided in Subsection (c) of this section and Sections 147 through 153 of this act:

(1) transactions and liens that were not governed by Chapter 55, Article 9 NMSA 1978, as it existed prior to July 1, 2001, were validly entered into or created before that date and would be subject to this act if they had been entered into or created after July 1, 2001, and the rights, duties and interests flowing from those transactions and liens remain valid after July 1, 2001; and

(2) the transactions and liens described in Paragraph (1) of this subsection may be terminated, completed, consummated and enforced as required or permitted by this act or by the law that otherwise would apply if this act had not taken effect.

Section 147. TEMPORARY TRANSITION PROVISION--SECURITY INTEREST PERFECTED BEFORE EFFECTIVE DATE.--

(a) A security interest that is enforceable immediately before July 1, 2001 and would have priority over the rights of a person that becomes a lien creditor at that time is a perfected security interest under this act if, on July 1, 2001, the applicable requirements for enforceability and perfection under this act are satisfied without further action.

(b) Except as otherwise provided in Section 149 of this act, if, immediately before July 1, 2001, a security interest is enforceable and would have priority over the rights of a person that becomes a lien creditor at that time, but the applicable requirements for enforceability or perfection under this act are not satisfied on July 1, 2001, the security interest:

(1) is a perfected security interest until midnight on June 30, 2002;

(2) remains enforceable on and after July 1, 2002 only if the security interest becomes enforceable pursuant to Section 55-9-203 NMSA 1978 before midnight on June 30, 2002; and

(3) remains perfected on and after July 1, 2002 only if the applicable requirements for perfection under this act are satisfied before midnight on June 30, 2002.

Section 148. TEMPORARY TRANSITION PROVISION--SECURITY INTEREST UNPERFECTED BEFORE EFFECTIVE DATE.--A security interest that is enforceable immediately before July 1, 2001, but which would be subordinate to the rights of a person that becomes a lien creditor at that time:

(1) remains an enforceable security interest until midnight June 30, 2002;

(2) remains enforceable on and after July 1, 2002 if the security interest becomes enforceable pursuant to Section 55-9-203 NMSA 1978 before June 30, 2002; and

(3) becomes perfected:

(A) without further action on July 1, 2002 if the applicable requirements for perfection under this act are satisfied before or at that time; or

(B) when the applicable requirements for perfection are satisfied if the requirements are satisfied after the time specified in Paragraph (A) of this subsection.

Section 149. TEMPORARY TRANSITION PROVISION--EFFECTIVENESS OF ACTION TAKEN BEFORE EFFECTIVE DATE.--

(a) If action, other than the filing of a financing statement, is taken before July 1, 2001, and if the action would have resulted in priority of a security interest over the rights of a person that becomes a lien creditor had the security interest become enforceable before that date, the action is effective to perfect a security interest that attaches under this act before July 1, 2002. An attached security interest becomes unperfected on July 1, 2002 unless the security interest becomes a perfected security interest under this act before that date.

(b) The filing of a financing statement before July 1, 2001 is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this act.

(c) This act does not render ineffective an effective financing statement that, before July 1, 2001, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in Section 55-9-103 NMSA 1978 as it existed prior to July 1, 2001. However, except as otherwise provided in Subsections (d) and (e) of this section and Section 150 of this act, the financing statement ceases to be effective at the earlier of:

(1) the time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed; or

(2) June 30, 2006.

(d) Filing of a continuation statement after July 1, 2001 does not continue the effectiveness of a financing statement filed before that date. However, upon the timely filing of a continuation statement on or after July 1, 2001 and in accordance with the law of the jurisdiction governing perfection as provided in Sections 55-9-301 through 55-9-342 NMSA 1978, the effectiveness of a financing statement filed in the same office in that jurisdiction before July 1, 2001 continues for the period provided by the law of that jurisdiction.

(e) Paragraph (2) of Subsection (c) of this section applies to a financing statement that, before July 1, 2001, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in Section 55-9-103 NMSA 1978 as that section existed prior to July 1, 2001 only to the extent that Sections 55-9-301 through 55-9-342 NMSA 1978 provide that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.

(f) A financing statement that includes a financing statement filed before July 1, 2001 and a continuation statement filed after that date is effective only to the extent that it satisfies the requirements of Sections 55-9-501 through 55-9-518 NMSA 1978 for an initial financing statement.

