Commercial Code

Part 3 of 4 · provisions 401–600

This division is known as the Uniform Commercial Code—Leases and may be cited by that name.

Jurisdiction: United States — California
Instrument: Code
Citation: COM
Version: Undated source snapshot
Language: en
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Priority of claims Security entitlements UCC filing acceptance acceptance of goods accessions accord and satisfaction account charging account closure account debtor account debtor defenses account debtor discharge accounting charges accounts receivable acknowledgment adequate assurance admissibility of evidence adverse claims advisers after-acquired collateral agreement agreement modification agreements agricultural lien +830 more

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This division is known as the Uniform Commercial Code—Leases and may be cited by that name. This section says the division applies to transactions that create a lease, including hybrid leases, with special rules depending on whether the lease-of-goods aspects predominate. This section defines key terms used in the personal property leases division. A lease under this division is also subject to applicable title-registration laws and consumer law; if those laws conflict with this division, the other law controls. For certain goods with a certificate of title, the effect of compliance or noncompliance is governed by the issuing jurisdiction’s law until surrender of the certificate or four months after removal, and then until another jurisdiction issues a new certificate.

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Provisions of Commercial Code

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5116.
## Commercial Code - COM ## DIVISION 5. LETTERS OF CREDIT [5101 - 5118] ( Division 5 repealed and added by Stats. 1996, Ch. 176, Sec. 7. )
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This section tells which jurisdiction’s law governs liability for issuers, nominated persons, advisers, and related bank branches, and how forum selection may be chosen.

## Commercial Code - COM ## DIVISION 5. LETTERS OF CREDIT [5101 - 5118] ( Division 5 repealed and added by Stats. 1996, Ch. 176, Sec. 7. ) ## 5116. (a) The liability of an issuer, nominated person, or adviser for action or omission is governed by the law of the jurisdiction chosen by an agreement in the form of a record signed by the affected parties or by a provision in the person’s letter of credit, confirmation, or other undertaking. The jurisdiction whose law is chosen need not bear any relation to the transaction. (b) Unless subdivision (a) applies, the liability of an issuer, nominated person, or adviser for action or omission is governed by the law of the jurisdiction in which the person is located. The person is considered to be located at the address indicated in the person’s undertaking. If more than one address is indicated, the person is considered to be located at the address from which the person’s undertaking was issued. (c) For the purpose of jurisdiction, choice of law, and recognition of interbranch letters of credit, but not enforcement of a judgment, all branches of a bank are considered separate juridical entities and a bank is considered to be located at the place where its relevant branch is considered to be located under subdivision (d). (d) A branch of a bank is considered to be located at the address indicated in the branch’s undertaking. If more than one address is indicated, the branch is considered to be located at the address from which the undertaking was issued. (e) Except as otherwise provided in this subdivision, the liability of an issuer, nominated person, or adviser is governed by any rules of custom or practice, such as the Uniform Customs and Practice for Documentary Credits, to which the letter of credit, confirmation, or other undertaking is expressly made subject. If (i) this division would govern the liability of an issuer, nominated person, or adviser under subdivision (a) or (b), (ii) the relevant undertaking incorporates rules of custom or practice, and (iii) there is conflict between this division and those rules applied to that undertaking, those rules govern except to the extent of any conflict with the nonvariable provisions specified in subdivision (c) of Section 5103. (f) If there is conflict between this division and Division 3 (commencing with Section 3101), Division 4 (commencing with Section 4101), or Division 9 (commencing with Section 9101), this division governs. (g) The forum for settling disputes arising out of an undertaking within this division may be chosen in the manner and with the binding effect that governing law may be chosen in accordance with subdivision (a). (Amended by Stats. 2023, Ch. 210, Sec. 16. (SB 95) Effective January 1, 2024.)
5117.
## Commercial Code - COM ## DIVISION 5. LETTERS OF CREDIT [5101 - 5118] ( Division 5 repealed and added by Stats. 1996, Ch. 176, Sec. 7. )
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This section gives subrogation rights in letter of credit transactions to the issuer, applicant, and nominated person when the stated payment or reimbursement conditions are met.

## Commercial Code - COM ## DIVISION 5. LETTERS OF CREDIT [5101 - 5118] ( Division 5 repealed and added by Stats. 1996, Ch. 176, Sec. 7. ) ## 5117. (a) An issuer that honors a beneficiary’s presentation is subrogated to the rights of the beneficiary to the same extent as if the issuer were a secondary obligor of the underlying obligation owed to the beneficiary and of the applicant to the same extent as if the issuer were the secondary obligor of the underlying obligation owed to the applicant. (b) An applicant that reimburses an issuer is subrogated to the rights of the issuer against any beneficiary, presenter, or nominated person to the same extent as if the applicant were the secondary obligor of the obligations owed to the issuer and has the rights of subrogation of the issuer to the rights of the beneficiary stated in subdivision (a). (c) A nominated person who pays or gives value against a draft or demand presented under a letter of credit is subrogated to the rights of: (1) the issuer against the applicant to the same extent as if the nominated person were a secondary obligor of the obligation owed to the issuer by the applicant; (2) the beneficiary to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the beneficiary; and (3) the applicant to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the applicant. (d) Notwithstanding any agreement or term to the contrary, the rights of subrogation stated in subdivisions (a) and (b) do not arise until the issuer honors the letter of credit or otherwise pays and the rights in subdivision (c) do not arise until the nominated person pays or otherwise gives value. Until then, the issuer, nominated person, and the applicant do not derive under this section present or prospective rights forming the basis of a claim, defense, or excuse. (Repealed and added by Stats. 1996, Ch. 176, Sec. 7. Effective January 1, 1997.)
5118.
## Commercial Code - COM ## DIVISION 5. LETTERS OF CREDIT [5101 - 5118] ( Division 5 repealed and added by Stats. 1996, Ch. 176, Sec. 7. )
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An issuer or nominated person gets a security interest in a document presented under a letter of credit when they honor or give value for the presentation.

## Commercial Code - COM ## DIVISION 5. LETTERS OF CREDIT [5101 - 5118] ( Division 5 repealed and added by Stats. 1996, Ch. 176, Sec. 7. ) ## 5118. (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 subdivision (a), the security interest continues and is subject to Division 9 (commencing with Section 9101), subject to all of the following: (1) A security agreement is not necessary to make the security interest enforceable under paragraph (3) of subdivision (b) of section 9203. (2) If the document is presented in a medium other than a written or other tangible medium, the security interest is perfected. (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. (Added by Stats. 1999, Ch. 991, Sec. 29.5. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)
6101.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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This division is called and may be cited as the Uniform Commercial Code—Bulk Sales.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6101. This division shall be known and may be cited as Uniform Commercial Code—Bulk Sales. (Repealed and added by Stats. 1990, Ch. 1191, Sec. 3.)
6102.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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This section defines key terms for the bulk sales division.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6102. (a) In this division, unless the context otherwise requires: (1) “Assets” means the inventory and equipment that is the subject of a bulk sale and any tangible and intangible personal property used or held for use primarily in, or arising from, the seller’s business and sold in connection with that inventory and equipment, but the term does not include any of the following: (i) Fixtures (paragraph (41) of subdivision (a) of Section 9102) other than readily removable factory and office machines. (ii) The lessee’s interest in a lease of real property. (iii) Property to the extent it is generally exempt from creditor process under nonbankruptcy law. (2) “Auctioneer” means a person whom the seller engages to direct, conduct, control, or be responsible for a sale by auction. (3) “Bulk sale” means either of the following: (i) In the case of a sale by auction or a sale or series of sales conducted by a liquidator on the seller’s behalf, a sale or series of sales not in the ordinary course of the seller’s business of more than half of the seller’s inventory and equipment, as measured by a value on the date of the bulk-sale agreement. (ii) In all other cases, a sale not in the ordinary course of the seller’s business of more than half the seller’s inventory and equipment, as measured by value on the date of the bulk-sale agreement. (4) “Claim” means a right to payment from the seller, whether or not the right is reduced to judgment, liquidated, fixed, matured, disputed, secured, legal, or equitable. The term includes costs of collection and attorney’s fees only to the extent that the laws of this state permit the holder of the claim to recover them in an action against the obligor. (5) “Claimant” means a person holding a claim incurred in the seller’s business other than any of the following: (i) An unsecured and unmatured claim for employment compensation and benefits, including commissions and vacation, severance, and sick-leave pay. (ii) A claim for injury to an individual or to property, or for breach of warranty, unless all of the following are satisfied: (A) A right of action for the claim has accrued. (B) The claim has been asserted against the seller. (C) The seller knows the identity of the person asserting the claim and the basis upon which the person has asserted it. (iii) A claim for taxes owing to a governmental unit, if both of the following are satisfied: (A) A statute governing the enforcement of the claim permits or requires notice of the bulk sale to be given to the governmental unit in a manner other than by compliance with the requirements of this division. (B) Notice is given in accordance with the statute. (6) “Creditor” means a claimant or other person holding a claim. (7) (i) “Date of the bulk sale” means either of the following: (A) If the sale is by auction or is conducted by a liquidator on the seller’s behalf, the date on which more than 10 percent of the net proceeds is paid to or for the benefit of the seller. (B) In all other cases, the later of the date on which either of the following occurs: (I) More than 10 percent of the net contract price is paid to or for the benefit of the seller. (II) More than 10 percent of the assets, as measured by value, are transferred to the buyer. (ii) For purposes of this subdivision the following shall apply: (A) Delivery of a negotiable instrument (subdivision (1) of Section 3104) to or for the benefit of the seller in exchange for assets constitutes payment of the contract price pro tanto. (B) To the extent that the contract price is deposited in an escrow, the contract price is paid to or for the benefit of the seller when the seller acquires the unconditional right to receive the deposit or when the deposit is delivered to the seller or for the benefit of the seller, whichever is earlier. (C) An asset is transferred when a person holding an unsecured claim can no longer obtain through judicial proceedings rights to the asset that are superior to those of the buyer arising as a result of the bulk sale. A person holding an unsecured claim can obtain those superior rights to a tangible asset at least until the buyer has an unconditional right, under the bulk-sale agreement, to possess the asset, and a person holding an unsecured claim can obtain those superior rights to an intangible asset at least until the buyer has an unconditional right, under the bulk-sale agreement, to use the asset. (8) “Date of the bulk-sale agreement” means either of the following: (i) In the case of a sale by auction or conducted by a liquidator (subparagraph (i) of paragraph (3)), the date on which the seller engages the auctioneer or liquidator. (ii) In all other cases, the date on which a bulk-sale agreement becomes enforceable between the buyer and the seller. (9) “Debt” means liability on a claim. (10) “Liquidator” means a person who is regularly engaged in the business of disposing of assets for businesses contemplating liquidation or dissolution. (11) “Net contract price” means the new consideration the buyer is obligated to pay for the assets less each of the following: (i) The amount of any proceeds of the sale of an asset, to the extent the proceeds are applied in partial or total satisfaction of a debt secured by the asset. (ii) The amount of any debt to the extent it is secured by a security interest or lien that is enforceable against the asset before and after it has been sold to a buyer. If a debt is secured by an asset and other property of the seller, the amount of the debt secured by a security interest or lien that is enforceable against the asset is determined by multiplying the debt by a fraction, the numerator of which is the value of the new consideration for the asset on the date of the bulk sale and the denominator of which is the value of all property securing the debt on the date of the bulk sale. (12) “Net proceeds” means the new consideration received for assets sold at a sale by auction or a sale conducted by a liquidator on the seller’s behalf less each of the following: (i) Commissions and reasonable expenses of the sale. (ii) The amount of any proceeds of the sale of an asset, to the extent the proceeds are applied in partial or total satisfaction of a debt secured by the asset. (iii) The amount of any debt to the extent it is secured by a security interest or lien that is enforceable against the asset before and after it has been sold to a buyer. If a debt is secured by an asset and other property of the seller, the amount of the debt secured by a security interest or lien that is enforceable against the asset is determined by multiplying the debt by a fraction, the numerator of which is the value of the new consideration for the asset on the date of the bulk sale and the denominator of which is the value of all property securing the debt on the date of the bulk sale. (13) A sale is “in the ordinary course of the seller’s business” if the sale comports with 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. (14) “United States” includes its territories and possessions and the Commonwealth of Puerto Rico. (15) “Value” means fair market value. (16) “Verified” means signed and sworn to or affirmed. (b) The following definitions in other divisions apply to this division: (1) “Buyer.” Paragraph (a) of subdivision (1) of Section 2103. (2) “Equipment.” Paragraph (33) of subdivision (a) of Section 9102. (3) “Inventory.” Paragraph (48) of subdivision (a) of Section 9102. (4) “Sale.” Subdivision (1) of Section 2106. (5) “Seller.” Paragraph (d) of subdivision (1) of Section 2103. (c) In addition, Division 1 (commencing with Section 1101) contains general definitions and principles of construction and interpretation applicable throughout this division. (Amended by Stats. 1999, Ch. 991, Sec. 30. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)
6103.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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This section says the bulk sales division applies only when the seller meets specified business and location conditions, and it lists many transfers and sales that are excluded.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6103. (a) Except as otherwise provided in subdivision (c), this division applies to a bulk sale if both of the following are satisfied: (1) The seller’s principal business is the sale of inventory from stock, including those who manufacture what they sell, or that of a restaurant owner. (2) On the date of the bulk-sale agreement the seller is located in this state or, if the seller is located in a jurisdiction that is not a part of the United States, the seller’s major executive office in the United States is in this state. (b) A seller is deemed to be located at its place of business. If a seller has more than one place of business, the seller is deemed located at its chief executive office. (c) This division does not apply to any of the following: (1) A transfer made to secure payment or performance of an obligation. (2) A transfer of collateral to a secured party pursuant to Section 9609. (3) A disposition of collateral pursuant to Section 9610. (4) Retention of collateral pursuant to Section 9620. (5) A sale of an asset encumbered by a security interest or lien if (i) all the proceeds of the sale are applied in partial or total satisfaction of the debt secured by the security interest or lien or (ii) the security interest or lien is enforceable against the asset after it has been sold to the buyer and the net contract price is zero. (6) A general assignment for the benefit of creditors or to a subsequent transfer by the assignee. (7) A sale by an executor, administrator, receiver, trustee in bankruptcy, debtor in possession, or any public officer under judicial process. (8) A sale made in the course of judicial or administrative proceedings for the dissolution or reorganization of an organization. (9) A sale to a buyer whose principal place of business is in the United States and who satisfies each of the following: (i) Not earlier than 21 days before the date of the bulk sale, (A) obtains from the seller a verified and dated list of claimants of whom the seller has notice three days before the seller sends or delivers the list to the buyer or (B) conducts a reasonable inquiry to discover the claimants. (ii) Assumes in full the debts owed to claimants of whom the buyer has knowledge on the date the buyer receives the list of claimants from the seller or on the date the buyer completes the reasonable inquiry, as the case may be. (iii) Is not insolvent after the assumption. (iv) Records and publishes notice of the assumption not later than 30 days after the date of the bulk sale in the manner provided in Section 6105. (10) A sale to a buyer whose principal place of business is in the United States and who satisfies each of the following: (i) Assumes in full the debts that were incurred in the seller’s business before the date of the bulk sale. (ii) Is not insolvent after the assumption. (iii) Records and publishes notice of the assumption not later than 30 days after the date of the bulk sale in the manner provided by Section 6105. (11) A sale to a new organization that is organized to take over and continue the business of the seller and that has its principal place of business in the United States if each of the following conditions are satisfied: (i) The buyer assumes in full the debts that were incurred in the seller’s business before the date of the bulk sale. (ii) The seller receives nothing from the sale except an interest in the new organization that is subordinate to the claims against the organization arising from the assumption. (iii) The buyer records and publishes notice of the assumption not later than 30 days after the date of the bulk sale in the manner provided in Section 6105. (12) A sale of assets having either of the following: (i) A value, net of liens and security interests, of less than ten thousand dollars ($10,000). If a debt is secured by assets and other property of the seller, the net value of the assets is determined by subtracting from their value an amount equal to the product of the debt multiplied by a fraction, the numerator of which is the value of the assets on the date of the bulk sale and the denominator of which is the value of all property securing the debt on the date of the bulk sale. (ii) A value of more than five million dollars ($5,000,000) on the date of the bulk-sale agreement. (13) A sale required by, and made pursuant to, statute. (14) A transfer of personal property, if the personal property is leased back to the transferor immediately following the transfer and either there has been compliance with subdivision (h) of Section 3440.1 of the Civil Code or the transfer is exempt under subdivision (k) of Section 3440.1 of the Civil Code. (15) A transfer which is subject to and complies with Article 5 (commencing with Section 24070) of Chapter 6 of Division 9 of the Business and Professions Code, if the transferee records and publishes notice of the transfer at least 12 business days before the transfer is to be consummated in the manner provided in Section 6105 and the notice contains the information set forth in paragraphs (1) to (4) inclusive, of subdivision (a) of Section 6105. (16) A transfer of goods in a warehouse where a warehouse receipt has been issued therefor by a warehouseman (Section 7102) and a copy of the receipt is kept at the principal place of business of the warehouseman and at the warehouse in which the goods are stored. (d) The notice under subparagraph (iv) of paragraph (9) of subdivision (c) shall state each of the following: (1) That a sale that may constitute a bulk sale has been or will be made. (2) The date or prospective date of the bulk sale. (3) The individual, partnership, or corporate names and the addresses of the seller and buyer. (4) The address to which inquiries about the sale may be made, if different from the seller’s address. (5) That the buyer has assumed or will assume in full the debts owed to claimants of whom the buyer has knowledge on the date the buyer receives the list of claimants from the seller or completes a reasonable inquiry to discover the claimants. (e) The notice under subparagraph (iii) of paragraph (10) of subdivision (c) and subparagraph (iii) of paragraph (11) of subdivision (c) shall state each of the following: (1) That a sale that may constitute a bulk sale has been or will be made. (2) The date or prospective date of the bulk sale. (3) The individual, partnership, or corporate names and the addresses of the seller and buyer. (4) The address to which inquiries about the sale may be made, if different from the seller’s address. (5) That the buyer has assumed or will assume the debts that were incurred in the seller’s business before the date of the bulk sale. (f) For purposes of paragraph (12) of subdivision (c), the value of assets is presumed to be equal to the price the buyer agrees to pay for the assets. However, in a sale by auction or a sale conducted by a liquidator on the seller’s behalf, the value of assets is presumed to be the amount the auctioneer or liquidator reasonably estimates the assets will bring at auction or upon liquidation. (Amended by Stats. 1999, Ch. 991, Sec. 31. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)
6104.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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In a covered bulk sale, the buyer must get the seller’s business-name-and-address list, give notice of the bulk sale under Section 6105, and comply with Section 6106.2 if that section applies.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6104. In a bulk sale as defined in subparagraph (ii) of paragraph (3) of subdivision (a) of Section 6102 the buyer shall do each of the following: (a) Obtain from the seller a list of all business names and addresses used by the seller within three years before the date the list is sent or delivered to the buyer. (b) Give notice of the bulk sale in accordance with Section 6105. (c) Comply with Section 6106.2 if the bulk sale is within the scope of that section. (Added by Stats. 1990, Ch. 1191, Sec. 3.)
6105.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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A bulk-sale notice must include specific sale, seller, buyer, asset, date, and Section 6106.2 information, and it must be recorded, published, and sent to the county tax collector at least 12 business days before the sale.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6105. (a) A notice that is governed by this section shall comply with each of the following: (1) State that a bulk sale is about to be made. (2) State the name and business address of the seller together with any other business name and address listed by the seller (subdivision (a) of Section 6104) and the name and business address of the buyer. (3) State the location and general description of the assets. (4) State the place and the anticipated date of the bulk sale. (5) State whether or not the bulk sale is subject to Section 6106.2 and, if so subject, the matters required by subdivision (f) of Section 6106.2. (b) At least 12 business days before the date of the bulk sale, a notice that is governed by this section shall be: (1) Recorded in the office of the county recorder in the county or counties in this state in which the tangible assets are located and, if different, in the county in which the seller is located (paragraph (2) of subdivision (a) of Section 6103). (2) Published at least once in a newspaper of general circulation published in the public notice district in this state in which the tangible assets are located and in the public notice district, if different, in which the seller is located (paragraph (2) of subdivision (a) of Section 6103), if in either case there is one, and if there is none, then in a newspaper of general circulation in the county in which the public notice district is located. If the tangible assets are located in more than one public notice district in this state, the publication shall be in a newspaper of general circulation published in the public notice district in this state in which a greater portion of the tangible assets are located, on the date the notice is published, than in any other public notice district in this state and, if different, in the public notice district in which the seller is located (paragraph (2) of subdivision (a) of Section 6103). (3) Delivered or sent by registered or certified mail to the county tax collector in the county or counties in this state in which the tangible assets are located. If delivered during the period from January 1 to May 7, inclusive, the notice shall be accompanied by a completed business property statement with respect to property involved in the bulk sale pursuant to Section 441 of the Revenue and Taxation Code. (c) For the purposes of this section, publication of notice in a public notice district is governed by Chapter 1.1 (commencing with Section 6080) of Division 7 of Title 1 of the Government Code. (d) As used in this section, “business day” means any day other than a Saturday, Sunday, or day observed as a holiday by the state government. (Amended by Stats. 2016, Ch. 703, Sec. 10. (AB 2881) Effective January 1, 2017.)
6106.2.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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For qualifying bulk sales, the buyer or escrow agent must use the cash consideration to pay certain seller debts, send required notices, withhold disputed amounts, and handle unpaid claims within the stated deadlines.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6106.2. (a) This section applies only to a bulk sale where the consideration is two million dollars ($2,000,000) or less and is substantially all cash or an obligation of the buyer to pay cash in the future to the seller or a combination thereof. (b) Upon every bulk sale subject to this section except one made by sale at auction or a sale or series of sales conducted by a liquidator on the seller’s behalf, it is the duty of the buyer or, if the transaction is handled through an escrow, the escrow agent to apply the cash consideration in accordance with this section so far as necessary to pay those debts of the seller for which claims are due and payable on or before the date of the bulk sale and are received in writing on or prior to the date specified as the last date to file claims with the person designated in the notice to receive claims. This duty of the buyer or escrow agent runs to each claimant timely filing the claim. (c) If the seller disputes whether a claim is due and payable on the date of the bulk sale or the amount of any claim, the buyer or escrow agent shall withhold from distribution an amount equal to (1) 125 percent of the first seven thousand five hundred dollars ($7,500) of the claim, and (2) an amount equal to that portion of the claim in excess of the first seven thousand five hundred dollars ($7,500), or the pro rata amount under subdivision (b) of Section 6106.4, if applicable, and shall send a written notice to the claimant filing the claim on or before two business days after the distribution that the amount will be paid to the seller, or to the other claimants in accordance with subdivision (b) of Section 6106.4, as the case may be, unless attached within 25 days from the mailing of the notice. Any portion of the amount withheld which is not attached by the claimant within that time shall be paid by the buyer or escrow agent to the seller, or to the other claimants in accordance with subdivision (b) of Section 6106.4 if they have not been paid in full. An attachment of any amount so withheld shall be limited in its effect to the amount withheld for the attaching claimant and shall give the attaching claimant no greater priority or rights with respect to its claim than the claimant would have had if the claim had not been disputed. For purposes of this subdivision, a claimant may obtain the issuance of an attachment for a claim which is less than five hundred dollars ($500) and which otherwise meets the requirements of Section 483.010 of the Code of Civil Procedure or which is a secured claim or lien of the type described in Section 483.010 of the Code of Civil Procedure. The remedy in this subdivision shall be in addition to any other remedies the claimant may have, including any right to attach the property intended to be transferred or any other property. (d) If the cash consideration payable is not sufficient to pay all of the claims received in full, where no escrow has been established pursuant to Section 6106.4, the buyer shall follow the procedures specified in subdivisions (a) to (c), inclusive, of Section 6106.4, and the immunity established by paragraph (3) of subdivision (a) of that section shall apply to the buyer. (e) The buyer or escrow agent shall, within 45 days after the buyer takes legal title to any of the goods, either pay to the extent of the cash consideration the claims filed and not disputed, or the applicable portion thereof to the extent of the cash consideration under subdivision (b) of Section 6106.4, or institute an action in interpleader pursuant to subdivision (b) of Section 386 of the Code of Civil Procedure and deposit the consideration with the clerk of the court pursuant to subdivision (c) of that section. The action shall be brought in the appropriate court in the county where the seller had its principal place of business in this state. Sections 386.1 and 386.6 of the Code of Civil Procedure shall apply in the action. (f) The notice shall state, in addition to the matters required by Section 6105, the name and address of the person with whom claims may be filed and the last date for filing claims, which shall be the business day before the date stated in the notice pursuant to paragraph (4) of subdivision (a) of Section 6105. Claims shall be deemed timely filed only if actually received by the person designated in the notice to receive claims before the close of business on the day specified in the notice as the last date for filing claims. (g) This section shall not be construed to release any security interest or other lien on the property which is the subject of the bulk sale except upon a voluntary release by the secured party or lienholder. (Added by Stats. 1990, Ch. 1191, Sec. 4.)
6106.4.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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In some bulk sales, the buyer must deposit the full purchase price with the escrow agent, and the escrow agent must delay closing steps, notify claimants, and distribute funds in a required priority order if escrowed cash is not enough to pay all claims.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6106.4. In any case where the notice of a bulk sale subject to Section 6106.2 states that claims may be filed with an escrow agent, the intended buyer shall deposit with the escrow agent the full amount of the purchase price or consideration. If, at the time the bulk sale is otherwise ready to be consummated, the amount of cash deposited or agreed to be deposited at or prior to consummation in the escrow is insufficient to pay in full all of the claims filed with the escrow agent, the escrow agent shall do each of the following: (a) (1) Delay the distribution of the consideration and the passing of legal title for a period of not less than 25 days nor more than 30 days from the date the notice required in paragraph (2) is mailed. (2) Within five business days after the time the bulk sale would otherwise have been consummated, send a written notice to each claimant who has filed a claim stating the total consideration deposited or agreed to be deposited in the escrow, the name of each claimant who filed a claim against the escrow and the amount of each claim, the amount proposed to be paid to each claimant, the new date scheduled for the passing of legal title pursuant to paragraph (1) and the date on or before which distribution will be made to claimants which shall not be more than five days after the new date specified for the passing of legal title. (3) If no written objection to the distribution described in the notice required by paragraph (2) is received by the escrow agent prior to the new date specified in the notice for the passing of legal title, the escrow agent shall not be liable to any person to whom the notice required by paragraph (2) was sent for any good faith error that may have been committed in allocating and distributing the consideration as stated in the notice. (b) Distribute the consideration in the following order of priorities: (1) All obligations owing to the United States, to the extent given priority by federal law. (2) Secured claims, including statutory and judicial liens, to the extent of the consideration fairly attributable to the value of the properties securing the claims and in accordance with the priorities provided by law. A secured creditor shall participate in the distribution pursuant to this subdivision only if a release of lien is deposited by the secured creditor conditioned only upon receiving an amount equal to the distribution. (3) Escrow and professional charges and brokers’ fees attributable directly to the sale. (4) Wage claims given priority by Section 1205 of the Code of Civil Procedure. (5) All other tax claims. (6) All other unsecured claims pro rata, including any deficiency claims of partially secured creditors. (c) To the extent that an obligation of the buyer to pay cash in the future is a part of the consideration and the cash consideration is not sufficient to pay all claims filed in full, apply all principal and interest received on the obligation to the payment of claims in accordance with subdivision (b) until they are paid in full before making any payment to the seller. In that case, the notice sent pursuant to subdivision (a) shall state the amount, terms, and due dates of the obligation and the portion of the claims expected to be paid thereby. No funds may be drawn from the escrow, prior to the actual closing and completion of the escrow, for the payment, in whole or in part, of any commission, fee, or other consideration as compensation for a service that is contingent upon the performance of any act, condition, or instruction set forth in the escrow. (Amended by Stats. 1991, Ch. 111, Sec. 1.5. Effective July 15, 1991.)
6107.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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A buyer that does not comply with Section 6104 may owe damages to a claimant, but a good-faith, commercially reasonable effort can avoid creditor liability, and a buyer may seek reimbursement from the seller unless otherwise agreed.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6107. (a) Except as provided in subdivision (c), and subject to the limitation in subdivision (d), a buyer who fails to comply with the requirements of Section 6104 with respect to a claimant is liable to the claimant for damages in the amount of the claim, reduced by any amount that the claimant would not have realized if the buyer had complied. (b) In an action under subdivision (a), the claimant has the burden of establishing the validity and amount of the claim, and the buyer has the burden of establishing the amount that the claimant would not have realized if the buyer had complied. (c) A buyer who made a good faith and commercially reasonable effort to comply with the requirements of Section 6104 or to exclude the sale from the application of this division under subdivision (c) of Section 6103 is not liable to creditors for failure to comply with the requirements of Section 6104. The buyer has the burden of establishing the good faith and commercial reasonableness of the effort. (d) In a single bulk sale the cumulative liability of the buyer for failure to comply with the requirements of Section 6104 may not exceed an amount equal to any of the following: (1) If the assets consist only of inventory and equipment, twice the net contract price, less the amount of any part of the net contract price paid to or applied for the benefit of the seller or a creditor except to the extent that the payment or application is applied to a debt which is secured by the assets and which has been taken into consideration in determining the net contract price. (2) If the assets include property other than inventory and equipment, twice the net value of the inventory and equipment less the amount of the portion of any part of the net contract price paid to or applied for the benefit of the seller or a creditor which is allocable to the inventory and equipment except to the extent that the payment or application is applied to a debt which is secured by the assets and which has been taken into consideration in determining the net contract price. (e) For the purposes of paragraph (2) of subdivision (d), the “net value” of an asset is the value of the asset less each of the following: (1) The amount of any proceeds of the sale of an asset, to the extent the proceeds are applied in partial or total satisfaction of a debt secured by the asset. (2) The amount of any debt to the extent it is secured by a security interest or lien that is enforceable against the asset before and after it has been sold to a buyer. If a debt is secured by an asset and other property of the seller, the amount of the debt secured by a security interest or lien that is enforceable against the asset is determined by multiplying the debt by a fraction, the numerator of which is the value of the asset on the date of the bulk sale and the denominator of which is the value of all property securing the debt on the date of the bulk sale. The portion of a part of the net contract price paid to or applied for the benefit of the seller or a creditor that is “allocable to the inventory and equipment” is the portion that bears the same ratio to that part of the net contract price as the net value of the inventory and equipment bears to the net value of all of the assets. (f) A payment made by the buyer to a person to whom the buyer is, or believes it is, liable under subdivision (a) reduces pro tanto the buyer’s cumulative liability under subdivision (d). (g) No action may be brought under subdivision (a) by or on behalf of a claimant whose claim is unliquidated or contingent. (h) A buyer’s failure to comply with the requirements of Section 6104 does not do any of the following: (1) Impair the buyer’s rights in or title to the assets. (2) Render the sale ineffective, void, or voidable. (3) Entitle a creditor to more than a single satisfaction of its claim. (4) Create liability other than as provided in this division. (i) Payment of the buyer’s liability under subdivision (a) discharges pro tanto the seller’s debt to the creditor. (j) Unless otherwise agreed, a buyer has an immediate right of reimbursement from the seller for any amount paid to a creditor in partial or total satisfaction of the buyer’s liability under subdivision (a). (Repealed and added by Stats. 1990, Ch. 1191, Sec. 3.)
6108.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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For bulk sales by auction or by a liquidator, the section changes how the notice and liability rules work, and exempts the buyer from Section 6104 compliance.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6108. (a) Sections 6104, 6105, and 6107 apply to a bulk sale by auction and a bulk sale conducted by a liquidator on the seller’s behalf with the following modifications: (1) “Buyer” refers to auctioneer or liquidator, as the case may be. (2) “Net contract price” refers to net proceeds of the auction or net proceeds of the sale, as the case may be. (3) The written notice required under subdivision (a) of Section 6105 shall be accompanied by a statement that the sale is to be by auction or by liquidation, the name of the auctioneer or liquidator, and the time and place of the auction or the time and place on or after which the liquidator will begin to sell assets on the seller’s behalf. (4) In a single bulk sale the cumulative liability of the auctioneer or liquidator for failure to comply with the requirements of this section may not exceed the amount of the net proceeds of the sale allocable to inventory and equipment sold less the amount of the portion of any part of the net proceeds paid to or applied for the benefit of a creditor which is allocable to the inventory and equipment. (b) A payment made by the auctioneer or liquidator to a person to whom the auctioneer or liquidator is, or believes it is, liable under this section reduces pro tanto the auctioneer’s or liquidator’s cumulative liability under paragraph (4) of subdivision (a). (c) A person who buys at a bulk sale by auction or conducted by a liquidator need not comply with the requirements of Section 6104 and is not liable for the failure of an auctioneer or liquidator to comply with the requirements of this section. (Repealed and added by Stats. 1990, Ch. 1191, Sec. 3.)
6110.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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An action under this division against a buyer, auctioneer, or liquidator must generally be started within one year after the bulk sale date.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6110. (a) Except as provided in subdivision (b), an action under this division against a buyer, auctioneer, or liquidator shall be commenced within one year after the date of the bulk sale. (b) If the buyer, auctioneer, or liquidator conceals the fact that the sale has occurred, the limitation is tolled and an action under this division may be commenced within the earlier of the following: (1) One year after the person bringing the action discovers that the sale has occurred. (2) One year after the person bringing the action should have discovered that the sale has occurred, but no later than two years after the date of the bulk sale. Complete noncompliance with the requirements of this division does not of itself constitute concealment. (Repealed and added by Stats. 1990, Ch. 1191, Sec. 3.)
6111.
## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. )
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This section applies the bulk sales division to sales on or after January 1, 1991, with special transitional rules for agreements made before that date.