Section 150. TEMPORARY TRANSITION PROVISION--WHEN INITIAL FINANCING STATEMENT SUFFICES TO CONTINUE EFFECTIVENESS OF FINANCING STATEMENT.--

(a) The filing of an initial financing statement in the office specified in Section 55-9-501 NMSA 1978 continues the effectiveness of a financing statement filed before July 1, 2001 if:

(1) the filing of an initial financing statement in that office would be effective to perfect a security interest under this act;

(2) the pre-effective-date financing statement was filed in an office in another state or another office in this state; and

(3) the initial financing statement satisfies Subsection (c) of this section.

(b) The filing of an initial financing statement under Subsection (a) of this section continues the effectiveness of the pre-effective-date financing statement:

(1) if the initial financing statement is filed before July 1, 2001, for the period provided in Section 55-9-403 NMSA 1978 as it existed prior to July 1, 2001, with respect to a financing statement; and

(2) if the initial financing statement is filed after July 1, 2001, for the period provided in Section 55-9-515 NMSA 1978 with respect to an initial financing statement.

(1) satisfy the requirements of Sections 55-9-501 through 55-9-526 NMSA 1978 for an initial financing statement;

(2) identify the pre-effective-date financing statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and

(3) indicate that the pre-effective-date financing statement remains effective.

Section 151. TEMPORARY TRANSITION PROVISION--AMENDMENT OF PRE-EFFECTIVE-DATE FINANCING STATEMENT.--

(a) In this section, "pre-effective-date financing statement" means a financing statement filed before July 1, 2001.

(b) After July 1, 2001, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in, a pre-effective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in Sections 55-9-301 through 55-9-338 NMSA 1978. However, the effectiveness of a pre-effective-date financing statement also may be terminated in accordance with the law of the jurisdiction in which the financing statement is filed.

(c) Except as otherwise provided in Subsection (d) of this section if the law of this state governs perfection of a security interest, the information in a pre-effective-date financing statement may be amended after July 1, 2001 only if:

(1) the pre-effective-date financing statement and an amendment are filed in the office specified in Section 55-9-501 NMSA 1978;

(2) an amendment is filed in the office specified in Section 55-9-501 NMSA 1978 concurrently with, or after the filing in that office of, an initial financing statement that satisfies Subsection (c) of Section 149 of this act; or

(3) an initial financing statement that provides the information as amended and satisfies Subsection (c) of Section 149 of this act is filed in the office specified in Section 55-9-501 NMSA 1978.

(d) If the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement may be continued only under Subsections (d) and (f) of Section 148 of this act or Section 149 of this act.

(e) Whether or not the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement filed in this state may be terminated after July 1, 2001 by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial financing statement that satisfies Subsection (c) of Section 149 of this act has been filed in the office specified by the law of the jurisdiction governing perfection as provided in Sections 55-9-301 through 55-9-342 NMSA 1978 as the office in which to file a financing statement.

Section 152. TEMPORARY TRANSITION PROVISION--PERSONS ENTITLED TO FILE INITIAL FINANCING STATEMENT OR CONTINUATION STATEMENT.--A person may file an initial financing statement or a continuation statement under Sections 145 through 152 of this act if:

(1) the secured party of record authorizes the filing; and

(2) the filing is necessary under Sections 145 through 153 of this act:

(A) to continue the effectiveness of a financing statement filed before July 1, 2001; or

(B) to perfect or continue the perfection of a security interest.

Section 153. TEMPORARY TRANSITION PROVISION--PRIORITY.--

(a) This act determines the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before July 1, 2001, Chapter 55, Article 9 NMSA 1978 as it existed before that date determines priority.

(b) For purposes of Subsection (a) of Section 55-9-322 NMSA 1978, the priority of a security interest that becomes enforceable under Section 55-9-203 NMSA 1978 dates from July 1, 2001 if the security interest is perfected under this act by the filing of a financing statement before that date which would not have been effective to perfect the security interest under Chapter 55, Article 9 NMSA 1978 as it existed before July 1, 2001. This subsection does not apply to conflicting security interests, each of which is perfected by the filing of such a financing statement.

Section 154. TEMPORARY TRANSITION PROVISION--CERTAIN RECORDS OF COUNTY CLERKS.--

(a) As used in this section, "pre-effective-date record" means a financing statement and related records filed in a county clerk's office, pursuant to the provisions of Chapter 55, Article 9 NMSA 1978 as it existed prior to July 1, 2001, but does not include real estate records filed in the county clerk's office.

(b) Until July 1, 2008, a county clerk shall maintain, index and make available to the public all pre-effective-date records.

(c) On or after July 1, 2008, a county clerk may remove and destroy pre-effective-date records, including related indexes, so long as the county clerk complies with other applicable laws regarding retention of records.

Section 155. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2001.

HB 408

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