## Commercial Code - COM ## DIVISION 6. BULK SALES [6101 - 6111] ( Division 6 repealed and added by Stats. 1990, Ch. 1191, Sec. 3. ) ## 6111. (a) Except to the extent provided in subdivision (b), this division shall apply to a bulk sale if the date of the bulk sale is on or after January 1, 1991. (b) If the date of a bulk sale is on or after January 1, 1991, and the date of the bulk-sale agreement is before January 1, 1991, all of the following shall apply: (1) Paragraph (2) of subdivision (a) of Section 6103 and subdivision (b) of Section 6103 shall not apply and this division shall apply only if the goods are located in this state. (2) Subdivision (a) of Section 6104 shall not apply. (3) The buyer is required under subdivision (b) of Section 6104 to give notice in accordance with Section 6107, as in effect on December 31, 1990, rather than Section 6105. (4) The buyer is required under subdivision (c) of Section 6104 to comply with Section 6106, as in effect on December 31, 1990, if the bulk sale is within the scope of that section, rather than Section 6106.2. (5) Section 6105 shall not apply, and Section 6107, as in effect on December 31, 1990, shall apply. (6) Sections 6106.2 and 6106.4 shall not apply, and Sections 6106 and 6106.1, as in effect on December 31, 1990, shall apply. (7) No action may be brought under this division, as in effect either before or on or after January 1, 1991, if the provisions of this division, as in effect on December 31, 1990, have been complied with. (Repealed and added by Stats. 1990, Ch. 1191, Sec. 3.)
7101.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. )
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This section says Division 7 may be cited as the Uniform Commercial Code—Documents of Title.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7101. This division may be cited as the Uniform Commercial Code—Documents of Title. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7102.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. )
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This section defines key terms used in Division 7, including bailee, carrier, consignee, consignor, delivery order, good faith, goods, issuer, person entitled under the document, shipper, and warehouse.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7102. (a) In this division, unless the context otherwise requires: (1) “Bailee” means a person that by a warehouse receipt, bill of lading, or other document of title acknowledges possession of goods and contracts to deliver them. (2) “Carrier” means a person that issues a bill of lading. (3) “Consignee” means a person named in a bill of lading to which or to whose order the bill promises delivery. (4) “Consignor” means a person named in a bill of lading as the person from which the goods have been received for shipment. (5) “Delivery order” means a record that contains an order to deliver goods directed to a warehouse, carrier, or other person that in the ordinary course of business issues warehouse receipts or bills of lading. (6) “Good faith” means honesty in fact and the observance of reasonable commercial standards of fair dealing. (7) “Goods” means all things that are treated as movable for the purposes of a contract for storage or transportation. (8) “Issuer” means a bailee that issues a document of title or, in the case of an unaccepted delivery order, the person that orders the possessor of goods to deliver. The term includes a person for which an agent or employee purports to act in issuing a document if the agent or employee has real or apparent authority to issue documents, even if the issuer did not receive any goods, the goods were misdescribed, or in any other respect the agent or employee violated the issuer’s instructions. (9) “Person entitled under the document” means the holder, in the case of a negotiable document of title, or the person to which delivery of the goods is to be made by the terms of, or pursuant to instructions in a record under, a nonnegotiable document of title. (10) [Reserved] (11) [Reserved] (12) “Shipper” means a person that enters into a contract of transportation with a carrier. (13) “Warehouse” means a person engaged in the business of storing goods for hire. (b) Definitions in other divisions applying to this division and the sections in which they appear are: (1) “Contract for sale,” Section 2106. (2) “Lessee in the ordinary course of business,” Section 10103. (3) “Receipt of goods,” Section 2103. (c) In addition, Division 1 (commencing with Section 1101) contains general definitions and principles of construction and interpretation applicable throughout this division. (Amended by Stats. 2023, Ch. 210, Sec. 17. (SB 95) Effective January 1, 2024.)
7103.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. )
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This section says Division 7 yields to applicable federal or state laws, does not change certain bailee and document-of-title laws, partly overrides the federal E-SIGN Act, and controls if it conflicts with the Uniform Electronic Transactions Act.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7103. (a) This division is subject to any treaty or statute of the United States or regulatory statute of this state to the extent the treaty, statute, or regulatory statute is applicable. (b) This division does not modify or repeal any law prescribing the form or content of a document of title or the services or facilities to be afforded by a bailee, or otherwise regulating a bailee’s business in respects not specifically treated in this division. However, violation of such a law does not affect the status of a document of title that otherwise is within the definition of a document of title. (c) This division modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Sec. 7001, et seq.) but does not modify, limit, or supersede Section 101(c) of that act (15 U.S.C. Sec. 7001(c)) or authorize electronic delivery of any of the notices described in Section 103(b) of that act (15 U.S.C. Sec. 7003(b)). (d) To the extent there is a conflict between the Uniform Electronic Transactions Act (Title 2.5 (commencing with Section 1633.1) of Part 2 of Division 3 of the Civil Code) and this division, this division governs. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7104.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. )
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A document of title is negotiable only if it calls for delivery to bearer or to the order of a named person, unless subdivision (c) says otherwise.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7104. (a) Except as otherwise provided in subdivision (c), a document of title is negotiable if by its terms the goods are to be delivered to bearer or to the order of a named person. (b) A document of title other than one described in subdivision (a) is nonnegotiable. A bill of lading that states that the goods are consigned to a named person is not made negotiable by a provision that the goods are to be delivered only against an order in a record signed by the same or another named person. (c) A document of title is nonnegotiable if, at the time it is issued, the document has a conspicuous legend, however expressed, that it is nonnegotiable. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7105.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. )
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An issuer may replace an electronic document of title with a tangible one, or a tangible one with an electronic one, if the required surrender and substitution statement conditions are met.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7105. (a) Upon request of a person entitled under an electronic document of title, the issuer of the electronic document may issue a tangible document of title as a substitute for the electronic document if: (1) the person entitled under the electronic document surrenders control of the document to the issuer; and (2) the tangible document when issued contains a statement that it is issued in substitution for the electronic document. (b) Upon issuance of a tangible document of title in substitution for an electronic document of title in accordance with subdivision (a): (1) the electronic document ceases to have any effect or validity; and (2) the person that procured issuance of the tangible document warrants to all subsequent persons entitled under the tangible document that the warrantor was a person entitled under the electronic document when the warrantor surrendered control of the electronic document to the issuer. (c) Upon request of a person entitled under a tangible document of title, the issuer of the tangible document may issue an electronic document of title as a substitute for the tangible document if: (1) the person entitled under the tangible document surrenders possession of the document to the issuer; and (2) the electronic document when issued contains a statement that it is issued in substitution for the tangible document. (d) Upon issuance of an electronic document of title in substitution for a tangible document of title in accordance with subdivision (c): (1) the tangible document ceases to have any effect or validity; and (2) the person that procured issuance of the electronic document warrants to all subsequent persons entitled under the electronic document that the warrantor was a person entitled under the tangible document when the warrantor surrendered possession of the tangible document to the issuer. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7106.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. )
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This section explains when a person has control of an electronic document of title and when that control gives the person exclusive power to prevent changes and transfer control.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 1. General [7101 - 7106] ( Chapter 1 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7106. (a) A person has control of an electronic document of title if a system employed for evidencing the transfer of interests in the electronic document reliably establishes that person as the person to which the electronic document was issued or transferred. (b) A system satisfies subdivision (a), and a person has control of an electronic document of title, if the document is created, stored, and transferred in a manner that: (1) a single authoritative copy of the document exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable; (2) the authoritative copy identifies the person asserting control as: (A) the person to which the document was issued; or (B) if the authoritative copy indicates that the document has been transferred, the person to which the document was most recently transferred; (3) the authoritative copy is communicated to and maintained by the person asserting control or its designated custodian; (4) copies or amendments that add or change an identified transferee of the authoritative copy can be made only with the consent of the person asserting control; (5) 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 (6) any amendment of the authoritative copy is readily identifiable as authorized or unauthorized. (c) A system satisfies subdivision (a), and a person has control of an electronic document of title, if an authoritative electronic copy of the document, a record attached to or logically associated with the electronic copy, or a system in which the electronic copy is recorded: (1) enables the person readily to identify each electronic copy as either an authoritative copy or a nonauthoritative copy; (2) enables the person readily to identify itself in any way, including by name, identifying number, cryptographic key, office, or account number, as the person to which each authoritative electronic copy was issued or transferred; and (3) gives the person exclusive power, subject to subdivision (d), to: (A) prevent others from adding or changing the person to which each authoritative electronic copy has been issued or transferred; and (B) transfer control of each authoritative electronic copy. (d) Subject to subdivision (e), a power is exclusive under subparagraphs (A) and (B) of paragraph (3) of subdivision (c) even if: (1) the authoritative electronic copy, a record attached to or logically associated with the authoritative electronic copy, or a system in which the authoritative electronic copy is recorded limits the use of the document of title or has a protocol that is programmed to cause a change, including a transfer or loss of control; or (2) the power is shared with another person. (e) A power of a person is not shared with another person under paragraph (2) of subdivision (d) and the person’s power is not exclusive if: (1) the person can exercise the power only if the power also is exercised by the other person; and (2) the other person: (A) can exercise the power without exercise of the power by the person; or (B) is the transferor to the person of an interest in the document of title. (f) If a person has the powers specified in subparagraphs (A) and (B) of paragraph (3) of subdivision (c), the powers are presumed to be exclusive. (g) A person has control of an electronic document of title if another person, other than the transferor to the person of an interest in the document: (1) has control of the document and acknowledges that it has control on behalf of the person; or (2) obtains control of the document after having acknowledged that it will obtain control of the document on behalf of the person. (h) A person that has control under this section is not required to acknowledge that it has control on behalf of another person. (i) If a person acknowledges that it has or will obtain control on behalf of another person, unless the person otherwise agrees or law other than this division or Division 9 (commencing with Section 9101) otherwise provides, the person does not owe any duty to the other person and is not required to confirm the acknowledgment to any other person. (Amended by Stats. 2023, Ch. 210, Sec. 18. (SB 95) Effective January 1, 2024.)
7201.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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A warehouse may issue a warehouse receipt. In some stored-goods cases, a receipt is treated as a warehouse receipt even if the owner, not a warehouse, issued it.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7201. (a) A warehouse receipt may be issued by any warehouse. (b) If goods, including distilled spirits and agricultural commodities, are stored under a statute requiring a bond against withdrawal or a license for the issuance of receipts in the nature of warehouse receipts, a receipt issued for the goods is deemed to be a warehouse receipt even if issued by a person that is the owner of the goods and is not a warehouse. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7202.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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Warehouse receipts do not have to follow a specific form, but they should include several listed details or the warehouse may be liable for damages caused by the omission.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7202. (a) A warehouse receipt need not be in any particular form. (b) Unless a warehouse receipt provides for each of the following, the warehouse is liable for damages caused to a person injured by its omission: (1) a statement of the location of the warehouse facility where the goods are stored; (2) the date of issue of the receipt; (3) the unique identification code of the receipt; (4) a statement whether the goods received will be delivered to the bearer, to a named person, or to a named person or its order; (5) the rate of storage and handling charges, unless goods are stored under a field warehousing arrangement, in which case a statement of that fact is sufficient on a nonnegotiable receipt; (6) a description of the goods or the packages containing them; (7) the signature of the warehouse or its agent; (8) if the receipt is issued for goods that the warehouse owns, either solely, jointly, or in common with others, a statement of the fact of that ownership; and (9) a statement of the amount of advances made and of liabilities incurred for which the warehouse claims a lien or security interest, unless the precise amount of advances made or liabilities incurred, at the time of the issue of the receipt, is unknown to the warehouse or to its agent that issued the receipt, in which case a statement of the fact that advances have been made or liabilities incurred and the purpose of the advances or liabilities is sufficient. (c) A warehouse may insert in its receipt any terms that are not contrary to the provisions of this code and do not impair its obligation of delivery under Section 7403 or its duty of care under Section 7204. Any contrary provision is ineffective. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7203.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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A good-faith party or purchaser for value relying on a document of title, other than a bill of lading, may recover damages from the issuer for nonreceipt or misdescription of the goods, unless stated warnings or notice apply.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7203. A party to or purchaser for value in good faith of a document of title, other than a bill of lading, that relies upon the description of the goods in the document may recover from the issuer damages caused by the nonreceipt or misdescription of the goods, except to the extent that: (1) the document conspicuously indicates that the issuer does not know whether all or part of the goods in fact were received or conform to the description, such as a case in which the description is in terms of marks or labels or kind, quantity, or condition, or the receipt or description is qualified by “contents, condition, and quality unknown,” “said to contain,” or words of similar import, if the indication is true; or (2) the party or purchaser otherwise has notice of the nonreceipt or misdescription. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7204.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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A warehouse must use reasonable care for stored goods and may be liable for losses or injuries caused by failing to do so.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7204. (a) A warehouse is liable for damages for loss of or injury to the goods caused by its failure to exercise care with regard to the goods that a reasonably careful person would exercise under similar circumstances. Unless otherwise agreed, the warehouse is not liable for damages that could not have been avoided by the exercise of that care. (b) Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage beyond which the warehouse is not liable. Such a limitation is not effective with respect to the warehouse’s liability for conversion to its own use. On request of the bailor in a record at the time of signing the storage agreement or within a reasonable time after receipt of the warehouse receipt, the warehouse’s liability may be increased on part or all of the goods covered by the storage agreement or the warehouse receipt. In this event, increased rates may be charged based on an increased valuation of the goods. (c) Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the bailment may be included in the warehouse receipt or storage agreement. (d) This section does not modify or repeal Section 1630 of the Civil Code nor any of the provisions of the Public Utilities Code or the Food and Agricultural Code or any lawful regulations issued thereunder. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7205.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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A buyer in ordinary course of business can take qualifying fungible goods free of claims under a warehouse receipt, even if the receipt is negotiable and was duly negotiated.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7205. A buyer in ordinary course of business of fungible goods sold and delivered by a warehouse that is also in the business of buying and selling such goods takes the goods free of any claim under a warehouse receipt even if the receipt is negotiable and has been duly negotiated. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7206.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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A warehouse may demand payment and removal of stored goods by notice, may sell unremoved goods in specified circumstances, and must deliver goods to entitled persons before sale or other disposition.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7206. (a) A warehouse, by giving notice to the person on whose account the goods are held and any other person known to claim an interest in the goods, may require payment of any charges and removal of the goods from the warehouse at the termination of the period of storage fixed by the document of title or, if a period is not fixed, within a stated period not less than 30 days after the warehouse gives notice. If the goods are not removed before the date specified in the notice, the warehouse may sell them pursuant to Section 7210. (b) If a warehouse in good faith believes that goods are about to deteriorate or decline in value to less than the amount of its lien within the time provided in subdivision (a) and Section 7210, the warehouse may specify in the notice given under subdivision (a) any reasonable shorter time for removal of the goods and, if the goods are not removed, may sell them at public sale held not less than one week after a single advertisement or posting. (c) If, as a result of a quality or condition of the goods of which the warehouse did not have notice at the time of deposit, the goods are a hazard to other property, the warehouse facilities, or other persons, the warehouse may sell the goods at public or private sale without advertisement or posting on reasonable notification to all persons known to claim an interest in the goods. If the warehouse, after a reasonable effort, is unable to sell the goods, it may dispose of them in any lawful manner and does not incur liability by reason of that disposition. (d) A warehouse shall deliver the goods to any person entitled to them under this division upon due demand made at any time before sale or other disposition under this section. (e) A warehouse may satisfy its lien from the proceeds of any sale or disposition under this section but shall hold the balance for delivery on the demand of any person to which the warehouse would have been bound to deliver the goods. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7207.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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A warehouse must keep goods covered by each receipt separate, unless the receipt allows otherwise; fungible goods may be mixed.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7207. (a) Unless the warehouse receipt provides otherwise, a warehouse shall keep separate the goods covered by each receipt so as to permit at all times identification and delivery of those goods. However, different lots of fungible goods may be commingled. (b) If different lots of fungible goods are commingled, the goods are owned in common by the persons entitled thereto and the warehouse is severally liable to each owner for that owner’s share. If, because of overissue, a mass of fungible goods is insufficient to meet all the receipts the warehouse has issued against it, the persons entitled include all holders to which overissued receipts have been duly negotiated. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7208.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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If a blank in a negotiable tangible warehouse receipt was filled in without authority, a good-faith purchaser for value without notice may treat it as authorized.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7208. If a blank in a negotiable tangible warehouse receipt has been filled in without authority, a good-faith purchaser for value and without notice of the lack of authority may treat the insertion as authorized. Any other unauthorized alteration leaves any tangible or electronic warehouse receipt enforceable against the issuer according to its original tenor. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7209.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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A warehouse can claim a lien on stored goods and may reserve a security interest for certain extra charges.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7209. (a) A warehouse has a lien against the bailor on the goods covered by a warehouse receipt or storage agreement or on the proceeds thereof in its possession for charges for storage or transportation, including demurrage and terminal charges, insurance, labor, or other charges, present or future, in relation to the goods, and for expenses necessary for preservation of the goods or reasonably incurred in their sale pursuant to law. If the person on whose account the goods are held is liable for similar charges or expenses in relation to other goods whenever deposited and it is stated in the warehouse receipt or storage agreement that a lien is claimed for charges and expenses in relation to other goods, the warehouse also has a lien against the goods covered by the warehouse receipt or storage agreement or on the proceeds thereof in its possession for those charges and expenses, whether or not the other goods have been delivered by the warehouse. However, as against a person to which a negotiable warehouse receipt is duly negotiated, a warehouse’s lien is limited to charges in an amount or at a rate specified in the warehouse receipt or, if no charges are so specified, to a reasonable charge for storage of the specific goods covered by the receipt subsequent to the date of the receipt. (b) A warehouse may also reserve a security interest against the bailor for the maximum amount specified on the receipt for charges other than those specified in subdivision (a), such as for money advanced and interest. The security interest is governed by Division 9 (commencing with Section 9101). (c) A warehouse’s lien for charges and expenses under subdivision (a) or a security interest under subdivision (b) is also effective against any person that so entrusted the bailor with possession of the goods that a pledge of them by the bailor to a good-faith purchaser for value would have been valid. However, the lien or security interest is not effective against a person that before issuance of a document of title had a legal interest or a perfected security interest in the goods and that did not: (1) deliver or entrust the goods or any document of title covering the goods to the bailor or the bailor’s nominee with: (A) actual or apparent authority to ship, store, or sell; (B) power to obtain delivery under Section 7403; or (C) power of disposition under Section 2403 or 9320 or subdivision (c) of Section 9321 or subdivision (b) of Section 10304 or subdivision (b) of Section 10305 or other statute or rule of law; or (2) acquiesce in the procurement by the bailor or its nominee of any document. (d) A warehouse’s lien on household goods for charges and expenses in relation to the goods under subdivision (a) is also effective against all persons if the depositor was the legal possessor of the goods at the time of deposit. In this subdivision, “household goods” means furniture, furnishings, or personal effects used by the depositor in a dwelling. (e) A warehouse loses its lien on any goods that it voluntarily delivers or unjustifiably refuses to deliver. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7210.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. )
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A warehouse may enforce its lien by selling the goods, but it must give notice, follow specific sale procedures, and act in a commercially reasonable way.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 2. Warehouse Receipts: Special Provisions [7201 - 7210] ( Chapter 2 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7210. (a) Except as otherwise provided in subdivision (b), a warehouse’s lien may be enforced by public or private sale of the goods, in bulk or in packages, at any time or place and on any terms that are commercially reasonable, after notifying all persons known to claim an interest in the goods. Notification may be made by mail, personal service, or verifiable electronic mail. The notification must include a statement of the amount due, the nature of the proposed sale, and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a method different from that selected by the warehouse is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. The warehouse sells in a commercially reasonable manner if the warehouse sells the goods in the usual manner in any recognized market therefor, sells at the price current in that market at the time of the sale, or otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding sentence. (b) A warehouse may enforce its lien on goods, other than goods stored by a merchant in the course of its business, only if the following requirements are satisfied: (1) All persons known to claim an interest in the goods must be notified. (2) The notification must include an itemized statement of the claim, a description of the goods subject to the lien, a demand for payment within a specified time not less than 10 days after receipt of the notification, and a conspicuous statement that unless the claim is paid within that time the goods will be advertised for sale and sold by auction at a specified time and place. (3) The sale must conform to the terms of the notification. (4) The sale must be held at the nearest suitable place to where the goods are held or stored. (5) After the expiration of the time given in the notification, an advertisement of the sale must be published once a week for two weeks consecutively in a newspaper of general circulation where the sale is to be held. The advertisement must include a description of the goods, the name of the person on whose account the goods are being held, and the time and place of the sale. The sale must take place at least 15 days after the first publication. If there is no newspaper of general circulation where the sale is to be held, the advertisement must be posted at least 10 days before the sale in not fewer than six conspicuous places in the neighborhood of the proposed sale. (c) Before any sale pursuant to this section, any person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred in complying with this section. In that event, the goods may not be sold but must be retained by the warehouse subject to the terms of the receipt and this division. (d) A warehouse may buy at any public sale held pursuant to this section. (e) A purchaser in good faith of goods sold to enforce a warehouse’s lien takes the goods free of any rights of persons against which the lien was valid, despite the warehouse’s noncompliance with this section. (f) A warehouse may satisfy its lien from the proceeds of any sale pursuant to this section but shall hold the balance, if any, for delivery on demand to any person to which the warehouse would have been bound to deliver the goods. (g) The rights provided by this section are in addition to all other rights allowed by law to a creditor against a debtor. (h) If a lien is on goods stored by a merchant in the course of its business, the lien may be enforced in accordance with subdivision (a) or (b). (i) A warehouse is liable for damages caused by failure to comply with the requirements for sale under this section and, in case of willful violation, is liable for conversion. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7301.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. )
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This section lets certain bill-of-lading holders recover damages for misdating or misdescription, requires the issuer to verify loaded goods in some cases, and makes the shipper indemnify the issuer for inaccurate shipment details.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7301. (a) A consignee of a nonnegotiable bill of lading which has given value in good faith, or a holder to which a negotiable bill has been duly negotiated, relying upon the description of the goods in the bill or upon the date shown in the bill, may recover from the issuer damages caused by the misdating of the bill or the nonreceipt or misdescription of the goods, except to the extent that the bill indicates that the issuer does not know whether any part or all of the goods in fact were received or conform to the description, such as in a case in which the description is in terms of marks or labels or kind, quantity, or condition or the receipt or description is qualified by “contents or condition of contents of packages unknown,” “said to contain,” “shipper’s weight, load, and count,” or words of similar import, if that indication is true. (b) If goods are loaded by the issuer of a bill of lading: (1) the issuer shall count the packages of goods if shipped in packages and ascertain the kind and quantity if shipped in bulk; and (2) words such as “shipper’s weight, load, and count,” or words of similar import indicating that the description was made by the shipper are ineffective except as to goods concealed in packages. (c) If bulk goods are loaded by a shipper that makes available to the issuer of a bill of lading adequate facilities for weighing those goods, the issuer shall ascertain the kind and quantity within a reasonable time after receiving the shipper’s request in a record to do so. In that case, “shipper’s weight” or words of similar import are ineffective. (d) The issuer of a bill of lading, by including in the bill the words “shipper’s weight, load, and count,” or words of similar import, may indicate that the goods were loaded by the shipper, and, if that statement is true, the issuer is not liable for damages caused by the improper loading. However, omission of such words does not imply liability for damages caused by improper loading. (e) A shipper guarantees to an issuer the accuracy at the time of shipment of the description, marks, labels, number, kind, quantity, condition, and weight, as furnished by the shipper, and the shipper shall indemnify the issuer against damage caused by inaccuracies in those particulars. This right of indemnity does not limit the issuer’s responsibility or liability under the contract of carriage to any person other than the shipper. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7302.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. )
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The issuer of a through bill of lading can be liable for breach by a performing carrier or agent, and can recover related losses from the carrier or other person in possession of the goods.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7302. (a) The issuer of a through bill of lading, or other document of title embodying an undertaking to be performed in part by a person acting as its agent or by a performing carrier, is liable to any person entitled to recover on the bill or other document for any breach by the other person or the performing carrier of its obligation under the bill or other document. However, to the extent that the bill or other document covers an undertaking to be performed overseas or in territory not contiguous to the continental United States or an undertaking including matters other than transportation, this liability for breach by the other person or the performing carrier may be varied by agreement of the parties. (b) If goods covered by a through bill of lading or other document of title embodying an undertaking to be performed in part by a person other than the issuer are received by that person, the person is subject, with respect to its own performance while the goods are in its possession, to the obligation of the issuer. The person’s obligation is discharged by delivery of the goods to another person pursuant to the bill or other document and does not include liability for breach by any other person or by the issuer. (c) The issuer of a through bill of lading or other document of title described in subdivision (a) is entitled to recover from the performing carrier, or other person in possession of the goods when the breach of the obligation under the bill or other document occurred: (1) the amount it may be required to pay to any person entitled to recover on the bill or other document for the breach, as may be evidenced by any receipt, judgment, or transcript of judgment; and (2) the amount of any expense reasonably incurred by the issuer in defending any action commenced by any person entitled to recover on the bill or other document for the breach. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7303.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. )
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A carrier may deliver goods somewhere else than the bill of lading says, or otherwise dispose of them, if it acts on the listed instructions and the bill does not say otherwise.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7303. (a) Unless the bill of lading otherwise provides, a carrier may deliver the goods to a person or destination other than that stated in the bill or may otherwise dispose of the goods, without liability for misdelivery, on instructions from: (1) the holder of a negotiable bill; (2) the consignor on a nonnegotiable bill, even if the consignee has given contrary instructions; (3) the consignee on a nonnegotiable bill in the absence of contrary instructions from the consignor, if the goods have arrived at the billed destination or if the consignee is in possession of the tangible bill or in control of the electronic bill; or (4) the consignee on a nonnegotiable bill, if the consignee is entitled as against the consignor to dispose of the goods. (b) Unless instructions described in subdivision (a) are included in a negotiable bill of lading, a person to which the bill is duly negotiated may hold the bailee according to the original terms. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7304.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. )
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A tangible bill of lading generally may not be issued in parts, except in customary international transportation. If it is lawfully issued in parts, the first presented part controls delivery, and certain transfers can create liability.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7304. (a) Except as customary in international transportation, a tangible bill of lading may not be issued in a set of parts. The issuer is liable for damages caused by violation of this subdivision. (b) If a tangible bill of lading is lawfully issued in a set of parts, each of which contains an identification code and is expressed to be valid only if the goods have not been delivered against any other part, the whole of the parts constitutes one bill. (c) If a tangible negotiable bill of lading is lawfully issued in a set of parts and different parts are negotiated to different persons, the title of the holder to which the first due negotiation is made prevails as to both the document of title and the goods even if any later holder may have received the goods from the carrier in good faith and discharged the carrier’s obligation by surrendering its part. (d) A person that negotiates or transfers a single part of a tangible bill of lading issued in a set is liable to holders of that part as if it were the whole set. (e) The bailee shall deliver in accordance with Chapter 4 (commencing with Section 7401) against the first presented part of a tangible bill of lading lawfully issued in a set. Delivery in this manner discharges the bailee’s obligation on the whole bill. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7305.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. )
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A carrier may arrange for a bill of lading to be issued at a different place if the consignor requests it. An issuer may also arrange for a substitute bill to be issued, if the requesting person is entitled to control the goods in transit and any outstanding bill or receipt is surrendered.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7305. (a) Instead of issuing a bill of lading to the consignor at the place of shipment, a carrier, at the request of the consignor, may procure the bill to be issued at destination or at any other place designated in the request. (b) Upon request of any person entitled as against a carrier to control the goods while in transit and on surrender of possession or control of any outstanding bill of lading or other receipt covering the goods, the issuer, subject to Section 7105, may procure a substitute bill to be issued at any place designated in the request. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7306.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. )
Verify source ↗

If a bill of lading is altered without authorization or has a blank filled in without authorization, it remains enforceable as originally written.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7306. An unauthorized alteration or filling in of a blank in a bill of lading leaves the bill enforceable according to its original tenor. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7307.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. )
Verify source ↗

A carrier may claim a lien on covered goods or their proceeds for certain storage, transportation, preservation, and related sale expenses, but the lien is limited against a purchaser for value of a negotiable bill of lading.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7307. (a) A carrier has a lien on the goods covered by a bill of lading or on the proceeds thereof in its possession for charges after the date of the carrier’s receipt of the goods for storage or transportation, including demurrage and terminal charges, and for expenses necessary for preservation of the goods incident to their transportation or reasonably incurred in their sale pursuant to law. However, against a purchaser for value of a negotiable bill of lading, a carrier’s lien is limited to charges stated in the bill or the applicable tariffs or, if no charges are stated, a reasonable charge. (b) A lien for charges and expenses under subdivision (a) on goods that the carrier was required by law to receive for transportation is effective against the consignor or any person entitled to the goods unless the carrier had notice that the consignor lacked authority to subject the goods to those charges and expenses. Any other lien under subdivision (a) is effective against the consignor and any person that permitted the bailor to have control or possession of the goods unless the carrier had notice that the bailor lacked authority. (c) A carrier loses its lien on any goods that it voluntarily delivers or unjustifiably refuses to deliver. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7308.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. )
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A carrier may enforce a lien on goods by sale if it first notifies known claimants and the sale is commercially reasonable.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7308. (a) A carrier’s lien on goods may be enforced by public or private sale of the goods, in bulk or in packages, at any time or place and on any terms that are commercially reasonable, after notifying all persons known to claim an interest in the goods. The notification must include a statement of the amount due, the nature of the proposed sale, and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a method different from that selected by the carrier is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. The carrier sells goods in a commercially reasonable manner if the carrier sells the goods in the usual manner in any recognized market therefor, sells at the price current in that market at the time of the sale, or otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding sentence. (b) Before any sale pursuant to this section, any person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred in complying with this section. In that event, the goods may not be sold but must be retained by the carrier, subject to the terms of the bill of lading and this division. (c) A carrier may buy at any public sale pursuant to this section. (d) A purchaser in good faith of goods sold to enforce a carrier’s lien takes the goods free of any rights of persons against which the lien was valid, despite the carrier’s noncompliance with this section. (e) A carrier may satisfy its lien from the proceeds of any sale pursuant to this section but shall hold the balance, if any, for delivery on demand to any person to which the carrier would have been bound to deliver the goods. (f) The rights provided by this section are in addition to all other rights allowed by law to a creditor against a debtor. (g) A carrier’s lien may be enforced pursuant to either subdivision (a) or the procedure set forth in subdivision (b) of Section 7210. (h) A carrier is liable for damages caused by failure to comply with the requirements for sale under this section and, in case of willful violation, is liable for conversion. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7309.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. )
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A carrier issuing a bill of lading must use reasonable care with the goods. The carrier may limit damages in the bill or a transportation agreement if value-based rate conditions and notice/opportunity requirements are met, but not for conversion to its own use. The bill or agreement may also include reasonable claim-presentation and lawsuit-commencement timing rules.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 3. Bills of Lading: Special Provisions [7301 - 7309] ( Chapter 3 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7309. (a) A carrier that issues a bill of lading, whether negotiable or nonnegotiable, shall exercise the degree of care in relation to the goods which a reasonably careful person would exercise under similar circumstances. This subdivision does not affect any statute, regulation, or rule of law that imposes liability upon a common carrier for damages not caused by its negligence. (b) Damages may be limited by a term in the bill of lading or in a transportation agreement that the carrier’s liability may not exceed a value stated in the bill or transportation agreement if the carrier’s rates are dependent upon value and the consignor is afforded an opportunity to declare a higher value and the consignor is advised of the opportunity. However, such a limitation is not effective with respect to the carrier’s liability for conversion to its own use. (c) Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the shipment may be included in a bill of lading or a transportation agreement. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7401.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 4. Warehouse Receipts and Bills of Lading: General Obligations [7401 - 7404] ( Chapter 4 added by Stats. 2006, Ch. 254, Sec. 49. )
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An issuer’s obligations under this division still apply to a document of title even if the document has defects or the issuer or goods have certain irregularities.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 4. Warehouse Receipts and Bills of Lading: General Obligations [7401 - 7404] ( Chapter 4 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7401. The obligations imposed by this division on an issuer apply to a document of title even if: (1) the document does not comply with the requirements of this division or of any other statute, rule, or regulation regarding its issuance, form, or content; (2) the issuer violated laws regulating the conduct of its business; (3) the goods covered by the document were owned by the bailee when the document was issued; or (4) the person issuing the document is not a warehouse but the document purports to be a warehouse receipt. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7402.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 4. Warehouse Receipts and Bills of Lading: General Obligations [7401 - 7404] ( Chapter 4 added by Stats. 2006, Ch. 254, Sec. 49. )
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A duplicate document of title generally does not give rights in goods already covered by an outstanding document from the same issuer; the issuer is liable for damages if it overissues or fails to mark a duplicate conspicuously.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 4. Warehouse Receipts and Bills of Lading: General Obligations [7401 - 7404] ( Chapter 4 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7402. A duplicate or any other document of title purporting to cover goods already represented by an outstanding document of the same issuer does not confer any right in the goods, except as provided in the case of tangible bills of lading in a set of parts, overissue of documents for fungible goods, substitutes for lost, stolen, or destroyed documents, or substitute documents issued pursuant to Section 7105. The issuer is liable for damages caused by its overissue or failure to identify a duplicate document by a conspicuous notation. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7403.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 4. Warehouse Receipts and Bills of Lading: General Obligations [7401 - 7404] ( Chapter 4 added by Stats. 2006, Ch. 254, Sec. 49. )
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A bailee must deliver goods to the person entitled under a document of title, unless a listed excuse applies, and the claimant must satisfy the bailee’s lien and surrender any outstanding negotiable document when required.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 4. Warehouse Receipts and Bills of Lading: General Obligations [7401 - 7404] ( Chapter 4 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7403. (a) A bailee shall deliver the goods to a person entitled under a document of title if the person complies with subdivisions (b) and (c), unless and to the extent that the bailee establishes any of the following: (1) delivery of the goods to a person whose receipt was rightful as against the claimant; (2) damage to or delay, loss, or destruction of the goods for which the bailee is not liable; (3) previous sale or other disposition of the goods in lawful enforcement of a lien or on a warehouse’s lawful termination of storage; (4) the exercise by a seller of its right to stop delivery pursuant to Section 2705 or by a lessor of its right to stop delivery pursuant to Section 10526; (5) a diversion, reconsignment, or other disposition pursuant to Section 7303; (6) release, satisfaction, or any other personal defense against the claimant; or (7) any other lawful excuse. (b) A person claiming goods covered by a document of title shall satisfy the bailee’s lien if the bailee so requests or if the bailee is prohibited by law from delivering the goods until the charges are paid. (c) Unless a person claiming the goods is a person against which the document of title does not confer a right under subdivision (a) of Section 7503: (1) the person claiming under a document shall surrender possession or control of any outstanding negotiable document covering the goods for cancellation or indication of partial deliveries; and (2) the bailee shall cancel the document or conspicuously indicate in the document the partial delivery or the bailee is liable to any person to which the document is duly negotiated. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7404.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 4. Warehouse Receipts and Bills of Lading: General Obligations [7401 - 7404] ( Chapter 4 added by Stats. 2006, Ch. 254, Sec. 49. )
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A bailee acting in good faith is not liable for goods it received and then delivered or disposed of under a document of title or this division.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 4. Warehouse Receipts and Bills of Lading: General Obligations [7401 - 7404] ( Chapter 4 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7404. A bailee that in good faith has received goods and delivered or otherwise disposed of the goods according to the terms of a document of title or pursuant to this division is not liable for the goods even if: (1) the person from which the bailee received the goods did not have authority to procure the document or to dispose of the goods; or (2) the person to which the bailee delivered the goods did not have authority to receive the goods. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7501.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. )
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This section explains how negotiable tangible and electronic documents of title are negotiated, mostly by indorsement and/or delivery, and states that certain indorsements or notices do not change negotiability or transferee rights.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7501. (a) The following rules apply to a negotiable tangible document of title: (1) If the document’s original terms run to the order of a named person, the document is negotiated by the named person’s indorsement and delivery. After the named person’s indorsement in blank or to bearer, any person may negotiate the document by delivery alone. (2) If the document’s original terms run to bearer, it is negotiated by delivery alone. (3) If the document’s original terms run to the order of a named person and it is delivered to the named person, the effect is the same as if the document had been negotiated. (4) Negotiation of the document after it has been indorsed to a named person requires indorsement by the named person and delivery. (5) A document is duly negotiated if it is negotiated in the manner stated in this subdivision to a holder that purchases it in good faith, without notice of any defense against or claim to it on the part of any person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves receiving the document in settlement or payment of a monetary obligation. (b) The following rules apply to a negotiable electronic document of title: (1) If the document’s original terms run to the order of a named person or to bearer, the document is negotiated by delivery of the document to another person. Indorsement by the named person is not required to negotiate the document. (2) If the document’s original terms run to the order of a named person and the named person has control of the document, the effect is the same as if the document had been negotiated. (3) A document is duly negotiated if it is negotiated in the manner stated in this subdivision to a holder that purchases it in good faith, without notice of any defense against or claim to it on the part of any person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves taking delivery of the document in settlement or payment of a monetary obligation. (c) Indorsement of a nonnegotiable document of title neither makes it negotiable nor adds to the transferee’s rights. (d) The naming in a negotiable bill of lading of a person to be notified of the arrival of the goods does not limit the negotiability of the bill or constitute notice to a purchaser of the bill of any interest of that person in the goods. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7502.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. )
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A duly negotiated negotiable document of title gives the holder title to the document and goods, related agency or estoppel rights, and the issuer’s direct obligation to hold or deliver the goods, subject to Sections 7205 and 7503.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7502. (a) Subject to Sections 7205 and 7503, a holder to which a negotiable document of title has been duly negotiated acquires thereby: (1) title to the document; (2) title to the goods; (3) all rights accruing under the law of agency or estoppel, including rights to goods delivered to the bailee after the document was issued; and (4) the direct obligation of the issuer to hold or deliver the goods according to the terms of the document free of any defense or claim by the issuer except those arising under the terms of the document or under this division, but in the case of a delivery order, the bailee’s obligation accrues only upon the bailee’s acceptance of the delivery order and the obligation acquired by the holder is that the issuer and any indorser will procure the acceptance of the bailee. (b) Subject to Section 7503, title and rights acquired by due negotiation are not defeated by any stoppage of the goods represented by the document of title or by surrender of the goods by the bailee and are not impaired even if: (1) the due negotiation or any prior due negotiation constituted a breach of duty; (2) any person has been deprived of possession of a negotiable tangible document or control of a negotiable electronic document by misrepresentation, fraud, accident, mistake, duress, loss, theft, or conversion; or (3) a previous sale or other transfer of the goods or document has been made to a third person. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7503.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. )
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This section limits when a document of title gives rights in goods, and it gives priority to certain negotiated warehouse receipts, bills of lading, and carrier delivery rules.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7503. (a) A document of title confers no right in goods against a person that before issuance of the document had a legal interest or a perfected security interest in the goods and that did not: (1) deliver or entrust the goods or any document of title covering the goods to the bailor or the bailor’s nominee with: (A) actual or apparent authority to ship, store, or sell; (B) power to obtain delivery under Section 7403; or (C) power of disposition under Section 2403 or 9320 or subdivision (c) of Section 9321 or subdivision (b) of Section 10304 or subdivision (b) of Section 10305 or other statute or rule of law; or (2) acquiesce in the procurement by the bailor or its nominee of any document. (b) Title to goods based upon an unaccepted delivery order is subject to the rights of any person to which a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated. That title may be defeated under Section 7504 to the same extent as the rights of the issuer or a transferee from the issuer. (c) Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of any person to which a bill issued by the freight forwarder is duly negotiated. However, delivery by the carrier in accordance with Chapter 4 (commencing with Section 7401) pursuant to its own bill of lading discharges the carrier’s obligation to deliver. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7504.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. )
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This section says a transferee of a document of title can get the transferor’s title and rights, subject to limits for nonnegotiable transfers and notice rules.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7504. (a) A transferee of a document of title, whether negotiable or nonnegotiable, to which the document has been delivered but not duly negotiated, acquires the title and rights that its transferor had or had actual authority to convey. (b) In the case of a transfer of a nonnegotiable document of title, until but not after the bailee receives notice of the transfer, the rights of the transferee may be defeated: (1) by those creditors of the transferor which could treat the transfer as void under Section 2402 or 10308; (2) by a buyer from the transferor in ordinary course of business if the bailee has delivered the goods to the buyer or received notification of the buyer’s rights; (3) by a lessee from the transferor in ordinary course of business if the bailee has delivered the goods to the lessee or received notification of the lessee’s rights; or (4) as against the bailee, by good-faith dealings of the bailee with the transferor. (c) A diversion or other change of shipping instructions by the consignor in a nonnegotiable bill of lading which causes the bailee not to deliver the goods to the consignee defeats the consignee’s title to the goods if the goods have been delivered to a buyer in ordinary course of business or a lessee in ordinary course of business and, in any event, defeats the consignee’s rights against the bailee. (d) Delivery of the goods pursuant to a nonnegotiable document of title may be stopped by a seller under Section 2705 or a lessor under Section 10526, subject to the requirements of due notification in those sections. A bailee that honors the seller’s or lessor’s instructions is entitled to be indemnified by the seller or lessor against any resulting loss or expense. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7505.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. )
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Indorsing a tangible document of title issued by a bailee does not make the indorser liable for defaults by the bailee or earlier endorsers.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7505. The indorsement of a tangible document of title issued by a bailee does not make the indorser liable for any default by the bailee or previous endorsers. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7506.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. )
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A transferee of a negotiable tangible document of title can require the transferor to provide any needed indorsement.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7506. The transferee of a negotiable tangible document of title has a specifically enforceable right to have its transferor supply any necessary indorsement, but the transfer becomes a negotiation only as of the time the indorsement is supplied. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7507.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. )
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A transferor who negotiates or delivers a document of title for value must warrant to the immediate purchaser that the document is genuine, there is no known defect affecting its validity or worth, and the transfer is rightful and fully effective.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7507. If a person negotiates or delivers a document of title for value, otherwise than as a mere intermediary under Section 7508, unless otherwise agreed, the transferor, in addition to any warranty made in selling or leasing the goods, warrants to its immediate purchaser only that: (1) the document is genuine; (2) the transferor does not have knowledge of any fact that would impair the document’s validity or worth; and (3) the negotiation or delivery is rightful and fully effective with respect to the title to the document and the goods it represents. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7508.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. )
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A collecting bank or similar intermediary that holds title documents for someone else warrants only its own good faith and authority when delivering the documents.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7508. A collecting bank or other intermediary known to be entrusted with documents of title on behalf of another or with collection of a draft or other claim against delivery of documents warrants by the delivery of the documents only its own good faith and authority even if the collecting bank or other intermediary has purchased or made advances against the claim or draft to be collected. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7509.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. )
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This section says other code divisions determine whether a document of title is enough to satisfy a sale contract, lease contract, or letter of credit condition.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 5. Warehouse Receipts and Bills of Lading: Negotiation and Transfer [7501 - 7509] ( Chapter 5 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7509. Whether a document of title is adequate to fulfill the obligations of a contract for sale, a contract for lease, or the conditions of a letter of credit is determined by Division 2 (commencing with Section 2101), Division 5 (commencing with Section 5101), or Division 10 (commencing with Section 10101). (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7601.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 6. Warehouse Receipts and Bills Of Lading: Miscellaneous Provisions [7601 - 7603] ( Chapter 6 added by Stats. 2006, Ch. 254, Sec. 49. )
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If a document of title is lost, stolen, or destroyed, a court may order delivery of the goods or a substitute document, and the bailee may comply without liability. Special security rules apply for negotiable documents, and a bailee can be liable if it delivers goods without a court order.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 6. Warehouse Receipts and Bills Of Lading: Miscellaneous Provisions [7601 - 7603] ( Chapter 6 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7601. (a) If a document of title is lost, stolen, or destroyed, a court may order delivery of the goods or issuance of a substitute document and the bailee may without liability to any person comply with the order. If the document was negotiable, a court may not order delivery of the goods or issuance of a substitute document without the claimant’s posting security unless it finds that any person that may suffer loss as a result of nonsurrender of possession or control of the document is adequately protected against the loss. If the document was nonnegotiable, the court may require security. The court may also order payment of the bailee’s reasonable costs and attorney’s fees in any action under this subdivision. (b) A bailee that, without a court order, delivers goods to a person claiming under a missing negotiable document of title is liable to any person injured thereby. If the delivery is not in good faith, the bailee is liable for conversion. Delivery in good faith is not conversion if the claimant posts security with the bailee in an amount at least double the value of the goods at the time of posting to indemnify any person injured by the delivery which files a notice of claim within one year after the delivery. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7602.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 6. Warehouse Receipts and Bills Of Lading: Miscellaneous Provisions [7601 - 7603] ( Chapter 6 added by Stats. 2006, Ch. 254, Sec. 49. )
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A judicial-process lien generally cannot attach to goods held by a bailee while a negotiable document of title is outstanding, and the bailee cannot be forced to deliver the goods until the document is surrendered or its negotiation is enjoined.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 6. Warehouse Receipts and Bills Of Lading: Miscellaneous Provisions [7601 - 7603] ( Chapter 6 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7602. Unless a document of title was originally issued upon delivery of the goods by a person that did not have power to dispose of them, a lien does not attach by virtue of any judicial process to goods in the possession of a bailee for which a negotiable document of title is outstanding unless possession or control of the document is first surrendered to the bailee or the document’s negotiation is enjoined. The bailee may not be compelled to deliver the goods pursuant to process until possession or control of the document is surrendered to the bailee or to the court. A purchaser of the document for value without notice of the process or injunction takes free of the lien imposed by judicial process. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
7603.
## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 6. Warehouse Receipts and Bills Of Lading: Miscellaneous Provisions [7601 - 7603] ( Chapter 6 added by Stats. 2006, Ch. 254, Sec. 49. )
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If multiple people claim the goods, the bailee does not have to deliver them right away and may file or defend an interpleader action.

## Commercial Code - COM ## DIVISION 7. DOCUMENTS OF TITLE [7101 - 7603] ( Division 7 repealed and added by Stats. 2006, Ch. 254, Sec. 49. ) ## CHAPTER 6. Warehouse Receipts and Bills Of Lading: Miscellaneous Provisions [7601 - 7603] ( Chapter 6 added by Stats. 2006, Ch. 254, Sec. 49. ) ## 7603. If more than one person claims title to or possession of the goods, the bailee is excused from delivery until the bailee has a reasonable time to ascertain the validity of the adverse claims or to commence an action for interpleader. The bailee may assert an interpleader either in defending an action for nondelivery of the goods or by original action. (Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)
8101.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section says the division may be cited as Uniform Commercial Code—Investment Securities.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8101. This division may be cited as Uniform Commercial Code—Investment Securities. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8102.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section defines key terms used in Division 8 of the Commercial Code.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8102. (a) In this division: (1) “Adverse claim” means a claim that a claimant has a property interest in a financial asset and that it is a violation of the rights of the claimant for another person to hold, transfer, or deal with the financial asset. (2) “Bearer form,” as applied to a certificated security, means a form in which the security is payable to the bearer of the security certificate according to its terms but not by reason of an indorsement. (3) “Broker” means a person defined as a broker or dealer under the federal securities laws, but without excluding a bank acting in that capacity. (4) “Certificated security” means a security that is represented by a certificate. (5) “Clearing corporation” means any of the following: (A) A person that is registered as a “clearing agency” under the federal securities laws. (B) A federal reserve bank. (C) Any other person that provides clearance or settlement services with respect to financial assets that would require it to register as a clearing agency under the federal securities laws but for an exclusion or exemption from the registration requirement, if its activities as a clearing corporation, including promulgation of rules, are subject to regulation by a federal or state governmental authority. (6) “Communicate” means to either: (A) Send a signed record. (B) Transmit information by any mechanism agreed upon by the persons transmitting and receiving the information. (7) “Entitlement holder” means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary. If a person acquires a security entitlement by virtue of paragraph (2) or (3) of subdivision (b) of Section 8501, that person is the entitlement holder. (8) “Entitlement order” means a notification communicated to a securities intermediary directing transfer or redemption of a financial asset to which the entitlement holder has a security entitlement. (9) “Financial asset,” except as otherwise provided in Section 8103, means any of the following: (A) A security. (B) An obligation of a person or a share, participation, or other interest in a person or in property or an enterprise of a person, that is, or is of a type, dealt in or traded on financial markets, or that is recognized in any area in which it is issued or dealt in as a medium for investment. (C) Any property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this division. As context requires, the term means either the interest itself or the means by which a person’s claim to it is evidenced, including a certificated or uncertificated security, a security certificate, or a security entitlement. (10) [Reserved] (11) “Endorsement” means a signature that alone or accompanied by other words is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring, or redeeming the security or granting a power to assign, transfer, or redeem it. (12) “Instruction” means a notification communicated to the issuer of an uncertificated security that directs that the transfer of the security be registered or that the security be redeemed. (13) “Registered form,” as applied to a certificated security, means a form in which both of the following apply: (A) The security certificate specifies a person entitled to the security. (B) A transfer of the security may be registered upon books maintained for that purpose by or on behalf of the issuer, or the security certificate so states. (14) “Securities intermediary” means either: (A) A clearing corporation. (B) A person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity. (15) “Security,” except as otherwise provided in Section 8103, means an obligation of an issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an issuer that is all of the following: (A) It is represented by a security certificate in bearer or registered form, or the transfer of it may be registered upon books maintained for that purpose by or on behalf of the issuer. (B) It is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests, or obligations. (C) It is either of the following: (i) It is, or is of a type, dealt in or traded on securities exchanges or securities markets. (ii) It is a medium for investment and by its terms expressly provides that it is a security governed by this division. (16) “Security certificate” means a certificate representing a security. (17) “Security entitlement” means the rights and property interest of an entitlement holder with respect to a financial asset specified in Chapter 5 (commencing with Section 8501). (18) “Uncertificated security” means a security that is not represented by a certificate. (b) The following definitions in this division and other divisions apply to this division: Appropriate person. Section 8107. Control. Section 8106. Controllable account. Section 9102. Controllable electronic record. Section 12102. Controllable payment intangible. Section 9102. Delivery. Section 8301. Investment company security. Section 8103. Issuer. Section 8201. Overissue. Section 8210. Protected purchaser. Section 8303. Securities account. Section 8501. (c) In addition, Division 1 (commencing with Section 1101) contains general definitions and principles of construction and interpretation applicable throughout this division. (d) The characterization of a person, business, or transaction for purposes of this division does not determine the characterization of the person, business, or transaction for purposes of any other law, regulation, or rule. (Amended by Stats. 2023, Ch. 210, Sec. 19. (SB 95) Effective January 1, 2024.)
8103.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section defines what counts as a security or financial asset, and lists several items that do not count unless specific conditions are met.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8103. (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 division, 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 division and not by Division 3 (commencing with Section 3101), even though it also meets the requirements of that division. However, a negotiable instrument governed by Division 3 (commencing with Section 3101) 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, but is a financial asset. (f) A commodity contract, as defined in paragraph (15) of subdivision (a) of Section 9102, is not a security or a financial asset. (g) A document of title is not a financial asset unless subparagraph (C) of paragraph (9) of subdivision (a) of Section 8102 applies. (h) A controllable account, controllable electronic record, or controllable payment intangible is not a financial asset unless subparagraph (C) of paragraph (9) of subdivision (a) of Section 8102 applies. (Amended by Stats. 2023, Ch. 210, Sec. 20. (SB 95) Effective January 1, 2024.)
8104.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section says when a person acquires a security, a financial asset, or an interest in either, and when a transfer-type requirement is satisfied by causing another person to acquire the interest.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8104. (a) A person acquires a security or an interest therein, under this division, if either of the following applies: (1) The person is a purchaser to whom a security is delivered pursuant to Section 8301; or (2) The person acquires a security entitlement to the security pursuant to Section 8501. (b) A person acquires a financial asset, other than a security, or an interest therein, under this division, if the person acquires a security entitlement to the financial asset. (c) A person who acquires a security entitlement to a security or other financial asset has the rights specified in Chapter 5 (commencing with Section 8501), but is a purchaser of any security, security entitlement, or other financial asset held by the securities intermediary only to the extent provided in Section 8503. (d) Unless the context shows that a different meaning is intended, a person who is required by other law, regulation, rule, or agreement to transfer, deliver, present, surrender, exchange, or otherwise put in the possession of another person a security or financial asset satisfies that requirement by causing the other person to acquire an interest in the security or financial asset pursuant to subdivision (a) or (b). (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8105.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section defines when a person is treated as having notice of an adverse claim, including knowledge, deliberate avoidance, certain duties to investigate, and some transfer situations involving certificated securities.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8105. (a) A person has notice of an adverse claim if any of the following applies: (1) The person knows of the adverse claim. (2) The person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim. (3) The person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists, and the investigation so required would establish the existence of the adverse claim. (b) Having knowledge that a financial asset or interest therein is or has been transferred by a representative imposes no duty of inquiry into the rightfulness of a transaction and is not notice of an adverse claim. However, a person who knows that a representative has transferred a financial asset or interest therein in a transaction that is, or whose proceeds are being used, for the individual benefit of the representative or otherwise in breach of duty has notice of an adverse claim. (c) An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or sets a date on or after which the certificate is to be presented or surrendered for redemption or exchange does not itself constitute notice of an adverse claim except in the case of a transfer more than either of the following: (1) One year after a date set for presentment or surrender for redemption or exchange. (2) Six months after a date set for payment of money against presentation or surrender of the certificate, if money was available for payment on that date. (d) A purchaser of a certificated security has notice of an adverse claim if the security certificate is any of the following: (1) Whether in bearer or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer. (2) Is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor, but the mere writing of a name on the certificate is not such a statement. (e) Filing of a financing statement under Division 9 (commencing with Section 9101) is not notice of an adverse claim to a financial asset. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8106.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section explains when a purchaser has “control” of different kinds of securities and limits when issuers, securities intermediaries, and other control holders must agree, acknowledge, or confirm control agreements.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8106. (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 either of the following applies: (1) The certificate is endorsed to the purchaser or in blank by an effective endorsement. (2) The certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer. (c) A purchaser has “control” of an uncertificated security if either of the following applies: (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 any of the following apply: (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. (3) Another person, other than the transferor to the purchaser of an interest in the security entitlement, satisfies either of the following conditions: (A) The person has control of the security entitlement and acknowledges that it has control on behalf of the purchaser. (B) The person obtains control of the security entitlement after having acknowledged that it will obtain control of the security entitlement 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 subdivision (c) or (d) has control, even if the registered owner in the case of subdivision (c) or the entitlement holder in the case of subdivision (d) 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 subdivision (c) or paragraph (2) of subdivision (d) 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. (h) A person that has control under this section is not required to acknowledge that it has control on behalf of a purchaser. (i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, unless the person otherwise agrees or law other than this division or Division 9 (commencing with Section 9101) otherwise provides, the person does not owe any duty to the purchaser and is not required to confirm the acknowledgment to any other person. (Amended by Stats. 2023, Ch. 210, Sec. 21. (SB 95) Effective January 1, 2024.)
8107.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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Defines who counts as an “appropriate person” and when endorsements, instructions, and entitlement orders are effective.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8107. (a) “Appropriate person” means any of the following: (1) With respect to an endorsement, the person specified by a security certificate or by an effective special endorsement to be entitled to the security. (2) With respect to an instruction, the registered owner of an uncertificated security. (3) With respect to an entitlement order, the entitlement holder. (4) If the person designated in paragraph (1), (2), or (3) is deceased, the designated person’s successor taking under other law or the designated person’s personal representative acting for the estate of the decedent, or the beneficiary of a security, as defined in subdivision (d) of Section 5501 of the Probate Code, registered in beneficiary form, as defined in subdivision (a) of Section 5501 of the Probate Code, if the beneficiary has survived the death of the registered owner or all registered owners. (5) If the person designated in paragraph (1), (2), or (3) lacks capacity, the designated person’s guardian, conservator, or other similar representative who has power under other law to transfer the security or financial asset. (b) An endorsement, instruction, or entitlement order is effective if it is made by any of the following: (1) It is made by the appropriate person. (2) It is made by a person who has power under the law of agency to transfer the security or financial asset on behalf of the appropriate person, including, in the case of an instruction or entitlement order, a person who has control under paragraph (2) of subdivision (c) or paragraph (2) of subdivision (d) of Section 8106. (3) The appropriate person has ratified it or is otherwise precluded from asserting its ineffectiveness. (c) An endorsement, instruction, or entitlement order made by a representative is effective even if: (1) The representative has failed to comply with a controlling instrument or with the law of the state having jurisdiction of the representative relationship, including any law requiring the representative to obtain court approval of the transaction. (2) The representative’s action in making the endorsement, instruction, or entitlement order or using the proceeds of the transaction is otherwise a breach of duty. (d) If a security is registered in the name of or specially endorsed to a person described as a representative, or if a securities account is maintained in the name of a person described as a representative, an endorsement, instruction, or entitlement order made by the person is effective even though the person is no longer serving in the described capacity. (e) Effectiveness of an endorsement, instruction, or entitlement order is determined as of the date the endorsement, instruction, or entitlement order is made, and an endorsement, instruction, or entitlement order does not become ineffective by reason of any later change of circumstances. (Amended by Stats. 1998, Ch. 242, Sec. 1. Effective January 1, 1999.)
8108.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section says that people involved in transferring certificated and uncertificated securities make specific warranties about validity, authority, adverse claims, transfer restrictions, and effectiveness.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8108. (a) A person who transfers a certificated security to a purchaser for value warrants to the purchaser, and an endorser, if the transfer is by endorsement, warrants to any subsequent purchaser, all of the following: (1) The certificate is genuine and has not been materially altered. (2) The transferor or endorser does not know of any fact that might impair the validity of the security. (3) There is no adverse claim to the security. (4) The transfer does not violate any restriction on transfer. (5) If the transfer is by endorsement, the endorsement is made by an appropriate person, or if the endorsement is by an agent, the agent has actual authority to act on behalf of the appropriate person. (6) The transfer is otherwise effective and rightful. (b) A person who originates an instruction for registration of transfer of an uncertificated security to a purchaser for value warrants to the purchaser all of the following: (1) The instruction is made by an appropriate person, or if the instruction is by an agent, the agent has actual authority to act on behalf of the appropriate person. (2) The security is valid. (3) There is no adverse claim to the security. (4) At the time the instruction is presented to the issuer, all of the following will be applicable: (A) The purchaser will be entitled to the registration of transfer. (B) The transfer will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction. (C) The transfer will not violate any restriction on transfer. (D) The requested transfer will otherwise be effective and rightful. (c) A person who transfers an uncertificated security to a purchaser for value and does not originate an instruction in connection with the transfer warrants all of the following: (1) The uncertificated security is valid. (2) There is no adverse claim to the security. (3) The transfer does not violate any restriction on transfer. (4) The transfer is otherwise effective and rightful. (d) A person who endorses a security certificate warrants all of the following to the issuer: (1) There is no adverse claim to the security. (2) The endorsement is effective. (e) A person who originates an instruction for registration of transfer of an uncertificated security warrants all of the following to the issuer: (1) The instruction is effective. (2) At the time the instruction is presented to the issuer the purchaser will be entitled to the registration of transfer. (f) A person who presents a certificated security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment, or exchange, but a purchaser for value and without notice of adverse claims to whom transfer is registered warrants only that the person has no knowledge of any unauthorized signature in a necessary endorsement. (g) If a person acts as agent of another in delivering a certificated security to a purchaser, the identity of the principal was known to the person to whom the certificate was delivered, and the certificate delivered by the agent was received by the agent from the principal or received by the agent from another person at the direction of the principal, the person delivering the security certificate warrants only that the delivering person has authority to act for the principal and does not know of any adverse claim to the certificated security. (h) A secured party who redelivers a security certificate received, or after payment and on order of the debtor delivers the security certificate to another person, makes only the warranties of an agent under subdivision (g). (i) Except as otherwise provided in subdivision (g), a broker acting for a customer makes to the issuer and a purchaser the warranties provided in subdivisions (a) to (f), inclusive. A broker that delivers a security certificate to its customer, or causes its customer to be registered as the owner of an uncertificated security, makes to the customer the warranties provided in subdivision (a) or (b), and has the rights and privileges of a purchaser under this section. The warranties of and in favor of the broker acting as an agent are in addition to applicable warranties given by and in favor of the customer. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8109.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section makes certain persons give warranties to a securities intermediary or entitlement holder when they originate entitlement orders, deliver security certificates, or cause uncertificated securities to be credited or registered.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8109. (a) A person who originates an entitlement order to a securities intermediary warrants all of the following to the securities intermediary: (1) The entitlement order is made by an appropriate person, or if the entitlement order is by an agent, the agent has actual authority to act on behalf of the appropriate person. (2) There is no adverse claim to the security entitlement. (b) A person who delivers a security certificate to a securities intermediary for credit to a securities account or originates an instruction with respect to an uncertificated security directing that the uncertificated security be credited to a securities account makes to the securities intermediary the warranties specified in subdivision (a) or (b) of Section 8108. (c) If a securities intermediary delivers a security certificate to its entitlement holder or causes its entitlement holder to be registered as the owner of an uncertificated security, the securities intermediary makes to the entitlement holder the warranties specified in subdivision (a) or (b) of Section 8108. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8110.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section says which local law governs several securities matters, including validity, transfer registration, adverse claims, and security entitlements.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8110. (a) The local law of the issuer’s jurisdiction, as specified in subdivision (d), governs the following: (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. (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 subdivision (e), governs the following: (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. (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) to (5), inclusive, of subdivision (a). (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 security intermediary’s jurisdiction for purposes of this code, that jurisdiction is the securities intermediary’s jurisdiction. (2) If paragraph (1) 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) 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. (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. (g) The local law of the issuer’s jurisdiction or the securities intermediary’s jurisdiction governs a matter or transaction specified in subdivision (a) or (b) even if the matter or transaction does not bear any relation to the jurisdiction. (Amended by Stats. 2023, Ch. 210, Sec. 22. (SB 95) Effective January 1, 2024.)
8111.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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A clearing corporation’s adopted rule can remain effective for the corporation and its participants even if it conflicts with this division and affects a nonconsenting party.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8111. A rule adopted by a clearing corporation governing rights and obligations among the clearing corporation and its participants in the clearing corporation is effective even if the rule conflicts with this division and affects another party who does not consent to the rule. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8112.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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A creditor may reach a debtor’s security interests only through the specific methods listed here, and sometimes can seek court aid to do so.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8112. (a) The interest of a debtor in a certificated security may be reached by a creditor only by actual seizure of the security certificate by the officer making the attachment or levy, except as otherwise provided in subdivision (d). However, a certificated security for which the certificate has been surrendered to the issuer may be reached by a creditor by legal process upon the issuer. (b) The interest of a debtor in an uncertificated security may be reached by a creditor only by legal process upon the issuer at its chief executive office in the United States, except as otherwise provided in subdivision (d). (c) The interest of a debtor in a security entitlement may be reached by a creditor only by legal process upon the securities intermediary with whom the debtor’s securities account is maintained, except as otherwise provided in subdivision (d). (d) The interest of a debtor in a certificated security for which the certificate is in the possession of a secured party, or in an uncertificated security registered in the name of a secured party, or a security entitlement maintained in the name of a secured party, may be reached by a creditor by legal process upon the secured party. (e) A creditor whose debtor is the owner of a certificated security, uncertificated security, or security entitlement is entitled to aid from a court of competent jurisdiction, by injunction or otherwise, in reaching the certificated security, uncertificated security, or security entitlement or in satisfying the claim by means allowed at law or in equity in regard to property that cannot readily be reached by other legal process. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8113.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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A contract or contract modification for the sale or purchase of a security is enforceable even without a signed writing or authenticated record, and even if it cannot be performed within one year.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8113. A contract or modification of a contract for the sale or purchase of a security is enforceable whether or not there is a writing signed or record authenticated by a party against whom enforcement is sought, even if the contract or modification is not capable of performance within one year of its making. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8114.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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In an action on a certificated security against the issuer, signatures are treated as admitted unless specifically denied, and a holder may recover on the certificate if signatures are admitted or proven and no valid defense or defect is shown.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8114. The following rules apply in an action on a certificated security against the issuer: (a) Unless specifically denied in the pleadings, each signature on a security certificate or in a necessary endorsement is admitted. (b) If the effectiveness of a signature is put in issue, the burden of establishing effectiveness is on the party claiming under the signature, but the signature is presumed to be genuine or authorized. (c) If signatures on a security certificate are admitted or established, production of the certificate entitles a holder to recover on it unless the defendant establishes a defense or a defect going to the validity of the security. (d) If it is shown that a defense or defect exists, the plaintiff has the burden of establishing that the plaintiff or some person under whom the plaintiff claims is a person against whom the defense or defect cannot be asserted. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8115.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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A securities intermediary, broker, agent, or bailee is generally not liable for dealing with a financial asset as described here, unless one of the stated exceptions applies.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8115. A securities intermediary that has transferred a financial asset pursuant to an effective entitlement order, or a broker or other agent or bailee that has dealt with a financial asset at the direction of its customer or principal, is not liable to a person having an adverse claim to the financial asset, unless the securities intermediary, or broker or other agent or bailee did one or more of the following: (1) Took the action after it had been served with an injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order, or other legal process. (2) Acted in collusion with the wrongdoer in violating the rights of the adverse claimant. (3) In the case of a security certificate that has been stolen, acted with notice of the adverse claim. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8116.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. )
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A securities intermediary is treated as a purchaser for value when it receives a financial asset and gives an entitlement to that asset in favor of an entitlement holder.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 1. Short Title and General Matters [8101 - 8116] ( Chapter 1 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8116. A securities intermediary that receives a financial asset and establishes a security entitlement to the financial asset in favor of an entitlement holder is a purchaser for value of the financial asset. A securities intermediary that acquires a security entitlement to a financial asset from another securities intermediary acquires the security entitlement for value if the securities intermediary acquiring the security entitlement establishes a security entitlement to the financial asset in favor of an entitlement holder. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8201.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section defines who counts as an “issuer” for securities matters.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8201. (a) With respect to an obligation on or a defense to a security, an “issuer” includes a person that does any of the following: (1) Places or authorizes the placing of its name on a security certificate, other than as authenticating trustee, registrar, transfer agent, or the like, to evidence a share, participation, or other interest in its property or in an enterprise, or to evidence its duty to perform an obligation represented by the certificate. (2) Creates a share, participation, or other interest in its property or in an enterprise, or undertakes an obligation, that is an uncertificated security. (3) Directly or indirectly creates a fractional interest in its rights or property, if the fractional interest is represented by a security certificate. (4) Becomes responsible for, or in place of, another person described as an issuer in this section. (b) With respect to an obligation on or defense to a security, a guarantor is an issuer to the extent of its guaranty, whether or not its obligation is noted on a security certificate. (c) With respect to a registration of a transfer, issuer means a person on whose behalf transfer books are maintained. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8202.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section says what terms count as part of certificated and uncertificated securities, and limits which defenses an issuer can raise against a purchaser for value without notice.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8202. (a) Even against a purchaser for value and without notice, the terms of a certificated security include terms stated on the certificate and terms made part of the security by reference on the certificate to another instrument, indenture, or document or to a constitution, statute, ordinance, rule, regulation, order, or the like, to the extent the terms referred to do not conflict with terms stated on the certificate. A reference under this subdivision does not of itself charge a purchaser for value with notice of a defect going to the validity of the security, even if the certificate expressly states that a person accepting it admits notice. The terms of an uncertificated security include those stated in any instrument, indenture, or document or in a constitution, statute, ordinance, rule, regulation, order, or the like, pursuant to which the security is issued. (b) The following rules apply if an issuer asserts that a security is not valid: (1) A security other than one issued by a government or governmental subdivision, agency, or instrumentality, even though issued with a defect going to its validity, is valid in the hands of a purchaser for value and without notice of the particular defect unless the defect involves a violation of a constitutional provision. In that case, the security is valid in the hands of a purchaser for value and without notice of the defect, other than one who takes by original issue. (2) Paragraph (1) applies to an issuer that is a government or governmental subdivision, agency, or instrumentality only if there has been substantial compliance with the legal requirements governing the issue or the issuer has received a substantial consideration for the issue as a whole or for the particular security and a stated purpose of the issue is one for which the issuer has power to borrow money or issue the security. (c) Except as otherwise provided in Section 8205, lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice. (d) All other defenses of the issuer of a security, including nondelivery and conditional delivery of a certificated security, are ineffective against a purchaser for value who has taken the certificated security without notice of the particular defense. (e) This section does not affect the right of a party to cancel a contract for a security “when, as and if issued” or “when distributed” in the event of a material change in the character of the security that is the subject of the contract or in the plan or arrangement pursuant to which the security is to be issued or distributed. (f) If a security is held by a securities intermediary against whom an entitlement holder has a security entitlement with respect to the security, the issuer may not assert any defense that the issuer could not assert if the entitlement holder held the security directly. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8203.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
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A purchaser may be charged with notice of defects in a security’s issue or issuer defenses if the security is taken too late after a payment, exchange, surrender, or presentation date.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8203. After an act or event, other than a call that has been revoked, creating a right to immediate performance of the principal obligation represented by a certificated security or setting a date on or after which the security is to be presented or surrendered for redemption or exchange, a purchaser is charged with notice of any defect in its issue or defense of the issuer, if the act or event either: (1) Requires the payment of money, the delivery of a certificated security, the registration of transfer of an uncertificated security, or any of them on presentation or surrender of the security certificate, the money or security is available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date. (2) Is not covered by paragraph (1) and the purchaser takes the security more than two years after the date set for surrender or presentation or the date on which performance became due. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8204.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
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A transfer restriction imposed by the issuer does not work against someone who does not know about it, unless the security certificate clearly notes the restriction or, for uncertificated securities, the registered owner has been notified.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8204. A restriction on transfer of a security imposed by the issuer, even if otherwise lawful, is ineffective against a person without knowledge of the restriction unless either of the following applies: (1) The security is certificated and the restriction is noted conspicuously on the security certificate. (2) The security is uncertificated and the registered owner has been notified of the restriction. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8205.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
Verify source ↗

An unauthorized signature on a security certificate is ineffective, except that it is effective for a purchaser for value who lacks notice of the lack of authority and when the signing was done by certain trusted persons or entrusted employees.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8205. An unauthorized signature placed on a security certificate before or in the course of issue is ineffective, but the signature is effective in favor of a purchaser for value of the certificated security if the purchaser is without notice of the lack of authority and the signing has been done by one of the following: (1) An authenticating trustee, registrar, transfer agent, or other person entrusted by the issuer with the signing of the security certificate or of similar security certificates, or the immediate preparation for signing of any of them. (2) An employee of the issuer, or of any of the persons listed in paragraph (1), entrusted with responsible handling of the security certificate. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8206.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
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A person may fill in missing blanks in a security certificate if the required signatures are already present; an incorrectly filled-in certificate can still be enforceable for a value-taking purchaser without notice, and an improperly altered complete certificate remains enforceable only on its original terms.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8206. (a) If a security certificate contains the signatures necessary to its issue or transfer but is incomplete in any other respect, the following apply: (1) Any person may complete it by filling in the blanks as authorized. (2) Even if the blanks are incorrectly filled in, the security certificate as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness. (b) A complete security certificate that has been improperly altered, even if fraudulently, remains enforceable, but only according to its original terms. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8207.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
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Before transfer is presented for registration, the issuer or indenture trustee may treat the registered owner as the person entitled to vote, receive notices, and exercise the owner's rights and powers.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8207. (a) Before due presentment for registration of transfer of a certificated security in registered form or of an instruction requesting registration of transfer of an uncertificated security, the issuer or indenture trustee may treat the registered owner as the person exclusively entitled to vote, receive notifications, and otherwise exercise all the rights and powers of an owner. (b) This division does not affect the liability of the registered owner of a security for a call, assessment, or the like. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8208.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
Verify source ↗

A person who signs a security certificate as an authenticating trustee, registrar, transfer agent, or similar role gives specified warranties to a purchaser for value who lacks notice of a defect.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8208. (a) A person signing a security certificate as authenticating trustee, registrar, transfer agent, or the like, warrants all of the following to a purchaser for value of the certificated security, if the purchaser is without notice of a particular defect: (1) The certificate is genuine. (2) The person’s own participation in the issue of the security is within the person’s capacity and within the scope of the authority received by the person from the issuer. (3) The person has reasonable grounds to believe that the certificated security is in the form and within the amount the issuer is authorized to issue. (b) Unless otherwise agreed, a person signing under subdivision (a) does not assume responsibility for the validity of the security in other respects. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8209.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
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An issuer’s lien on a certificated security is valid against a purchaser only if the lien right is conspicuously noted on the security certificate.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8209. A lien in favor of an issuer upon a certificated security is valid against a purchaser only if the right of the issuer to the lien is noted conspicuously on the security certificate. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8210.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section defines “overissue” and limits validation, issue, or reissue rules when they would create an overissue. It also gives a person entitled to issue or validation remedies against the issuer when an identical non-overissued security is available or when it is not.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 2. Issue and Issuer [8201 - 8210] ( Chapter 2 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8210. (a) In this section, “overissue” means the issue of securities in excess of the amount the issuer has corporate power to issue, but an overissue does not occur if appropriate action has cured the overissue. (b) Except as otherwise provided in subdivisions (c) and (d), the provisions of this division that validate a security or compel its issue or reissue do not apply to the extent that validation, issue, or reissue would result in overissue. (c) If an identical security not constituting an overissue is reasonably available for purchase, a person entitled to issue or validation may compel the issuer to purchase the security and deliver it if certificated or register its transfer if uncertificated, against surrender of any security certificate the person holds. (d) If a security is not reasonably available for purchase, a person entitled to issue or validation may recover from the issuer the price the person or the last purchaser for value paid for it with interest from the date of the person’s demand. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8301.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section says when delivery of certificated and uncertificated securities to a purchaser is considered to occur.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8301. (a) Delivery of a certificated security to a purchaser occurs when any of the following occur: (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. (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 (A) registered in the name of the purchaser, (B) payable to the order of the purchaser, or (C) specially endorsed to the purchaser by an effective endorsement and has not been endorsed to the securities intermediary or in blank. (b) Delivery of an uncertificated security to a purchaser occurs when any of the following occur: (1) The issuer registers the purchaser as the registered owner, upon original issue or registration of transfer. (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. (Amended by Stats. 1999, Ch. 991, Sec. 33.3. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)
8302.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. )
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A purchaser of a security generally gets the transferor’s rights, but only up to the interest purchased, and a prior holder with notice of an adverse claim cannot improve position by taking from a protected purchaser.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8302. (a) Except as otherwise provided in subdivisions (b) and (c), 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. (Amended by Stats. 1999, Ch. 991, Sec. 33.4. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)
8303.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section defines “protected purchaser” and says such a purchaser takes the security interest free of adverse claims.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8303. (a) “Protected purchaser” means a purchaser of a certificated or uncertificated security, or of an interest therein, who does all of the following: (1) Gives value. (2) Does not have notice of any adverse claim to the security. (3) Obtains control of the certificated or uncertificated security. (b) A protected purchaser also acquires its interest in the security free of any adverse claim. (Amended by Stats. 2023, Ch. 210, Sec. 23. (SB 95) Effective January 1, 2024.)
8304.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section explains when endorsements on securities are valid, how they can be changed, and when transfer and registration rights arise.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8304. (a) An endorsement may be in blank or special. An endorsement in blank includes an endorsement to bearer. A special endorsement specifies to whom a security is to be transferred or who has power to transfer it. A holder may convert a blank endorsement to a special endorsement. (b) An endorsement purporting to be only of part of a security certificate representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement. (c) An endorsement, whether special or in blank, does not constitute a transfer until delivery of the certificate on which it appears or, if the endorsement is on a separate document, until delivery of both the document and the certificate. (d) If a security certificate in registered form has been delivered to a purchaser without a necessary endorsement, the purchaser may become a protected purchaser only when the endorsement is supplied. However, against a transferor, a transfer is complete upon delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied. (e) An endorsement of a security certificate in bearer form may give notice of an adverse claim to the certificate, but it does not otherwise affect a right to registration that the holder possesses. (f) Unless otherwise agreed, a person making an endorsement assumes only the obligations provided in Section 8108 and not an obligation that the security will be honored by the issuer. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8305.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. )
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An incomplete instruction started by the right person may be completed by any person, and the issuer may rely on the completed instruction even if the completion is wrong.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8305. (a) If an instruction has been originated by an appropriate person but is incomplete in any other respect, any person may complete it as authorized and the issuer may rely on it as completed, even though it has been completed incorrectly. (b) Unless otherwise agreed, a person initiating an instruction assumes only the obligations imposed by Section 8108 and not an obligation that the security will be honored by the issuer. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8306.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section says what warranties a signature or endorsement guarantor makes for securities transfers, and it bars issuers from requiring certain guaranties before registering a transfer.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8306. (a) A person who guarantees a signature of an endorser of a security certificate warrants that at the time of signing all of the following were true: (1) The signature was genuine. (2) The signer was an appropriate person to endorse, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person. (3) The signer had legal capacity to sign. (b) A person who guarantees a signature of the originator of an instruction warrants that at the time of signing all of the following were true: (1) The signature was genuine. (2) The signer was an appropriate person to originate the instruction, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person, if the person specified in the instruction as the registered owner was, in fact, the registered owner, as to which fact the signature guarantor does not make a warranty. (3) The signer had legal capacity to sign. (c) A person who specially guarantees the signature of an originator of an instruction makes the warranties of a signature guarantor under subdivision (b) and also warrants that at the time the instruction is presented to the issuer all of the following are true: (1) The person specified in the instruction as the registered owner of the uncertificated security will be the registered owner. (2) The transfer of the uncertificated security requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction. (d) A guarantor under subdivisions (a) and (b) or a special guarantor under subdivision (c) does not otherwise warrant the rightfulness of the transfer. (e) A person who guarantees an endorsement of a security certificate makes the warranties of a signature guarantor under subdivision (a) and also warrants the rightfulness of the transfer in all respects. (f) A person who guarantees an instruction requesting the transfer of an uncertificated security makes the warranties of a special signature guarantor under subdivision (c) and also warrants the rightfulness of the transfer in all respects. (g) An issuer may not require a special guaranty of signature, a guaranty of endorsement, or a guaranty of instruction as a condition to registration of transfer. (h) The warranties under this section are made to a person taking or dealing with the security in reliance on the guaranty, and the guarantor is liable to the person for loss resulting from their breach. An endorser or originator of an instruction whose signature, endorsement, or instruction has been guaranteed is liable to a guarantor for any loss suffered by the guarantor as a result of breach of the warranties of the guarantor. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8307.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. )
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A security transferor must, on demand, provide proof of authority or another document needed to register the transfer, unless the parties agree otherwise. If the transfer is not for value, the transferor does not have to comply unless the purchaser pays the necessary expenses.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 3. Transfer of Certificated and Uncertificated Securities [8301 - 8307] ( Chapter 3 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8307. Unless otherwise agreed, the transferor of a security on due demand shall supply the purchaser with proof of authority to transfer or with any other requisite necessary to obtain registration of the transfer of the security, but if the transfer is not for value, a transferor need not comply unless the purchaser pays the necessary expenses. If the transferor fails within a reasonable time to comply with the demand, the purchaser may reject or rescind the transfer. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8401.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. )
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An issuer must register a security transfer when specified conditions are met, and may be liable for loss if it unreasonably delays or refuses to do so when under a duty to register.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8401. (a) If a certificated security in registered form is presented to an issuer with a request to register transfer or an instruction is presented to an issuer with a request to register transfer of an uncertificated security, the issuer shall register the transfer as requested if the following conditions are met: (1) Under the terms of the security the person seeking registration of transfer is eligible to have the security registered in its name. (2) The endorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person. (3) Reasonable assurance is given that the endorsement or instruction is genuine and authorized (Section 8402). (4) Any applicable law relating to the collection of taxes has been complied with. (5) The transfer does not violate any restriction on transfer imposed by the issuer in accordance with Section 8204. (6) A demand that the issuer not register transfer has not become effective under Section 8403, or the issuer has complied with subdivision (b) of Section 8403 but no legal process or indemnity bond is obtained as provided in subdivision (d) of Section 8403. (7) The transfer is in fact rightful or is to a protected purchaser. (b) If an issuer is under a duty to register a transfer of a security, the issuer is liable to a person presenting a certificated security or an instruction for registration or to the person’s principal for loss resulting from unreasonable delay in registration or failure or refusal to register the transfer. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8402.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. )
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An issuer may require assurance that endorsements or instructions are genuine and authorized, and may require extra assurance beyond the listed examples.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8402. (a) An issuer may require the following assurance that each necessary endorsement or each instruction is genuine and authorized: (1) In all cases, a guaranty of the signature of the person making an endorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity. (2) If the endorsement is made or the instruction is originated by an agent, appropriate assurance of actual authority to sign. (3) If the endorsement is made or the instruction is originated by a fiduciary pursuant to paragraph (4) or (5) of Section 8107, appropriate evidence of appointment or incumbency. (4) If there is more than one fiduciary, reasonable assurance that all who are required to sign have done so. (5) If the endorsement is made or the instruction is originated by a person not covered by another provision of this subdivision, assurance appropriate to the case corresponding as nearly as may be to the provisions of this subdivision. (b) An issuer may elect to require reasonable assurance beyond that specified in this section. (c) In this section: (1) “Guaranty of the signature” means a guaranty signed by or on behalf of a person reasonably believed by the issuer to be responsible. An issuer may adopt standards with respect to responsibility if they are not manifestly unreasonable. (2) “Appropriate evidence of appointment or incumbency” means: (A) In the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of the court or an officer thereof and dated within 60 days before the date of presentation for transfer. (B) In any other case, a copy of a document showing the appointment or a certificate issued by or on behalf of a person reasonably believed by an issuer to be responsible or, in the absence of that document or certificate, other evidence the issuer reasonably considers appropriate. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8403.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. )
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An appropriate person may ask the issuer not to register a transfer, and the issuer must notify the relevant parties and withhold transfer registration for up to 30 days in the stated notice period.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8403. (a) A person who is an appropriate person to make an endorsement or originate an instruction may demand that the issuer not register transfer of a security by communicating to the issuer a notification that identifies the registered owner and the issue of which the security is a part and provides an address for communications directed to the person making the demand. The demand is effective only if it is received by the issuer at a time and in a manner affording the issuer reasonable opportunity to act on it. (b) If a certificated security in registered form is presented to an issuer with a request to register transfer or an instruction is presented to an issuer with a request to register transfer of an uncertificated security after a demand that the issuer not register transfer has become effective, the issuer shall promptly communicate to (A) the person who initiated the demand at the address provided in the demand and (B) the person who presented the security for registration of transfer or initiated the instruction requesting registration of transfer a notification stating all of the following: (1) The certificated security has been presented for registration of transfer or the instruction for registration of transfer of the uncertificated security has been received. (2) A demand that the issuer not register transfer had previously been received. (3) The issuer will withhold registration of transfer for a period of time stated in the notification in order to provide the person who initiated the demand an opportunity to obtain legal process or an indemnity bond. (c) The period described in paragraph (3) of subdivision (b) may not exceed 30 days after the date of communication of the notification. A shorter period may be specified by the issuer if it is not manifestly unreasonable. (d) An issuer is not liable to a person who initiated a demand that the issuer not register transfer for any loss the person suffers as a result of registration of a transfer pursuant to an effective endorsement or instruction if the person who initiated the demand does not, within the time stated in the issuer’s communication, either: (1) Obtain an appropriate restraining order, injunction, or other process from a court of competent jurisdiction enjoining the issuer from registering the transfer. (2) File with the issuer an indemnity bond, sufficient in the issuer’s judgment to protect the issuer and any transfer agent, registrar, or other agent of the issuer involved from any loss it or they may suffer by refusing to register the transfer. (e) This section does not relieve an issuer from liability for registering transfer pursuant to an endorsement or instruction that was not effective. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8404.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. )
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An issuer can be liable for wrongful registration of a transfer and, on demand, must give the entitled person a replacement security and missed payments or distributions.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8404. (a) Except as otherwise provided in Section 8406, an issuer is liable for wrongful registration of transfer if the issuer has registered a transfer of a security to a person not entitled to it, and the transfer was registered in any of the following circumstances: (1) Pursuant to an ineffective endorsement or instruction. (2) After a demand that the issuer not register transfer became effective under subdivision (a) of Section 8403(a) and the issuer did not comply with subdivision (b) of Section 8403. (3) After the issuer had been served with an injunction, restraining order, or other legal process enjoining it from registering the transfer, issued by a court of competent jurisdiction, and the issuer had a reasonable opportunity to act on the injunction, restraining order, or other legal process. (4) By an issuer acting in collusion with the wrongdoer. (b) An issuer that is liable for wrongful registration of transfer under subdivision (a) on demand shall provide the person entitled to the security with a like certificated or uncertificated security, and any payments or distributions that the person did not receive as a result of the wrongful registration. If an overissue would result, the issuer’s liability to provide the person with a like security is governed by Section 8210. (c) Except as otherwise provided in subdivision (a) or in a law relating to the collection of taxes, an issuer is not liable to an owner or other person suffering loss as a result of the registration of a transfer of a security if registration was made pursuant to an effective endorsement or instruction. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8405.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. )
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An issuer must issue a new certificate when an owner reports a certificated security as lost, destroyed, or wrongly taken and meets specified requirements. The issuer must also register a transfer presented by a protected purchaser after replacement, unless that would create an overissue.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8405. (a) If an owner of a certificated security, whether in registered or bearer form, claims that the certificate has been lost, destroyed, or wrongfully taken, the issuer shall issue a new certificate if the owner does all of the following: (1) So requests before the issuer has notice that the certificate has been acquired by a protected purchaser. (2) Files with the issuer a sufficient indemnity bond. (3) Satisfies other reasonable requirements imposed by the issuer. (b) If, after the issue of a new security certificate, a protected purchaser of the original certificate presents it for registration of transfer, the issuer shall register the transfer unless an overissue would result. In that case, the issuer’s liability is governed by Section 8210. In addition to any rights on the indemnity bond, an issuer may recover the new certificate from a person to whom it was issued or any person taking under that person, except a protected purchaser. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8406.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. )
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If a security certificate is lost, apparently destroyed, or wrongfully taken, the owner may lose the right to sue the issuer if the owner does not notify the issuer within a reasonable time and the issuer transfers the security before getting that notice.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8406. If a security certificate has been lost, apparently destroyed, or wrongfully taken, and the owner fails to notify the issuer of that fact within a reasonable time after the owner has notice of it and the issuer registers a transfer of the security before receiving notification, the owner may not assert against the issuer a claim for registering the transfer under Section 8404 or a claim to a new security certificate under Section 8405. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8407.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. )
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Agents for an issuer handling securities transfers, issuance, or cancellation have the same obligation to the security holder or owner as the issuer does for those functions.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 4. Registration [8401 - 8407] ( Chapter 4 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8407. A person acting as authenticating trustee, transfer agent, registrar, or other agent for an issuer in the registration of a transfer of its securities, in the issue of new security certificates or uncertificated securities, or in the cancellation of surrendered security certificates has the same obligation to the holder or owner of a certificated or uncertificated security with regard to the particular functions performed as the issuer has in regard to those functions. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8501.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section defines a securities account and explains when a person acquires a security entitlement, including exceptions.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8501. (a) “Securities account” means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset. (b) Except as otherwise provided in subdivisions (d) and (e), a person acquires a security entitlement if a securities intermediary does any of the following: (1) Indicates by book entry that a financial asset has been credited to the person’s securities account. (2) Receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it for credit to the person’s securities account. (3) Becomes obligated under other law, regulation, or rule to credit a financial asset to the person’s securities account. (c) If a condition of subdivision (b) has been met, a person has a security entitlement even though the securities intermediary does not itself hold the financial asset. (d) If a securities intermediary holds a financial asset for another person, and the financial asset is registered in the name of, payable to the order of, or specially endorsed to the other person, and has not been endorsed to the securities intermediary or in blank, the other person is treated as holding the financial asset directly rather than as having a security entitlement with respect to the financial asset. (e) Issuance of a security is not establishment of a security entitlement. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8502.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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A person who acquires a security entitlement under Section 8501 for value and without notice of an adverse claim cannot be sued on that adverse claim.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8502. An action based on an adverse claim to a financial asset, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a person who acquires a security entitlement under Section 8501 for value and without notice of the adverse claim. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8503.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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A security intermediary must hold relevant financial-asset interests for entitlement holders, and those interests are generally not treated as the intermediary’s property or reachable by the intermediary’s creditors, subject to Section 8511.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8503. (a) To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary for the entitlement holders, are not property of the securities intermediary, and are not subject to claims of creditors of the securities intermediary, except as otherwise provided in Section 8511. (b) An entitlement holder’s property interest with respect to a particular financial asset under subdivision (a) is a pro rata property interest in all interests in that financial asset held by the securities intermediary, without regard to the time the entitlement holder acquired the security entitlement or the time the securities intermediary acquired the interest in that financial asset. (c) An entitlement holder’s property interest with respect to a particular financial asset under subdivision (a) may be enforced against the securities intermediary only by exercise of the entitlement holder’s rights under Sections 8505 to 8508, inclusive. (d) An entitlement holder’s property interest with respect to a particular financial asset under subdivision (a) may be enforced against a purchaser of the financial asset or interest therein only if all of the following conditions are met: (1) Insolvency proceedings have been initiated by or against the securities intermediary. (2) The securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements of all of its entitlement holders to that financial asset. (3) The securities intermediary violated its obligations under Section 8504 by transferring the financial asset or interest therein to the purchaser. (4) The purchaser is not protected under subdivision (e). The trustee or other liquidator, acting on behalf of all entitlement holders having security entitlements with respect to a particular financial asset, may recover the financial asset, or interest therein, from the purchaser. If the trustee or other liquidator elects not to pursue that right, an entitlement holder whose security entitlement remains unsatisfied has the right to recover its interest in the financial asset from the purchaser. (e) An action based on the entitlement holder’s property interest with respect to a particular financial asset under subdivision (a), whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against any purchaser of a financial asset or interest therein who gives value, obtains control, and does not act in collusion with the securities intermediary in violating the securities intermediary’s obligations under Section 8504. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8504.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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A securities intermediary must promptly obtain and keep enough financial assets to cover the security entitlements it has created, and it generally may not grant security interests in those assets unless the entitlement holder agrees otherwise.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8504. (a) A securities intermediary shall promptly obtain and thereafter maintain a financial asset in a quantity corresponding to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that financial asset. The securities intermediary may maintain those financial assets directly or through one or more other securities intermediaries. (b) Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant any security interests in a financial asset it is obligated to maintain pursuant to subdivision (a). (c) A securities intermediary satisfies the duty in subdivision (a) if it does either of the following: (1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary. (2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to obtain and maintain the financial asset. (d) This section does not apply to a clearing corporation that is itself the obligor of an option or similar obligation to which its entitlement holders have security entitlements. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8505.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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A securities intermediary must take action to obtain payments or distributions from the issuer of a financial asset.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8505. (a) A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset. A securities intermediary satisfies the duty if it does either of the following: (1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary. (2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to attempt to obtain the payment or distribution. (b) A securities intermediary is obligated to its entitlement holder for a payment or distribution made by the issuer of a financial asset if the payment or distribution is received by the securities intermediary. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8506.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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A securities intermediary must exercise rights in a financial asset when directed by an entitlement holder.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8506. A securities intermediary shall exercise rights with respect to a financial asset if directed to do so by an entitlement holder. A securities intermediary satisfies the duty if it does either of the following: (1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary. (2) In the absence of agreement, the securities intermediary either places the entitlement holder in a position to exercise the rights directly or exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8507.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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A securities intermediary must comply with a valid entitlement order and, if it makes a transfer under an ineffective order, reestablish the security entitlement and make missed payments or distributions good.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8507. (a) A securities intermediary shall comply with an entitlement order if the entitlement order is originated by the appropriate person, the securities intermediary has had reasonable opportunity to assure itself that the entitlement order is genuine and authorized, and the securities intermediary has had reasonable opportunity to comply with the entitlement order. A securities intermediary satisfies the duty if it does either of the following: (1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary. (2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to comply with the entitlement order. (b) If a securities intermediary transfers a financial asset pursuant to an ineffective entitlement order, the securities intermediary shall reestablish a security entitlement in favor of the person entitled to it, and pay or credit any payments or distributions that the person did not receive as a result of the wrongful transfer. If the securities intermediary does not reestablish a security entitlement, the securities intermediary is liable to the entitlement holder for damages. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8508.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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A securities intermediary must follow an entitlement holder’s direction to change a security entitlement or transfer the asset, and it satisfies that duty by acting as agreed or, if there is no agreement, by using due care under reasonable commercial standards.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8508. A securities intermediary shall act at the direction of an entitlement holder to change a security entitlement into another available form of holding for which the entitlement holder is eligible, or to cause the financial asset to be transferred to a securities account of the entitlement holder with another securities intermediary. A securities intermediary satisfies the duty if it does either of the following: (1) The securities intermediary acts as agreed upon by the entitlement holder and the securities intermediary. (2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8509.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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If no other rule or agreement sets the standard, a securities intermediary and an entitlement holder must act in a commercially reasonable manner. The section also says compliance with a federal rule can satisfy the intermediary’s duty, and the intermediary is not required to do anything another law forbids.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8509. (a) If the substance of a duty imposed upon a securities intermediary by Sections 8504 to 8508, inclusive, is the subject of a federal statute, regulation, or rule, compliance with that statute, regulation, or rule satisfies the duty. (b) To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise of the rights of an entitlement holder are not specified by other statute, regulation, or rule or by agreement between the securities intermediary and entitlement holder, the securities intermediary shall perform its duties and the entitlement holder shall exercise its rights in a commercially reasonable manner. (c) The obligation of a securities intermediary to perform the duties imposed by Sections 8504 to 8508, inclusive, is subject to the following: (1) Rights of the securities intermediary arising out of a security interest under a security agreement with the entitlement holder or otherwise. (2) Rights of the securities intermediary under other law, regulation, rule, or agreement to withhold performance of its duties as a result of unfulfilled obligations of the entitlement holder to the securities intermediary. (d) Sections 8504 to 8508, inclusive, do not require a securities intermediary to take any action that is prohibited by other statute, regulation, or rule. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8510.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section gives priority to certain purchasers of security entitlements who obtain control, and limits adverse-claim actions against them in some cases.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8510. (a) In a case not covered by the priority rules in Division 9 (commencing with Section 9101) or the rules stated in subdivision (c), 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 8502, 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 Division 9 (commencing with Section 9101), 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 subdivision (d), purchasers who have control rank according to priority in time of any of the following: (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 subdivision (d) of Section 8106. (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 subdivision (d) of Section 8106. (3) If the purchaser obtained control through another person under paragraph (3) of subdivision (d) of Section 8106, the time on which priority would be based under this subdivision 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. (Amended by Stats. 1999, Ch. 991, Sec. 33.41. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)
8511.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section sets priority rules when a securities intermediary or clearing corporation lacks enough assets to satisfy both entitlement holders and a creditor with a security interest.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 5. Security Entitlements [8501 - 8511] ( Chapter 5 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8511. (a) Except as otherwise provided in subdivisions (b) and (c), if a securities intermediary does not have sufficient interests in a particular financial asset to satisfy both its obligations to entitlement holders who have security entitlements to that financial asset and its obligation to a creditor of the securities intermediary who has a security interest in that financial asset, the claims of entitlement holders, other than the creditor, have priority over the claim of the creditor. (b) A claim of a creditor of a securities intermediary who has a security interest in a financial asset held by a securities intermediary has priority over claims of the securities intermediary’s entitlement holders who have security entitlements with respect to that financial asset if the creditor has control over the financial asset. (c) If a clearing corporation does not have sufficient financial assets to satisfy both its obligations to entitlement holders who have security entitlements with respect to a financial asset and its obligation to a creditor of the clearing corporation who has a security interest in that financial asset, the claim of the creditor has priority over the claims of entitlement holders. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8601.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 6. Transition Provisions [8601 - 8603] ( Chapter 6 added by Stats. 1996, Ch. 497, Sec. 9. )
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This division becomes operative on January 1, 1997.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 6. Transition Provisions [8601 - 8603] ( Chapter 6 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8601. This division becomes operative January 1, 1997. (Added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)
8603.
## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 6. Transition Provisions [8601 - 8603] ( Chapter 6 added by Stats. 1996, Ch. 497, Sec. 9. )
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This section says the new division does not disturb pre-existing proceedings, and it gives rules for keeping a perfected security interest perfected after the division becomes operative.

## Commercial Code - COM ## DIVISION 8. INVESTMENT SECURITIES [8101 - 8603] ( Division 8 repealed and added by Stats. 1996, Ch. 497, Sec. 9. ) ## CHAPTER 6. Transition Provisions [8601 - 8603] ( Chapter 6 added by Stats. 1996, Ch. 497, Sec. 9. ) ## 8603. (a) This division does not affect an action or proceeding commenced before this division becomes operative. (b) If a security interest in a security is perfected at the date this division becomes operative, and the action by which the security interest was perfected would suffice to perfect a security interest under this division, no further action is required to continue perfection. If a security interest in a security is perfected at the date this division takes effect but the action by which the security interest was perfected would not suffice to perfect a security interest under this division, the security interest remains perfected for a period of four months after the operative date and continues perfected thereafter if appropriate action to perfect under this division is taken within that period. If a security interest is perfected at the date this division becomes operative and the security interest can be perfected by filing under Division 9 (commencing with Section 9101), a financing statement signed by the secured party instead of the debtor may be filed within that period to continue perfection or thereafter to perfect and that financing statement shall contain a statement that it is being filed pursuant to this section. (Amended by Stats. 1999, Ch. 991, Sec. 33.5. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)
9101.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says Division 9 may be cited as the Uniform Commercial Code-Secured Transactions.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9101. This division may be cited as the Uniform Commercial Code-Secured Transactions. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9102.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section defines many terms used in Division 9 of the Commercial Code, including accession, account, consignment, goods, and secured party.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9102. (a) In this division: (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,” “account statement,” “account to,” “commodity account” in paragraph (14), “customer’s account,” “deposit account” in paragraph (29), “on account of,” and “statement of account,” 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. The term includes controllable accounts and health care insurance receivables. The term does not include (i) chattel paper, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, (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, or (vii) rights to payment evidenced by an instrument. (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 negotiable instrument evidences chattel paper. (4) “Accounting,” except as used in “accounting for,” means a record that is all of the following: (A) Signed by a secured party. (B) Indicating the aggregate unpaid secured obligations as of a date not more than 35 days earlier or 35 days later than the date of the record. (C) Identifying the components of the obligations in reasonable detail. (5) “Agricultural lien” means an interest in farm products that meets all of the following conditions: (A) It secures payment or performance of an obligation for either of the following: (i) Goods or services furnished in connection with a debtor’s farming operation. (ii) Rent on real property leased by a debtor in connection with its farming operation. (B) It is created by statute in favor of a person that does either of the following: (i) In the ordinary course of its business furnished goods or services to a debtor in connection with a debtor’s farming operation. (ii) Leased real property to a debtor in connection with the debtor’s farming operation. (C) Its effectiveness does not depend on the person’s possession of the personal property. (6) “As-extracted collateral” means either of the following: (A) Oil, gas, or other minerals that are subject to a security interest that does both of the following: (i) Is created by a debtor having an interest in the minerals before extraction. (ii) Attaches to the minerals as extracted. (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) [Reserved] (8) “Bank” means an organization that is engaged in the business of banking. The term 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. The term includes another record maintained as an alternative to a certificate of title by the governmental unit that issues certificates of title if a statute permits the security interest in question to be indicated on the record 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) (A) “Chattel paper” means either of the following: (i) A right to payment of a monetary obligation secured by specific goods, if the right to payment and security agreement are evidenced by a record. (ii) A right to payment of a monetary obligation owed by a lessee under a lease agreement with respect to specific goods and a monetary obligation owed by the lessee in connection with the transaction giving rise to the lease, if both of the following are met: (I) The right to payment and lease agreement are evidenced by a record. (II) The predominant purpose of the transaction giving rise to the lease was to give the lessee the right to possession and use of the goods. (B) “Chattel paper” does not include a right to payment arising out of a charter or other contract involving the use or hire of a vessel or 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. (12) “Collateral” means the property subject to a security interest or agricultural lien. The term includes all of the following: (A) Proceeds to which a security interest attaches. (B) Accounts, chattel paper, payment intangibles, and promissory notes that have been sold. (C) Goods that are the subject of a consignment. (13) “Commercial tort claim” means a claim arising in tort with respect to which either of the following conditions is satisfied: (A) The claimant is an organization. (B) The claimant is an individual and both of the following conditions are satisfied regarding the claim: (i) It arose in the course of the claimant’s business or profession. (ii) It 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 either of the following: (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. (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 is either of the following: (A) Is registered as a futures commission merchant under federal commodities law. (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 to do any of the following: (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. (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 all of the following conditions are satisfied: (A) The merchant satisfies all of the following conditions: (i) They deal in goods of that kind under a name other than the name of the person making delivery. (ii) They are not an auctioneer. (iii) They are 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. (C) The goods are not consumer goods immediately before 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 both of the following conditions are satisfied: (A) An individual incurs an obligation primarily for personal, family, or household purposes. (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 which does both of the following: (A) Identifies, by its file number, the initial financing statement to which it relates. (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 any of the following: (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. (C) A consignee. (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 subdivision (b) of Section 7201. (31) [Reserved] (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 which are any of the following: (A) Crops grown, growing, or to be grown, including both of the following: (i) Crops produced on trees, vines, and bushes. (ii) Aquatic goods produced in aquacultural operations. (B) Livestock, born or unborn, including aquatic goods produced in aquacultural operations. (C) Supplies used or produced in a farming operation. (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 subdivision (a) of Section 9519. (37) “Filing office” means an office designated in Section 9501 as the place to file a financing statement. (38) “Filing-office rule” means a rule adopted pursuant to Section 9526. (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 subdivisions (a) and (b) of Section 9502. The term includes the filing of a financing statement covering goods of a transmitting utility which 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) [Reserved] (44) “Goods” means all things that are movable when a security interest attaches. The term 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, and (v) manufactured homes. The term also includes a computer program embedded in goods and any supporting information provided in connection with a transaction relating to the program if (i) the program is associated with the goods in such a manner that it customarily is considered part of the goods, or (ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods. The term does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded. The term also does not include 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 which is a right to payment of a monetary obligation for health care goods or services provided or to be 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 (i) investment property, (ii) letters of credit, (iii) 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, or (iv) writings that evidence chattel paper. (48) “Inventory” means goods, other than farm products, which are any of the following: (A) Leased by a person as lessor. (B) Held by a person for sale or lease or to be furnished under a contract of service. (C) Furnished by a person 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 formed or 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) (A) “Lien creditor” means any of the following: (i) A creditor that has acquired a lien on the property involved by attachment, levy, or the like. (ii) An assignee for benefit of creditors from the time of assignment. (iii) A trustee in bankruptcy from the date of the filing of the petition. (iv) A receiver in equity from the time of appointment. (B) “Lien creditor” does not include a creditor who by filing a notice with the Secretary of State has acquired only an attachment or judgment lien on personal property, or both. (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 40 body-feet or more in length, or, when erected on site, is 320 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 paragraph 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 Title 42 of the United States Code. (54) “Manufactured home transaction” means a secured transaction that satisfies either of the following: (A) It creates a purchase money security interest in a manufactured home, other than a manufactured home held as inventory. (B) It is a secured transaction 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, which secures payment or performance of an obligation. (56) “New debtor” means a person that becomes bound as debtor under subdivision (d) of Section 9203 by a security agreement previously entered into by another person. (57) “New value” means (i) money, (ii) money’s worth in property, services, or new credit, or (iii) 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, (i) owes payment or other performance of the obligation, (ii) has provided property other than the collateral to secure payment or other performance of the obligation, or (iii) 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 subdivision (c) of Section 9310, means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under subdivision (d) of Section 9203. (61) “Payment intangible” means a general intangible under which the account debtor’s principal obligation is a monetary obligation. The term includes a controllable payment intangible. (62) “Person related to,” with respect to an individual, means any of the following: (A) The spouse of the individual. (B) A brother, brother-in-law, sister, or sister-in-law of the individual. (C) An ancestor or lineal descendant of the individual or the individual’s spouse. (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 any of the following: (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). (D) The spouse of an individual described in subparagraph (A), (B), or (C). (E) An individual who is related by blood or marriage to an individual described in subparagraph (A), (B), (C), or (D) and shares the same home with the individual. (64) “Proceeds,” except as used in subdivision (b) of Section 9609, means any of the following property: (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. (C) Rights arising out 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. (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 signed by a secured party that 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 9620, 9621, and 9622. (67) “Public finance transaction” means a secured transaction in connection with which all of the following conditions are satisfied: (A) Debt securities are issued. (B) All or a portion of the securities issued have an initial stated maturity of at least 20 years. (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) “Public organic record” means a record that is available to the public for inspection and is any of the following: (A) A record consisting of the record initially filed with or issued by a state or the United States to form or organize an organization and any record filed with or issued by the state or the United States that amends or restates the initial record. (B) An organic record of a business trust consisting of the record initially filed with a state and any record filed with the state that amends or restates the initial record, if a statute of the state governing business trusts requires that the record be filed with the state. (C) A record consisting of legislation enacted by the legislature of a state or the Congress of the United States which forms or organizes an organization, any record amending the legislation, and any record filed with or issued by the state or the United States which amends or restates the name of the organization. (69) “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. (70) “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 which is stored in an electronic or other medium and is retrievable in perceivable form. (71) “Registered organization” means an organization formed or organized solely under the law of a single state or the United States by the filing of a public organic record with, the issuance of a public organic record by, or the enactment of legislation by the state or the United States. The term includes a business trust that is formed or organized under the law of a single state if a statute of the state governing business trusts requires that the business trust’s organic record be filed with the state. (72) “Secondary obligor” means an obligor to the extent that either of the following conditions are satisfied: (A) The obligor’s obligation is secondary. (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. (73) “Secured party” means any of the following: (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. (C) A consignor. (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. (F) A person that holds a security interest arising under Section 2401, 2505, 4210, or 5118, or under subdivision (3) of Section 2711 or subdivision (5) of Section 10508. (74) “Security agreement” means an agreement that creates or provides for a security interest. (75) [Reserved] (76) “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. (77) “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. (78) “Supporting obligation” means a letter-of-credit right or secondary obligation that supports the payment or performance of an account, chattel paper, document, general intangible, instrument, or investment property. (79) [Reserved] (80) “Termination statement” means an amendment of a financing statement that does both of the following: (A) Identifies, by its file number, the initial financing statement to which it relates. (B) Indicates either that it is a termination statement or that the identified financing statement is no longer effective. (81) “Transmitting utility” means a person primarily engaged in the business of any of the following: (A) Operating a railroad, subway, street railway, or trolley bus. (B) Transmitting communications electrically, electromagnetically, or by light. (C) Transmitting goods by pipeline or sewer. (D) Transmitting or producing and transmitting electricity, steam, gas, or water. (82) “Assignee,” except as used in “assignee for benefit of creditors,” means a person (A) in whose favor a security interest that secures an obligation is created or provided for under a security agreement, whether or not the obligation is outstanding or (B) to which an account, chattel paper, payment intangible, or promissory note has been sold. The term includes a person to which a security interest has been transferred by a secured party. (83) “Assignor” means a person that (A) under a security agreement creates or provides for a security interest that secures an obligation or (B) sells an account, chattel paper, payment intangible, or promissory note. The term includes a secured party that has transferred a security interest to another person. (84) “Controllable account” means an account evidenced by a controllable electronic record that provides that the account debtor undertakes to pay the person that has control under Section 12105 of the controllable electronic record. (85) “Controllable payment intangible” means a payment intangible evidenced by a controllable electronic record that provides that the account debtor undertakes to pay the person that has control under Section 12105 of the controllable electronic record. (86) “Electronic money” means money in an electronic form. (87) “Money” has the same meaning as in paragraph (24) of subdivision (b) of Section 1201, but does not include (A) a deposit account or (B) money in an electronic form that cannot be subjected to control under Section 9105.1. (88) “Tangible money” means money in a tangible form. (b) The following definitions in other divisions apply to this division: “Applicant” Section 5102. “Beneficiary” Section 5102. “Broker” Section 8102. “Certificated security” Section 8102. “Check” Section 3104. “Clearing corporation” Section 8102. “Contract for sale” Section 2106. “Control” Section 7106. “Controllable electronic record” Section 12102. “Customer” Section 4104. “Entitlement holder” Section 8102. “Financial asset” Section 8102. “Holder in due course” Section 3302. “Issuer” (with respect to a letter of credit or letter-of-credit right) Section 5102. “Issuer” (with respect to a security) Section 8201. “Issuer” (with respect to documents of title) Section 7102. “Lease” Section 10103. “Lease agreement” Section 10103. “Lease contract” Section 10103. “Leasehold interest” Section 10103. “Lessee” Section 10103. “Lessee in ordinary course of business” Section 10103. “Lessor” Section 10103. “Lessor’s residual interest” Section 10103. “Letter of credit” Section 5102. “Merchant” Section 2104. “Negotiable instrument” Section 3104. “Nominated person” Section 5102. “Note” Section 3104. “Proceeds of a letter of credit” Section 5114. “Protected purchaser” Section 8303. “Prove” Section 3103. “Qualifying purchaser” Section 12102. “Sale” Section 2106. “Securities account” Section 8501. “Securities intermediary” Section 8102. “Security” Section 8102. “Security certificate” Section 8102. “Security entitlement” Section 8102. “Uncertificated security” Section 8102. (c) Division 1 (commencing with Section 1101) contains general definitions and principles of construction and interpretation applicable throughout this division. (Amended by Stats. 2023, Ch. 210, Sec. 24. (SB 95) Effective January 1, 2024.)
9103.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section defines purchase money collateral and purchase money obligations, and explains when a security interest counts as a purchase money security interest.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9103. (a) In this section: (1) “Purchase money collateral” means goods or software that secures a purchase money obligation incurred with respect to that collateral. (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 as follows: (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, also 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. (3) Also 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 both of the following conditions are satisfied: (1) The debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods. (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 as follows: (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. (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. (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 any of the following conditions are satisfied: (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. (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 subdivisions (e), (f), and (g) 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. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9104.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party has control of a deposit account if one of several listed conditions is met.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9104. (a) A secured party has control of a deposit account if any of the following conditions is satisfied: (1) The secured party is the bank with which the deposit account is maintained. (2) The debtor, secured party, and bank have agreed in a signed 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. (3) The secured party becomes the bank’s customer with respect to the deposit account. (4) Another person, other than the debtor, satisfies either of the following conditions: (A) The person has control of the deposit account and acknowledges that it has control on behalf of the secured party. (B) The person obtains control of the deposit account after having acknowledged that it will obtain control of the deposit account on behalf of the secured party. (b) A secured party that has satisfied subdivision (a) has control, even if the debtor retains the right to direct the disposition of funds from the deposit account. (Amended by Stats. 2023, Ch. 210, Sec. 25. (SB 95) Effective January 1, 2024.)
9105.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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A purchaser has control of an authoritative electronic copy of chattel paper if the system reliably identifies the purchaser as the assignee, and certain copy/assignment conditions are met.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9105. (a) A purchaser has control of an authoritative electronic copy of a record evidencing chattel paper if a system employed for evidencing the assignment of interests in the chattel paper reliably establishes the purchaser as the person to which the authoritative electronic copy was assigned. (b) A system satisfies subdivision (a) if the record or records evidencing the chattel paper are created, stored, and assigned in such a manner that each of the following conditions is satisfied: (1) A single authoritative copy of the record or records exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable. (2) The authoritative copy identifies the purchaser as the assignee of the record or records. (3) The authoritative copy is communicated to and maintained by the purchaser or its designated custodian. (4) Copies or amendments that add or change an identified assignee of the authoritative copy can be made only with the consent of the purchaser. (5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy. (6) Any amendment of the authoritative copy is readily identifiable as authorized or unauthorized. (c) A system satisfies subdivision (a), and a purchaser has control of an authoritative electronic copy of a record evidencing chattel paper, if the electronic copy, a record attached to or logically associated with the electronic copy, or a system in which the electronic copy is recorded satisfies each of the following conditions: (1) It enables the purchaser readily to identify each electronic copy as either an authoritative copy or a nonauthoritative copy. (2) It enables the purchaser readily to identify itself in any way, including by name, identifying number, cryptographic key, office, or account number, as the assignee of the authoritative electronic copy. (3) It gives the purchaser exclusive power, subject to subdivision (d), to do both of the following: (A) Prevent others from adding or changing an identified assignee of the authoritative electronic copy. (B) Transfer control of the authoritative electronic copy. (d) Subject to subdivision (e), a power is exclusive under subparagraphs (A) and (B) of paragraph (3) of subdivision (c) even if either of the following is true: (1) The authoritative electronic copy, a record attached to or logically associated with the authoritative electronic copy, or a system in which the authoritative electronic copy is recorded limits the use of the authoritative electronic copy or has a protocol programmed to cause a change, including a transfer or loss of control. (2) The power is shared with another person. (e) A power of a purchaser is not shared with another person under paragraph (2) of subdivision (d) and the purchaser’s power is not exclusive if each of the following conditions is satisfied: (1) The purchaser can exercise the power only if the power also is exercised by the other person. (2) Either of the following is true: (A) The other person can exercise the power without exercise of the power by the purchaser. (B) The other person is the transferor to the purchaser of an interest in the chattel paper. (f) If a purchaser has the powers specified in subparagraphs (A) and (B) of paragraph (3) of subdivision (c), the powers are presumed to be exclusive. (g) A purchaser has control of an authoritative electronic copy of a record evidencing chattel paper if another person, other than the transferor to the purchaser of an interest in the chattel paper, satisfies either of the following conditions: (1) The other person has control of the authoritative electronic copy and acknowledges that it has control on behalf of the purchaser. (2) The other person obtains control of the authoritative electronic copy after having acknowledged that it will obtain control of the electronic copy on behalf of the purchaser. (Amended by Stats. 2023, Ch. 210, Sec. 26. (SB 95) Effective January 1, 2024.)
9105.1.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section defines when a person has control of electronic money.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9105.1. (a) A person has control of electronic money if each of the following conditions is satisfied: (1) The electronic money, a record attached to or logically associated with the electronic money, or a system in which the electronic money is recorded gives the person all of the following: (A) Power to avail itself of substantially all the benefit from the electronic money. (B) Exclusive power, subject to subdivision (b), to do both of the following: (i) Prevent others from availing themselves of substantially all the benefit from the electronic money. (ii) Transfer control of the electronic money to another person or cause another person to obtain control of other electronic money as a result of the transfer of the electronic money. (2) The electronic money, a record attached to or logically associated with the electronic money, or a system in which the electronic money is recorded enables the person readily to identify itself in any way, including by name, identifying number, cryptographic key, office, or account number, as having the powers under paragraph (1). (b) Subject to subdivision (c), a power is exclusive under clauses (i) and (ii) of subparagraph (B) of paragraph (1) of subdivision (a) even if either of the following is true: (1) The electronic money, a record attached to or logically associated with the electronic money, or a system in which the electronic money is recorded limits the use of the electronic money or has a protocol programmed to cause a change, including a transfer or loss of control. (2) The power is shared with another person. (c) A power of a person is not shared with another person under paragraph (2) of subdivision (b) and the person’s power is not exclusive if each of the following conditions is satisfied: (1) The person can exercise the power only if the power also is exercised by the other person. (2) Either of the following is true: (A) The other person can exercise the power without exercise of the power by the person. (B) The other person is the transferor to the person of an interest in the electronic money. (d) If a person has the powers specified in clauses (i) and (ii) of subparagraph (B) of paragraph (1) of subdivision (a), the powers are presumed to be exclusive. (e) A person has control of electronic money if another person, other than the transferor to the person of an interest in the electronic money, satisfies either of the following conditions: (1) The other person has control of the electronic money and acknowledges that it has control on behalf of the person. (2) The other person obtains control of the electronic money after having acknowledged that it will obtain control of the electronic money on behalf of the person. (Added by Stats. 2023, Ch. 210, Sec. 27. (SB 95) Effective January 1, 2024.)
9106.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section defines when a person, secured party, or account holder has “control” of certain securities, commodity contracts, and related accounts.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9106. (a) A person has control of a certificated security, uncertificated security, or security entitlement as provided in Section 8106. (b) A secured party has control of a commodity contract if either of the following conditions is satisfied: (1) The secured party is the commodity intermediary with which the commodity contract is carried. (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. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9107.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party has control of a letter-of-credit right only to the extent the issuer or nominated person has a right to pay or perform and has consented to the assignment of proceeds, or where other applicable law or practice allows it.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9107. 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 subdivision (c) of Section 5114 or otherwise applicable law or practice. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9107.1.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party has control of a controllable electronic record under Section 12105, and may also have control of a controllable account or payment intangible if it controls the electronic record that evidences it.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9107.1. (a) A secured party has control of a controllable electronic record as provided in Section 12105. (b) A secured party has control of a controllable account or controllable payment intangible if the secured party has control of the controllable electronic record that evidences the controllable account or controllable payment intangible. (Added by Stats. 2023, Ch. 210, Sec. 28. (SB 95) Effective January 1, 2024.)
9107.2.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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A person with control under the cited sections does not have to acknowledge that control for another person, and a person who acknowledges it for another person generally has no duty to that other person and does not have to confirm the acknowledgment to anyone else unless agreed otherwise or another law applies.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9107.2. (a) A person that has control under Section 9104, 9105, or 9105.1 is not required to acknowledge that it has control on behalf of another person. (b) If a person acknowledges that it has or will obtain control on behalf of another person, unless the person otherwise agrees or law other than this division otherwise provides, the person does not owe any duty to the other person and is not required to confirm the acknowledgment to any other person. (Added by Stats. 2023, Ch. 210, Sec. 29. (SB 95) Effective January 1, 2024.)
9108.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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A property or collateral description is sufficient if it reasonably identifies what is described, but some broad or type-only descriptions are not enough.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9108. (a) Except as otherwise provided in subdivisions (c), (d), and (e), 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 subdivision (d), a description of collateral reasonably identifies the collateral if it identifies the collateral by any of the following: (1) Specific listing. (2) Category. (3) Except as otherwise provided in subdivision (e), a type of collateral defined in this code. (4) Quantity. (5) Computational or allocational formula or procedure. (6) Except as otherwise provided in subdivision (c), 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 subdivision (e), a description of a security entitlement, securities account, or commodity account is sufficient if it describes either of the following: (1) The collateral by those terms or as investment property. (2) The underlying financial asset or commodity contract. (e) A description only by type of collateral defined in this code is an insufficient description of either of the following: (1) A commercial tort claim. (2) In a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account. (f) A description of investment property collateral also shall meet the applicable requirements of Section 1799.103 of the Civil Code. A description of consumer goods also shall meet the applicable requirements of Section 1799.100 of the Civil Code. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9109.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says which transactions and property interests are covered by Division 9, and lists several exclusions where the division does not apply.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9109. (a) Except as otherwise provided in subdivisions (c) and (d), this division applies to each of the following: (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 2401 or 2505, subdivision (3) of Section 2711, or subdivision (e) of Section 10508, as provided in Section 9110. (6) A security interest arising under Section 4210 or 5118. (b) The application of this division 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 division does not apply. (c) This division does not apply to the extent that either of the following conditions is satisfied: (1) A statute, regulation, or treaty of the United States preempts this division. (2) The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under Section 5114. (d) This division does not apply to any of the following: (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, however Section 9333 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 loan made by an insurance company pursuant to the provisions of a policy or contract issued by it and upon the sole security of the policy or contract. (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 setoff, provided that both of the following sections apply: (A) Section 9340 applies with respect to the effectiveness of rights of recoupment or setoff against deposit accounts. (B) Section 9404 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 each of the following: (A) Liens on real property pursuant to Sections 9203 and 9308. (B) Fixtures pursuant to Section 9334. (C) Fixture filings pursuant to Sections 9501, 9502, 9512, 9516, and 9519. (D) Security agreements covering personal and real property pursuant to Section 9604. (12) An assignment of a claim arising in tort, other than a commercial tort claim, however Sections 9315 and 9322 apply with respect to proceeds and priorities in proceeds. (13) An assignment of a deposit account in a consumer transaction, however Sections 9315 and 9322 apply with respect to proceeds and priorities in proceeds. (14) A security interest created by the assignment of the benefits of a public construction contract under the Improvement Act of 1911 (Division 7 (commencing with Section 5000) of the Streets and Highways Code). (15) Transition property, as defined in Section 840 of the Public Utilities Code, except to the extent that the provisions of this division are referred to in Article 5.5 (commencing with Section 840) of Chapter 4 of Part 1 of Division 1 of the Public Utilities Code, recovery property, as defined in Section 848 of the Public Utilities Code, except to the extent that the provisions of this division are referred to in Article 5.6 (commencing with Section 848) of Chapter 4 of Part 1 of Division 1 of the Public Utilities Code, and water supply property, as defined in Section 849 of the Public Utilities Code, except to the extent that the provisions of this division are referred to in Article 5.7 (commencing with Section 849) of Chapter 4 of Part 1 of Division 1 of the Public Utilities Code. (16) A claim or right of an employee or employee’s dependents to receive workers’ compensation under Division 1 (commencing with Section 50) or Division 4 (commencing with Section 3200) of the Labor Code. (17) A transfer by a government or governmental unit. (Amended by Stats. 2014, Ch. 482, Sec. 4. (SB 936) Effective January 1, 2015.)
9110.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section makes certain security interests subject to this division and, before the debtor gets possession of the goods, says they remain enforceable, do not require filing to be perfected, have priority over conflicting debtor-created security interests, and are governed by other listed divisions after debtor default.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 1. General Provisions [9101 - 9110] ( Chapter 1 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9110. A security interest arising under Section 2401 or 2505, or under subdivision (3) of Section 2711, or subdivision (e) of Section 10508 is subject to this division. However, until the debtor obtains possession of the goods, all of the following apply: (1) The security interest is enforceable, even if paragraph (3) of subdivision (b) of Section 9203 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 Division 2 (commencing with Section 2101) or Division 10 (commencing with Section 10101). (4) The security interest has priority over a conflicting security interest created by the debtor. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9201.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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A security agreement generally works according to its terms between the parties, purchasers of the collateral, and creditors, but consumer-protection and other listed laws can override it.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9201. (a) Except as otherwise provided in this 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 this division is subject to any applicable rule of law which establishes a different rule for consumers; to Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code; Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code; the Retail Installment Sales Act, Chapter 1 (commencing with Section 1801) of Title 2 of Part 4 of Division 3 of the Civil Code; the Automobile Sales Finance Act, Chapter 2b (commencing with Section 2981) of Title 14 of Part 4 of Division 3 of the Civil Code; Part 4 (commencing with Section 1738) of Division 3 of the Civil Code, with respect to the applicable provisions of Titles 1 (commencing with Section 1738), 1.3 (commencing with Section 1747), 1.3A (commencing with Section 1748.10), 1.3B (commencing with Section 1748.20), 1.4 (commencing with Section 1749), 1.5 (commencing with Section 1750), 1.6 (commencing with Section 1785.1), 1.61 (commencing with Section 1785.41), 1.6A (commencing with Section 1786), 1.6B (commencing with Section 1787.1), 1.6C (commencing with Section 1788), 1.6D (commencing with Section 1789), 1.6E (commencing with Section 1789.10), 1.6F (commencing with Section 1789.30), 1.7 (commencing with Section 1790), 1.8 (commencing with Section 1798), 1.83 (commencing with Section 1799.5), 1.84 (commencing with Section 1799.8), 1.85 (commencing with Section 1799.90), 1.86 (commencing with Section 1799.200), 2 (commencing with Section 1801), 2.4 (commencing with Section 1812.50), 2.5 (commencing with Section 1812.80), 2.6 (commencing with Section 1812.100), 2.7 (commencing with Section 1812.200), 2.8 (commencing with Section 1812.300), 2.9 (commencing with Section 1812.400), 2.95 (commencing with Section 1812.600), 2.96 (commencing with Section 1812.620), 3 (commencing with Section 1813), 4 (commencing with Section 1884), and 14 (commencing with Section 2872); the Industrial Loan Law, Division 7 (commencing with Section 18000) of the Financial Code; the Pawnbroker Law, Division 8 (commencing with Section 21000) of the Financial Code; the California Financing Law, Division 9 (commencing with Section 22000) of the Financial Code; and the Mobilehomes-Manufactured Housing Act of 1980, Part 2 (commencing with Section 18000) of Division 13 of the Health and Safety Code; and to any applicable consumer protection statute, regulation, or law. (c) In case of conflict between this division and a rule of law, statute, or regulation described in subdivision (b), the rule of law, statute, or regulation controls. Failure to comply with a statute or regulation described in subdivision (b) has only the effect the statute or regulation specifies. (d) This division does not do either of the following: (1) Validate any rate, charge, agreement, or practice that violates a rule of law, statute, or regulation described in subdivision (b). (2) Extend the application of the rule of law, statute, or regulation to a transaction not otherwise subject to it. (Amended by Stats. 2019, Ch. 143, Sec. 20. (SB 251) Effective January 1, 2020.)
9202.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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This provision says the article’s rights and obligations apply whether the collateral’s title is held by the secured party or the debtor, except for certain consignments and sales of accounts, chattel paper, payment intangibles, or promissory notes.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9202. Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment intangibles, or promissory notes, the provisions of this article with regard to rights and obligations apply whether title to collateral is in the secured party or the debtor. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9203.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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A security interest attaches when it becomes enforceable against the debtor, unless the agreement delays attachment.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9203. (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 subdivisions (c) to (i), inclusive, a security interest is enforceable against the debtor and third parties with respect to the collateral only if each of the following conditions is satisfied: (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. (3) One of the following conditions is met: (A) The debtor has signed 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 9313 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 8301 pursuant to the debtor’s security agreement. (D) The collateral is controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, or letter-of-credit rights and the secured party has control under Section 7106, 9104, 9105.1, 9106, 9107, or 9107.1 pursuant to the debtor’s security agreement. (E) The collateral is chattel paper and the secured party has possession and control under Section 9314.1 pursuant to the debtor’s security agreement. (c) Subdivision (b) is subject to Section 4210 on the security interest of a collecting bank, Section 5118 on the security interest of a letter-of-credit issuer or nominated person, Section 9110 on a security interest arising under Division 2 (commencing with Section 2101) or Division 10 (commencing with Section 10101), and Section 9206 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 this division or by contract, either of the following conditions is satisfied: (1) The security agreement becomes effective to create a security interest in the person’s property. (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, both of the following apply: (1) The agreement satisfies paragraph (3) of subdivision (b) with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement. (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 9315 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. (Amended by Stats. 2023, Ch. 210, Sec. 30. (SB 95) Effective January 1, 2024.)
9204.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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A security agreement may cover after-acquired collateral, with exceptions for certain consumer goods and commercial tort claims.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9204. (a) Except as otherwise provided in subdivision (b), a security agreement may create or provide for a security interest in after-acquired collateral. (b) Subject to subdivision (c), a security interest does not attach under a term constituting an after-acquired property clause to either of the following: (1) Consumer goods, other than an accession when given as additional security, unless the debtor acquires rights in them within 10 days after the secured party gives value. (2) A commercial tort claim. (c) Subdivision (b) does not prevent a security interest from attaching to any of the following: (1) Consumer goods as proceeds under subdivision (a) of Section 9315 or commingled goods under subdivision (c) of Section 9336. (2) A commercial tort claim as proceeds under subdivision (a) of Section 9315. (3) Property that is the proceeds of consumer goods or a commercial tort claim under an after-acquired property clause. (d) 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. (Amended by Stats. 2023, Ch. 210, Sec. 31. (SB 95) Effective January 1, 2024.)
9205.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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A security interest is not invalid or fraudulent against creditors just because the debtor can handle the collateral or proceeds in listed ways, or because the secured party does not require an accounting or replacement.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9205. (a) A security interest is not invalid or fraudulent against creditors solely because either of the following applies: (1) The debtor has the right or ability to do any of the following: (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. (C) Accept the return of collateral or make repossessions. (D) Use, commingle, or dispose of proceeds. (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. (Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 8. Effective January 1, 2001. Addition and amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)
9206.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says when a security interest attaches in transactions involving a securities intermediary or delivery of certain securities or financial assets.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9206. (a) A security interest in favor of a securities intermediary attaches to a person’s security entitlement if both of the following conditions are satisfied: (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. (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 subdivision (a) 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 both of the following conditions are satisfied: (1) The security or other financial asset satisfies both of the following: (A) In the ordinary course of business it is transferred by delivery with any necessary endorsement or assignment. (B) It is delivered under an agreement between persons in the business of dealing with those securities or financial assets. (2) The agreement calls for delivery against payment. (d) The security interest described in subdivision (c) secures the obligation to make payment for the delivery. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9207.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party in possession of collateral must use reasonable care, keep the collateral identifiable, and in some cases apply received money or funds to the secured obligation.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9207. (a) Except as otherwise provided in subdivision (d), 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 subdivision (d), if a secured party has possession of collateral, all of the following apply: (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. (4) The secured party may use or operate the collateral for any of the following purposes: (A) For the purpose of preserving the collateral or its value. (B) As permitted by an order of a court having competent jurisdiction. (C) Except in the case of consumer goods, in the manner and to the extent agreed by the debtor. (c) Except as otherwise provided in subdivision (d), a secured party having possession of collateral or control of collateral under Section 7106, 9104, 9105, 9105.1, 9106, 9107, or 9107.1 may or shall, as the case may be, do all of the following: (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. (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 a consignor, both of the following apply: (1) Subdivision (a) does not apply unless the secured party is entitled under an agreement to either of the following: (A) To charge back uncollected collateral. (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. (2) Subdivisions (b) and (c) do not apply. (Amended by Stats. 2023, Ch. 210, Sec. 32. (SB 95) Effective January 1, 2024.)
9208.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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If a debtor signs a demand and the listed conditions are met, the secured party must release or transfer certain controlled collateral-related interests within 10 days.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9208. (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 10 days after receiving a signed demand by the debtor, all of the following apply: (1) A secured party having control of a deposit account under paragraph (2) of subdivision (a) of Section 9104 shall send to the bank with which the deposit account is maintained a signed record 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 subdivision (a) of Section 9104 shall do either of the following: (A) Pay the debtor the balance on deposit in the deposit account. (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 under Section 9105 of an authoritative electronic copy of a record evidencing chattel paper shall transfer control of the electronic copy to the debtor or a person designated by the debtor. (4) A secured party having control of investment property under paragraph (2) of subdivision (d) of Section 8106 or under subdivision (b) of Section 9106 shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained a signed 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. (5) A secured party having control of a letter-of-credit right under Section 9107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party a signed release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party. (6) A secured party having control under Section 7106 of an authoritative electronic copy of an electronic document of title shall transfer control of the electronic copy to the debtor or a person designated by the debtor. (7) A secured party having control under Section 9105.1 of electronic money shall transfer control of the electronic money to the debtor or a person designated by the debtor. (8) A secured party having control under Section 12105 of a controllable electronic record, other than a buyer of a controllable account or controllable payment intangible evidenced by the controllable electronic record, shall transfer control of the controllable electronic record to the debtor or a person designated by the debtor. (Amended by Stats. 2023, Ch. 210, Sec. 33. (SB 95) Effective January 1, 2024.)
9209.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party must send a signed record releasing the account debtor from further obligation within 10 days after a signed demand by the debtor, if the stated conditions are met.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9209. (a) Except as otherwise provided in subdivision (c), this section applies if both of the following conditions are satisfied: (1) There is no outstanding secured obligation. (2) The secured party is not committed to make advances, incur obligations, or otherwise give value. (b) Within 10 days after receiving a signed demand by the debtor, a secured party shall send to an account debtor that has received notification under subdivision (a) of Section 9406 or subdivision (b) of Section 12106 of an assignment to the secured party as assignee a signed 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. (Amended by Stats. 2023, Ch. 210, Sec. 34. (SB 95) Effective January 1, 2024.)
9210.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party must respond to a debtor’s request for an accounting, collateral list, or statement of account within 14 days, and the debtor gets one free response every six months.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement [9201 - 9210] ( Chapter 2 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9210. (a) In this section: (1) “Request” means a record of a type described in paragraph (2), (3), or (4). (2) “Request for an accounting” means a record signed 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 signed 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. (4) “Request regarding a statement of account” means a record signed 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 subdivisions (c), (d), (e), and (f), 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 14 days after receipt as follows: (1) In the case of a request for an accounting, by signing and sending to the debtor an accounting. (2) In the case of a request regarding a list of collateral or a request regarding a statement of account, by signing 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 a signed record including a statement to that effect within 14 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 14 days after receipt by sending to the debtor a signed record that contains both of the following: (1) It disclaims any interest in the collateral. (2) If known to the recipient, it provides 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 14 days after receipt by sending to the debtor a signed record that contains both of the following: (1) It disclaims any interest in the obligations. (2) If known to the recipient, it provides 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) for each additional response. (Amended by Stats. 2023, Ch. 210, Sec. 35. (SB 95) Effective January 1, 2024.)
9301.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section tells which jurisdiction’s local law governs perfection and priority for certain security interests in collateral.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9301. Except as otherwise provided in Sections 9303 to 9306.2, inclusive, 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 paragraph (4), while negotiable tangible documents, goods, instruments, or tangible money is located in a jurisdiction, the local law of that jurisdiction governs all of the following: (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. (C) The effect of perfection or nonperfection and the priority of a nonpossessory security interest in the collateral. (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. (Amended by Stats. 2023, Ch. 210, Sec. 36. (SB 95) Effective January 1, 2024.)
9302.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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For farm products located in a jurisdiction, that jurisdiction’s local law governs perfection, nonperfection, and priority of an agricultural lien on the farm products.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9302. 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. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9303.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says when goods are treated as covered by a certificate of title, when they stop being covered, and that the local law of the title jurisdiction governs perfection and priority of a security interest while they are covered.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9303. (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. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9304.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says which law governs perfection and priority for a security interest in a deposit account, and it gives rules for determining a bank’s jurisdiction.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9304. (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 even if the transaction does not bear any relation to the bank’s jurisdiction. (b) The following rules determine a bank’s jurisdiction for purposes of this chapter: (1) If an agreement between the bank and its customer governing the deposit account expressly provides that a particular jurisdiction is the bank’s jurisdiction for purposes of this chapter, this division, or this code, that jurisdiction is the bank’s jurisdiction. (2) If paragraph (1) 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) 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. (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. (Amended by Stats. 2023, Ch. 210, Sec. 37. (SB 95) Effective January 1, 2024.)
9305.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says which local law governs perfection and priority for different kinds of security interests, depending on the asset and, in some cases, the debtor’s or intermediary’s jurisdiction.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9305. (a) Except as otherwise provided in subdivision (c), 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 subdivision (d) of Section 8110 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 subdivision (e) of Section 8110 governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account. (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. (5) Paragraphs (2) to (4), inclusive, apply even if the transaction does not bear any relation to the jurisdiction. (b) The following rules determine a commodity intermediary’s jurisdiction for purposes of this chapter: (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 this chapter, this division, or this code, that jurisdiction is the commodity intermediary’s jurisdiction. (2) If paragraph (1) 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) 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. (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. (c) The local law of the jurisdiction in which the debtor is located governs all of the following: (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. (3) Automatic perfection of a security interest in a commodity contract or commodity account created by a commodity intermediary. (Amended by Stats. 2023, Ch. 210, Sec. 38. (SB 95) Effective January 1, 2024.)
9306.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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For a letter-of-credit right, the local law of the issuer’s jurisdiction or nominated person’s jurisdiction governs perfection, nonperfection effects, and priority, if that jurisdiction is a state.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9306. (a) Subject to subdivision (c), 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 this chapter, 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 5116. (c) This section does not apply to a security interest that is perfected only under subdivision (d) of Section 9308. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9306.1.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says which jurisdiction’s local law governs perfection and priority rules for security interests in chattel paper, depending on whether the chattel paper is in electronic or tangible form and where the debtor is located.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9306.1. (a) Except as provided in subdivision (d), if chattel paper is evidenced only by an authoritative electronic copy of the chattel paper or is evidenced by an authoritative electronic copy and an authoritative tangible copy, the local law of the chattel paper’s jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in the chattel paper, even if the transaction does not bear any relation to the chattel paper’s jurisdiction. (b) The following rules determine the chattel paper’s jurisdiction under this section: (1) If the authoritative electronic copy of the record evidencing chattel paper, or a record attached to or logically associated with the electronic copy and readily available for review, expressly provides that a particular jurisdiction is the chattel paper’s jurisdiction for purposes of this chapter, division, or code, that jurisdiction is the chattel paper’s jurisdiction. (2) If paragraph (1) does not apply and the rules of the system in which the authoritative electronic copy is recorded are readily available for review and expressly provide that a particular jurisdiction is the chattel paper’s jurisdiction for purposes of this chapter, this division, or this code, that jurisdiction is the chattel paper’s jurisdiction. (3) If paragraphs (1) and (2) do not apply and the authoritative electronic copy, or a record attached to or logically associated with the electronic copy and readily available for review, expressly provides that the chattel paper is governed by the law of a particular jurisdiction, that jurisdiction is the chattel paper’s jurisdiction. (4) If paragraphs (1) to (3), inclusive, do not apply and the rules of the system in which the authoritative electronic copy is recorded are readily available for review and expressly provide that the chattel paper or the system is governed by the law of a particular jurisdiction, that jurisdiction is the chattel paper’s jurisdiction. (5) If paragraphs (1) to (4), inclusive, do not apply, the chattel paper’s jurisdiction is the jurisdiction in which the debtor is located. (c) If an authoritative tangible copy of a record evidences chattel paper and the chattel paper is not evidenced by an authoritative electronic copy, while the authoritative tangible copy of the record evidencing chattel paper is located in a jurisdiction, the local law of that jurisdiction governs both of the following: (1) Perfection of a security interest in the chattel paper by possession under Section 9314.1. (2) The effect of perfection or nonperfection and the priority of a security interest in the chattel paper. (d) The local law of the jurisdiction in which the debtor is located governs perfection of a security interest in chattel paper by filing. (Added by Stats. 2023, Ch. 210, Sec. 39. (SB 95) Effective January 1, 2024.)
9306.2.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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Subdivision (a) says the local law specified in Section 12107 governs perfection, nonperfection, and priority for certain controllable electronic record security interests, except as stated in subdivision (b).

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9306.2. (a) Except as provided in subdivision (b), the local law of the controllable electronic record’s jurisdiction specified in subdivisions (c) and (d) of Section 12107 governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a controllable electronic record and a security interest in a controllable account or controllable payment intangible evidenced by the controllable electronic record. (b) The local law of the jurisdiction in which the debtor is located governs both of the following: (1) Perfection of a security interest in a controllable account, controllable electronic record, or controllable payment intangible by filing. (2) Automatic perfection of a security interest in a controllable payment intangible created by a sale of the controllable payment intangible. (Added by Stats. 2023, Ch. 210, Sec. 40. (SB 95) Effective January 1, 2024.)
9307.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section defines “place of business” and sets rules for where a debtor is located for purposes of this chapter.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9307. (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. (3) A debtor that is an organization and has more than one place of business is located at its chief executive office. (c) Subdivision (b) 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 subdivision (b) 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 subdivisions (b) and (c). (e) A registered organization that is organized under the law of a state is located in that state. (f) Except as otherwise provided in subdivision (i), 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 in any of the following jurisdictions: (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, including by designating its main office, home office, or other comparable office. (3) In the District of Columbia, if neither paragraph (1) nor paragraph (2) applies. (g) A registered organization continues to be located in the jurisdiction specified by subdivision (e) or (f) notwithstanding either of the following: (1) The suspension, revocation, forfeiture, or lapse of the registered organization’s status as such in its jurisdiction of organization. (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 this chapter. (Amended by Stats. 2013, Ch. 531, Sec. 9. (AB 502) Effective January 1, 2014. Operative July 1, 2014, by Sec. 28 of Ch. 531.)
9308.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says when a security interest or agricultural lien is perfected, including continuous perfection and several related interests that are also perfected by perfection of the main interest.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9308. (a) Except as otherwise provided in this section and in Section 9309, a security interest is perfected if it has attached and all of the applicable requirements for perfection in Sections 9310 to 9316, inclusive, 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 9310 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 this division and is later perfected by another method under this division, 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. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9309.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says certain listed security interests are perfected when they attach.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9309. The following security interests are perfected when they attach: (1) A purchase money security interest in consumer goods, except as otherwise provided in subdivision (b) of Section 9311 with respect to consumer goods that are subject to a statute or treaty described in subdivision (a) of Section 9311. (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 2401 or 2505, under subdivision (3) of Section 2711, or under subdivision (5) of Section 10508, until the debtor obtains possession of the collateral. (7) A security interest of a collecting bank arising under Section 4210. (8) A security interest of an issuer or nominated person arising under Section 5118. (9) A security interest arising in the delivery of a financial asset under subdivision (c) of Section 9206. (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. (13) A security interest created by an assignment of a beneficial interest in a decedent’s estate. (14) A sale by an individual of an account that is a right to payment of winnings in a lottery or other game of chance. (Amended by Stats. 2003, Ch. 235, Sec. 3. Effective January 1, 2004.)
9310.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A financing statement must generally be filed to perfect security interests and agricultural liens, but several listed exceptions apply.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9310. (a) Except as otherwise provided in subdivision (b) and in subdivision (b) of Section 9312, 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 that satisfies any of the following conditions: (1) It is perfected under subdivision (d), (e), (f), or (g) of Section 9308. (2) It is perfected under Section 9309 when it attaches. (3) It is a security interest in property subject to a statute, regulation, or treaty described in subdivision (a) of Section 9311. (4) It is a security interest in goods in possession of a bailee which is perfected under paragraph (1) or (2) of subdivision (d) of Section 9312. (5) It is a security interest in certificated securities, documents, goods, or instruments which is perfected without filing, control, or possession under subdivision (e), (f), or (g) of Section 9312. (6) It is a security interest in collateral in the secured party’s possession under Section 9313. (7) It is a security interest in a certificated security which is perfected by delivery of the security certificate to the secured party under Section 9313. (8) It is a security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, investment property, or letter-of-credit rights which is perfected by control under Section 9314. (9) It is a security interest in proceeds which is perfected under Section 9315. (10) It is perfected under Section 9316. (11) It is a security interest in, or claim in or under, any policy of insurance including unearned premiums which is perfected by written notice to the insurer under paragraph (4) of subdivision (b) of Section 9312. (12) It is a security interest in chattel paper which is perfected by possession and control under Section 9314.1. (c) If a secured party assigns a perfected security interest or agricultural lien, a filing under this division is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor. (Amended by Stats. 2023, Ch. 210, Sec. 41. (SB 95) Effective January 1, 2024.)
9311.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says a financing statement is not the way to perfect a security interest for certain covered property; instead, compliance with the listed statute, regulation, or treaty controls.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9311. (a) Except as otherwise provided in subdivision (d), the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to any of the following: (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 subdivision (a) of Section 9310. (2) (A) The provisions of the Vehicle Code which require registration of a vehicle or boat. (B) The provisions of the Health and Safety Code which require registration of a mobilehome or commercial coach, except that during any period in which collateral is inventory, the filing provisions of Chapter 5 (commencing with Section 9501) apply to a security interest in that collateral. (C) The provisions of the Health and Safety Code which require registration of all interests in approved air contaminant emission reductions (Sections 40709 to 40713, inclusive, of the Health and Safety Code). (3) A statute of another jurisdiction which provides for a security interest to be indicated on a certificate of title 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 subdivision (a) for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this division. Except as otherwise provided in subdivision (d), in Section 9313, and in subdivisions (d) and (e) of Section 9316 for goods covered by a certificate of title, a security interest in property subject to a statute, regulation, or treaty described in subdivision (a) 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 subdivision (d) and in subdivisions (d) and (e) of Section 9316, duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by a statute, regulation, or treaty described in subdivision (a) are governed by the statute, regulation, or treaty. In other respects, the security interest is subject to this division. (d) During any period in which collateral subject to a statute specified in paragraph (2) of subdivision (a) 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. (Amended by Stats. 2013, Ch. 531, Sec. 10. (AB 502) Effective January 1, 2014. Operative July 1, 2014, by Sec. 28 of Ch. 531.)
9312.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says how a secured party can perfect different kinds of security interests, and some types can be perfected only by control, possession, notice, or filing.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9312. (a) A security interest in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, instruments, investment property, or negotiable documents may be perfected by filing. (b) Except as otherwise provided in subdivisions (c) and (d) of Section 9315 for proceeds, all of the following apply: (1) A security interest in a deposit account may be perfected only by control under Section 9314. (2) Except as otherwise provided in subdivision (d) of Section 9308, a security interest in a letter-of-credit right may be perfected only by control under Section 9314. (3) A security interest in tangible money may be perfected only by the secured party’s taking possession under Section 9313. (4) A security interest in, or claim in or under, any policy of insurance, including unearned premiums, may be perfected only by giving written notice of the security interest or claim to the insurer. This paragraph does not apply to a health care insurance receivable. A security interest in a health care insurance receivable may be perfected only as otherwise provided in this division. (5) A security interest in electronic money may be perfected only by control under Section 9314. (c) While goods are in the possession of a bailee that has issued a negotiable document covering the goods, both of the following apply: (1) A security interest in the goods may be perfected by perfecting a security interest in the document. (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 any of the following methods: (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. (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 or control for a period of 20 days from the time it attaches to the extent that it arises for new value given under a signed 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 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of either of the following: (1) Ultimate sale or exchange. (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 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of either of the following: (1) Ultimate sale or exchange. (2) Presentation, collection, enforcement, renewal, or registration of transfer. (h) After the 20-day period specified in subdivision (e), (f), or (g) expires, perfection depends upon compliance with this division. (Amended by Stats. 2023, Ch. 210, Sec. 42. (SB 95) Effective January 1, 2024.)
9313.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party may perfect certain security interests by taking possession or delivery, subject to specific exceptions and conditions.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9313. (a) Except as otherwise provided in subdivision (b), a secured party may perfect a security interest in goods, instruments, negotiable tangible documents, or tangible money 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 8301. (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 subdivision (d) of Section 9316. (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 either of the following conditions is satisfied: (1) The person in possession signs a record acknowledging that it holds possession of the collateral for the secured party’s benefit. (2) The person takes possession of the collateral after having signed a record acknowledging that it will hold possession of the 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 not 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 8301 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, both of the following apply: (1) The acknowledgment is effective under subdivision (c) or under subdivision (a) of Section 8301, even if the acknowledgment violates the rights of a debtor. (2) Unless the person otherwise agrees or law other than this division 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 to do either of the following: (1) To hold possession of the collateral for the secured party’s benefit. (2) To redeliver the collateral to the secured party. (i) A secured party does not relinquish possession, even if a delivery under subdivision (h) violates the rights of a debtor. A person to which collateral is delivered under subdivision (h) 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 division otherwise provides. (Amended by Stats. 2023, Ch. 210, Sec. 43. (SB 95) Effective January 1, 2024.)
9314.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says some security interests may be perfected by control of the collateral, and in some cases perfection by control lasts only while the secured party keeps control.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9314. (a) A security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, or letter-of-credit rights may be perfected by control of the collateral under Section 7106, 9104, 9105.1, 9106, 9107, or 9107.1. (b) A security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, or letter-of-credit rights is perfected by control under Section 7106, 9104, 9105.1, 9107, or 9107.1 not earlier than the time 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 9106 not earlier than the time the secured party obtains control and remains perfected by control until both of the following conditions are satisfied: (1) The secured party does not have control. (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. (C) If the collateral is a security entitlement, the debtor is or becomes the entitlement holder. (Amended by Stats. 2023, Ch. 210, Sec. 44. (SB 95) Effective January 1, 2024.)
9314.1.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party may perfect a security interest in chattel paper by taking possession and control of the required authoritative copies.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9314.1. (a) A secured party may perfect a security interest in chattel paper by taking possession of each authoritative tangible copy of the record evidencing the chattel paper and obtaining control of each authoritative electronic copy of the electronic record evidencing the chattel paper. (b) A security interest is perfected under subdivision (a) not earlier than the time the secured party takes possession and obtains control and remains perfected under subdivision (a) only while the secured party retains possession and control. (c) Subdivisions (c) and (f) to (i), inclusive, of Section 9313 apply to perfection by possession of an authoritative tangible copy of a record evidencing chattel paper. (Added by Stats. 2023, Ch. 210, Sec. 45. (SB 95) Effective January 1, 2024.)
9315.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says a security interest or agricultural lien can continue in collateral after a sale or other transfer unless the secured party authorizes a transfer free of it, and it can also attach to identifiable proceeds.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9315. (a) Except as otherwise provided in this division and in subdivision (2) of Section 2403, both of the following apply: (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. (2) A security interest attaches to any identifiable proceeds of collateral. (b) Proceeds that are commingled with other property are identifiable proceeds as follows: (1) If the proceeds are goods, to the extent provided by Section 9336. (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 this division 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 21st day after the security interest attaches to the proceeds unless any of the following conditions is satisfied: (1) All of the following 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. (C) The proceeds are not acquired with cash proceeds. (2) The proceeds are identifiable cash proceeds. (3) The security interest in the proceeds is perfected other than under subdivision (c) when the security interest attaches to the proceeds or within 20 days thereafter. (e) If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under paragraph (1) of subdivision (d) becomes unperfected at the later of either of the following: (1) When the effectiveness of the filed financing statement lapses under Section 9515 or is terminated under Section 9513. (2) The 21st day after the security interest attaches to the proceeds. (f) Cash proceeds retain their character as cash proceeds while in the possession of a levying officer pursuant to Title 6.5 (commencing with Section 481.010) or Title 9 (commencing with Section 680.010) of Part 2 of the Code of Civil Procedure. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9316.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A perfected security interest can stay perfected after a debtor changes location or collateral moves, but only for the stated time limits and only if it is perfected under the other jurisdiction’s law in time.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9316. (a) A security interest perfected pursuant to the law of the jurisdiction designated in subdivision (1) of Section 9301, subdivision (c) of Section 9305, subdivision (d) of Section 9306.1, or subdivision (b) of Section 9306.2 remains perfected until the earliest of any of the following: (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. (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 subdivision (a) becomes perfected under the law of the other jurisdiction before the earliest time or event described in that subdivision, 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 all of the following conditions are satisfied: (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. (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 subdivision (e), 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 subdivision (d) 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 subdivision (b) of Section 9311 or under Section 9313 are not satisfied before the earlier of either of the following: (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. (2) The expiration of four months after the goods had become so covered. (f) A security interest in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, letter-of-credit rights, or investment property which is perfected under the law of the chattel paper’s jurisdiction, the controllable electronic record’s jurisdiction, 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 the following: (1) The time the security interest would have become unperfected under the law of that jurisdiction. (2) The expiration of four months after a change of the applicable jurisdiction to another jurisdiction. (g) If a security interest described in subdivision (f) becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in that subdivision, 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. (h) The following rules apply to collateral to which a security interest attaches within four months after the debtor changes its location to another jurisdiction: (1) A financing statement filed before the change pursuant to the law of the jurisdiction designated in paragraph (1) of Section 9301 or subdivision (c) of Section 9305 is effective to perfect a security interest in the collateral if the financing statement would have been effective to perfect a security interest in the collateral had the debtor not changed its location. (2) If a security interest perfected by a financing statement that is effective under paragraph (1) becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in paragraph (1) of Section 9301 or subdivision (c) of Section 9305 or the expiration of the four-month period, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value. (i) If a financing statement naming an original debtor is filed pursuant to the law of the jurisdiction designated in paragraph (1) of Section 9301 or subdivision (c) of Section 9305 and the new debtor is located in another jurisdiction, each of the following rules apply: (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 subdivision (d) of Section 9203, if the financing statement would have been effective to perfect a security interest in the collateral had the collateral been acquired by the original debtor. (2) A security interest perfected by the financing statement and which becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in paragraph (1) of Section 9301 or subdivision (c) of Section 9305 or the expiration of the four-month period remains perfected thereafter. A security interest that is perfected by the financing statement but which does not become perfected under the law of the other jurisdiction before the earlier time or event becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value. (Amended by Stats. 2023, Ch. 210, Sec. 46. (SB 95) Effective January 1, 2024.)
9317.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section sets priority rules for security interests and agricultural liens, including when certain buyers, lessees, and licensees can take collateral free of a security interest.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9317. (a) A security interest or agricultural lien is subordinate to the rights of both of the following: (1) A person entitled to priority under Section 9322. (2) Except as otherwise provided in subdivision (e), a person that becomes a lien creditor before the earlier of the time the security interest or agricultural lien is perfected, or one of the conditions specified in paragraph (3) of subdivision (b) of Section 9203 is met and a financing statement covering the collateral is filed. (b) Except as otherwise provided in subdivision (e), a buyer, other than a secured party, of goods, instruments, tangible documents, or a certificated security 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 subdivision (e), 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) Subject to subdivisions (f) to (i), inclusive, a licensee of a general intangible or a buyer, other than a secured party, of collateral other than electronic money, goods, instruments, tangible documents, or 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 9320 and 9321, if a person files a financing statement with respect to a purchase money security interest before or within 20 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. (f) A buyer, other than a secured party, of chattel paper takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and both of the following conditions are satisfied: (1) The buyer receives delivery of each authoritative tangible copy of the record evidencing the chattel paper. (2) If each authoritative electronic copy of the record evidencing the chattel paper can be subjected to control under Section 9105, the buyer obtains control of each authoritative electronic copy. (g) A buyer of an electronic document takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and, if each authoritative electronic copy of the document can be subjected to control under Section 7106, obtains control of each authoritative electronic copy. (h) A buyer of a controllable electronic record takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and obtains control of the controllable electronic record. (i) A buyer, other than a secured party, of a controllable account or a controllable payment intangible takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and obtains control of the controllable account or controllable payment intangible. (Amended by Stats. 2023, Ch. 210, Sec. 47. (SB 95) Effective January 1, 2024.)
9318.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A debtor who sells certain collateral generally does not keep a legal or equitable interest in it, and for certain creditor and purchaser rights determinations, the debtor is treated as still having the same rights and title while the buyer’s security interest is unperfected.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9318. (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. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9319.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A consignee is treated as having the same rights and title to goods as the consignor while the goods are in the consignee’s possession, except as provided in subdivision (b).

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9319. (a) Except as otherwise provided in subdivision (b), 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 this division determines the rights and title of a consignee while goods are in the consignee’s possession if, under this chapter, a perfected security interest held by the consignor would have priority over the rights of the creditor. (Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 13. Effective January 1, 2001. Addition and amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)
9320.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says certain buyers can take goods free of a security interest, subject to stated exceptions.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9320. (a) Except as otherwise provided in subdivision (e), a buyer in ordinary course of business 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 subdivision (e), 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 all of the following conditions are satisfied: (1) The buyer buys without knowledge of the security interest. (2) The buyer buys for value. (3) The buyer buys primarily for the buyer’s personal, family, or household purposes. (4) The buyer buys 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 subdivision (b), the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by subdivisions (a) and (b) of Section 9316. (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) Subdivisions (a) and (b) do not affect a security interest in goods in the possession of the secured party under Section 9313. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9321.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section defines “licensee in ordinary course of business” and says such a licensee, and also a lessee in ordinary course, can take specified interests free of certain security interests, subject to an exception in Section 9321.1.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9321. (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) Except as otherwise provided in Section 9321.1, 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. (Amended (as added by Stats. 2013, Ch. 54, Sec. 3) by Stats. 2014, Ch. 118, Sec. 2. (SB 650) Effective January 1, 2015. Note: The January 1, 2015, repeal provision was deleted in this amendment.)
9321.1.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A licensee of nonexclusive rights in a qualifying motion picture takes that license subject to any perfected security interest securing residual-payment obligations.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9321.1. A licensee of nonexclusive rights in a motion picture that is produced pursuant to one or more collective bargaining agreements governed by the laws of the United States takes its nonexclusive license in that motion picture subject to any perfected security interest securing the obligation to pay residuals as set forth in the applicable collective bargaining agreement and arising from exploitation under the license. The terms “motion picture” and “residuals” have the meaning ascribed to those terms under the applicable collective bargaining agreements. (Amended by Stats. 2015, Ch. 303, Sec. 43. (AB 731) Effective January 1, 2016.)
9322.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section sets the priority rules for conflicting security interests and agricultural liens in the same collateral.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9322. (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 subdivision (a), the following rules apply: (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. (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 subdivision (f), a security interest in collateral which qualifies for priority over a conflicting security interest under Section 9327, 9328, 9329, 9330, or 9331 also has priority over a conflicting security interest in both of the following: (1) Any supporting obligation for the collateral. (2) Proceeds of the collateral if all of the following conditions are satisfied: (A) The security interest in proceeds is perfected. (B) The proceeds are cash proceeds or of the same type as the collateral. (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 subdivision (e) and except as otherwise provided in subdivision (f), 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) Subdivision (d) 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) Subdivisions (a) to (e), inclusive, are subject to all of the following: (1) Subdivision (g) and the other provisions of this chapter. (2) Section 4210 with respect to a security interest of a collecting bank. (3) Section 5118 with respect to a security interest of an issuer or nominated person. (4) Section 9110 with respect to a security interest arising under Division 2 (commencing with Section 2101) or Division 10 (commencing with Section 10101). (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. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9323.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section sets when a perfected security interest keeps its priority and when later advances lose priority, including 45-day rules and knowledge-based exceptions.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9323. (a) Except as otherwise provided in subdivision (c), for purposes of determining the priority of a perfected security interest under paragraph (1) of subdivision (a) of Section 9322, perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that satisfies both of the following conditions: (1) It is made while the security interest is perfected only under either of the following: (A) Under Section 9309 when it attaches. (B) Temporarily under subdivision (e), (f), or (g) of Section 9312. (2) It is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under Section 9309 or under subdivision (e), (f), or (g) of Section 9312. (b) Except as otherwise provided in subdivision (c), a security interest is subordinate to the rights of a person who becomes a lien creditor to the extent that the security interest secures an advance made more than 45 days after the person becomes a lien creditor unless either of the following conditions is satisfied: (1) The advance is made without knowledge of the lien. (2) The advance is made pursuant to a commitment entered into without knowledge of the lien. (c) Subdivisions (a) and (b) do not apply to a security interest held by a secured party who is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor. (d) Except as otherwise provided in subdivision (e), a buyer of goods takes free of a security interest to the extent that it secures advances made after the earlier of the following: (1) The time the secured party acquires knowledge of the buyer’s purchase. (2) Forty-five days after the purchase. (e) Subdivision (d) 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 45-day period. (f) Except as otherwise provided in subdivision (g), a lessee of goods takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of either of the following: (1) The time the secured party acquires knowledge of the lease. (2) Forty-five days after the lease contract becomes enforceable. (g) Subdivision (f) 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 45-day period. (Amended by Stats. 2023, Ch. 210, Sec. 48. (SB 95) Effective January 1, 2024.)
9324.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section gives certain perfected purchase money security interests priority over conflicting security interests, subject to specific timing, notice, and filing conditions.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9324. (a) Except as otherwise provided in subdivision (g), 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 9327, 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 20 days thereafter. (b) Subject to subdivision (c) and except as otherwise provided in subdivision (g), 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 9330, and, except as otherwise provided in Section 9327, 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 all of the following conditions are satisfied: (1) The purchase money security interest is perfected when the debtor receives possession of the inventory. (2) The purchase money secured party sends a signed 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. (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) to (4), inclusive, of subdivision (b) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory as follows: (1) If the purchase money security interest is perfected by filing, before the date of the filing. (2) If the purchase money security interest is temporarily perfected without filing or possession under subdivision (f) of Section 9312, before the beginning of the 20-day period thereunder. (d) Subject to subdivision (e) and except as otherwise provided in subdivision (g), 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 9327, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if all of the following conditions are satisfied: (1) The purchase money security interest is perfected when the debtor receives possession of the livestock. (2) The purchase money secured party sends a signed 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. (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) to (4), inclusive, of subdivision (d) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock as follows: (1) If the purchase money security interest is perfected by filing, before the date of the filing. (2) If the purchase money security interest is temporarily perfected without filing or possession under subdivision (f) of Section 9312, before the beginning of the 20-day period thereunder. (f) Except as otherwise provided in subdivision (g), 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 9327, 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 subdivision (a), (b), (d), or (f), the following rules apply: (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. (2) In all other cases, subdivision (a) of Section 9322 applies to the qualifying security interests. (Amended by Stats. 2023, Ch. 210, Sec. 49. (SB 95) Effective January 1, 2024.)
9325.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A debtor-created security interest can be subordinate to another person’s security interest in the same collateral if the collateral was taken subject to that interest and the other interest was perfected when the debtor acquired the collateral, with no later lapse in perfection.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9325. (a) Except as otherwise provided in subdivision (b), a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if all of the following apply: (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. (3) There is no period thereafter when the security interest is unperfected. (b) Subdivision (a) subordinates a security interest only if either of the following conditions is satisfied: (1) The security interest otherwise would have priority solely under subdivision (a) of Section 9322 or under Section 9324. (2) The security interest arose solely under subdivision (3) of Section 2711 or subdivision (5) of Section 10508. (Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 15. Effective January 1, 2001. Addition and amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)
9326.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A new debtor’s security interest in collateral can be subordinate if it is perfected only by a filed financing statement that would otherwise be ineffective; other rules in the chapter control priority in the stated situations.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9326. (a) Subject to subdivision (b), a security interest that is created by a new debtor in collateral in which the new debtor has or acquires rights and is perfected solely by a filed financing statement that would be ineffective to perfect the security interest but for the application of paragraph (1) of subdivision (i) of Section 9316 or Section 9508 is subordinate to a security interest in the same collateral which is perfected other than by such a filed financing statement. (b) The other provisions of this chapter determine the priority among conflicting security interests in the same collateral perfected by filed financing statements described in subdivision (a). 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’s having become bound. (Amended by Stats. 2013, Ch. 531, Sec. 13. (AB 502) Effective January 1, 2014. Operative July 1, 2014, by Sec. 28 of Ch. 531.)
9326.1.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A security interest in certain controllable assets has priority if the secured party has control; a conflicting security interest without control ranks behind it.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9326.1. A security interest in a controllable account, controllable electronic record, or controllable payment intangible held by a secured party having control of the account, electronic record, or payment intangible has priority over a conflicting security interest held by a secured party that does not have control. (Added by Stats. 2023, Ch. 210, Sec. 50. (SB 95) Effective January 1, 2024.)
9327.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section sets priority rules for conflicting security interests in the same deposit account.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9327. 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 9104 has priority over a conflicting security interest held by a secured party that does not have control. (2) Except as otherwise provided in subdivisions (3) and (4), security interests perfected by control under Section 9314 rank according to priority in time of obtaining control. (3) Except as otherwise provided in subdivision (4), 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 subdivision (a) of Section 9104 has priority over a security interest held by the bank with which the deposit account is maintained. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9328.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section sets priority rules for conflicting security interests in the same investment property.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9328. 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 9106 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 subdivisions (3) and (4), conflicting security interests held by secured parties each of which has control under Section 9106 rank according to priority in time of one of the following: (A) If the collateral is a security, obtaining control. (B) If the collateral is a security entitlement carried in a securities account and if the secured party obtained control under paragraph (1) of subdivision (d) of Section 8106, the secured party’s becoming the person for which the securities account is maintained. (C) If the collateral is a security entitlement carried in a securities account and if the secured party obtained control under paragraph (2) of subdivision (d) of Section 8106, 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. (D) If the collateral is a security entitlement carried in a securities account and if the secured party obtained control through another person under paragraph (3) of subdivision (d) of Section 8106, the time on which priority would be based under this paragraph if the other person were the secured party. (E) If the collateral is a commodity contract carried with a commodity intermediary, the satisfaction of the requirement for control specified in paragraph (2) of subdivision (b) of Section 9106 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 subdivision (a) of Section 9313 and not by control under Section 9314 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 9106 rank equally. (7) In all other cases, priority among conflicting security interests in investment property is governed by Sections 9322 and 9323. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9329.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section sets priority rules for conflicting security interests in the same letter-of-credit right.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9329. 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 9107 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 9314 rank according to priority in time of obtaining control. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9330.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section gives a purchaser priority over certain security interests in chattel paper or instruments if specified conditions are met.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9330. (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 both of the following conditions are satisfied: (1) In good faith and in the ordinary course of the purchaser’s business, the purchaser gives new value, takes possession of each authoritative tangible copy of the record evidencing the chattel paper, and obtains control under Section 9105 of each authoritative electronic copy of the record evidencing the chattel paper. (2) The authoritative copies of the record evidencing the chattel paper do not indicate that the chattel paper 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, takes possession of each authoritative tangible copy of the record evidencing the chattel paper, and obtains control under Section 9105 of each authoritative electronic copy of the record evidencing the chattel paper 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 9327, a purchaser having priority in chattel paper under subdivision (a) or (b) also has priority in proceeds of the chattel paper to the extent that either of the following applies: (1) Section 9322 provides for priority in the proceeds. (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 subdivision (a) of Section 9331, 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 subdivisions (a) and (b), 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 subdivisions (b) and (d), if the authoritative copies of the record evidencing chattel paper or an instrument indicate that the chattel paper or instrument 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. (Amended by Stats. 2023, Ch. 210, Sec. 51. (SB 95) Effective January 1, 2024.)
9331.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section preserves certain priority and protection rules for specified holders and purchasers, and says filing under this division is not notice to them.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9331. (a) This division 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, a protected purchaser of a security, or a qualifying purchaser of a controllable account, controllable electronic record, or controllable payment intangible. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Division 3 (commencing with Section 3101), Division 7 (commencing with Section 7101), Division 8 (commencing with Section 8101), and Division 12 (commencing with Section 12101). (b) This division does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Division 8 (commencing with Section 8101) and Division 12 (commencing with Section 12101). (c) Filing under this division does not constitute notice of a claim or defense to the holders, purchasers, or persons described in subdivisions (a) and (b). (Amended by Stats. 2023, Ch. 210, Sec. 52. (SB 95) Effective January 1, 2024.)
9332.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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Certain transferees may take money or funds free of a security interest if they obtain possession or control and do not collude with the debtor against the secured party.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9332. (a) A transferee of tangible money takes the money free of a security interest if the transferee receives possession of the money without acting 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 if the transferee receives the funds without acting in collusion with the debtor in violating the rights of the secured party. (c) A transferee of electronic money takes the money free of a security interest if the transferee obtains control of the money without acting in collusion with the debtor in violating the rights of the secured party. (Amended by Stats. 2023, Ch. 210, Sec. 53. (SB 95) Effective January 1, 2024.)
9333.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A possessory lien is defined as a lien-like interest tied to possession of goods and, unless a statute says otherwise, it has priority over a security interest in those goods.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9333. (a) In this section, “possessory lien” means an interest, other than a security interest or an agricultural lien which satisfies all of the following conditions: (1) It 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) It is created by statute or rule of law in favor of the person. (3) Its 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. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9334.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section lets security interests cover fixtures, but not ordinary building materials built into land improvements.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9334. (a) A security interest under this division may be created in goods that are fixtures or may continue in goods that become fixtures. A security interest does not exist under this division in ordinary building materials incorporated into an improvement on land. (b) This division does not prevent creation of an encumbrance upon fixtures under real property law. (c) In cases not governed by subdivisions (d) to (h), inclusive, 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 subdivision (h), 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 all of the following conditions are satisfied: (1) The security interest is a purchase money security interest. (2) The interest of the encumbrancer or owner arises before the goods become fixtures. (3) The security interest is perfected by a fixture filing before the goods become fixtures or within 20 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 any of the following conditions is satisfied: (1) The debtor has an interest of record in the real property or is in possession of the real property and both of the following conditions are satisfied: (A) The security interest is perfected by a fixture filing before the interest of the encumbrancer or owner is of record. (B) The security interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner. (2) The fixtures are readily removable factory or office machines or readily removable replacements of domestic appliances that are consumer goods. (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 division. (4) The security interest is both of the following: (A) Created in a manufactured home in a manufactured home transaction. (B) Perfected pursuant to a statute described in paragraph (2) of subdivision (a) of Section 9311. (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 either of the following conditions is satisfied: (1) The encumbrancer or owner has, in a signed record, consented to the security interest or disclaimed an interest in the goods as fixtures. (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 subdivision (f) 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 subdivisions (e) and (f), 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. (i) A perfected security interest in crops growing on real property 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. (Amended by Stats. 2023, Ch. 210, Sec. 54. (SB 95) Effective January 1, 2024.)
9335.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says when a security interest in an accession can continue, how priority is determined, when a secured party may remove an accession after default, and when reimbursement is required.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9335. (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 subdivision (d), the other provisions of this chapter 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 subdivision (b) of Section 9311. (e) After default, subject to Chapter 6 (commencing with subdivision 9601), 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 subdivision (e) 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. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9336.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section defines “commingled goods” and says how a security interest continues when goods are mixed into a product or mass.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9336. (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. (c) If collateral becomes commingled goods, a security interest attaches to the product or mass. (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 subdivision (c) is perfected. (e) Except as otherwise provided in subdivision (f), the other provisions of this chapter determine the priority of a security interest that attaches to the product or mass under subdivision (c). (f) If more than one security interest attaches to the product or mass under subdivision (c), the following rules determine priority: (1) A security interest that is perfected under subdivision (d) has priority over a security interest that is unperfected at the time the collateral becomes commingled goods. (2) If more than one security interest is perfected under subdivision (d), the security interests rank equally in proportion to the value of the collateral at the time it became commingled goods. (Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 17. Effective January 1, 2001. Addition and amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)
9337.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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If a title certificate does not note a security interest, a qualifying buyer can take the goods free of that interest, and a later conflicting security interest can have priority in specified conditions.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9337. 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 both of the following apply: (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. (2) The security interest is subordinate to a conflicting security interest in the goods that attaches, and is perfected under subdivision (b) of Section 9311, after issuance of the certificate and without the conflicting secured party’s knowledge of the security interest. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9338.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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If a filed financing statement contains incorrect information, the affected security interest or agricultural lien can be subordinated or cut off for certain parties who relied on the error.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9338. If a security interest or agricultural lien is perfected by a filed financing statement providing information described in paragraph (5) of subdivision (b) of Section 9516 which is incorrect at the time the financing statement is filed, both of the following apply: (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. (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 tangible chattel paper, tangible documents, goods, instruments, or a security certificate, receives delivery of the collateral. (Amended by Stats. 2006, Ch. 254, Sec. 62. Effective January 1, 2007.)
9339.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A person entitled to priority may agree to subordinate that priority.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9339. This division does not preclude subordination by agreement by a person entitled to priority. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9340.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A bank may set off or recoup against a secured party’s interest in a deposit account, except where the security interest is perfected by control and the setoff is based on a claim against the debtor.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9340. (a) Except as otherwise provided in subdivision (c), a bank with which a deposit account is maintained may exercise any right of recoupment or setoff against a secured party that holds a security interest in the deposit account. (b) Except as otherwise provided in subdivision (c), the application of this division to a security interest in a deposit account does not affect a right of recoupment or setoff of the secured party as to a deposit account maintained with the secured party. (c) The exercise by a bank of a setoff 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 subdivision (a) of Section 9104, if the setoff is based on a claim against the debtor. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9341.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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A bank’s rights and duties for a deposit account generally are not changed by a security interest, the bank’s knowledge of it, or instructions from the secured party, unless Section 9340(c) applies or the bank agrees otherwise in a signed record.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9341. Except as otherwise provided in subdivision (c) of Section 9340, and unless the bank otherwise agrees in a signed record, a bank’s rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended, or modified by any of the following: (1) The creation, attachment, or perfection of a security interest in the deposit account. (2) The bank’s knowledge of the security interest. (3) The bank’s receipt of instructions from the secured party. (Amended by Stats. 2023, Ch. 210, Sec. 55. (SB 95) Effective January 1, 2024.)
9342.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. )
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Banks are not required to enter into a specified agreement, even if a customer asks or directs them to do so, and they generally do not have to confirm that agreement to others unless the customer asks.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 3. Perfection and Priority [9301 - 9342] ( Chapter 3 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9342. This division does not require a bank to enter into an agreement of the kind described in paragraph (2) of subdivision (a) of Section 9104, 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. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9401.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says transfer of a debtor’s rights in collateral is generally governed by other law, and a debtor-secured party agreement cannot stop the transfer from taking effect.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9401. (a) Except as otherwise provided in subdivision (b) and in Sections 9406, 9407, 9408, and 9409, whether a debtor’s rights in collateral may be voluntarily or involuntarily transferred is governed by law other than this division. (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. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9402.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party is not liable in contract or tort for a debtor’s acts or omissions just because a security interest, agricultural lien, or authority to use or dispose of collateral exists.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9402. 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. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9403.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section makes certain debtor-to-assignee waiver agreements enforceable if the assignment was taken for value, in good faith, and without notice of specified claims or defenses.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9403. (a) In this section, “value” has the meaning provided in subdivision (a) of Section 3303. (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 that satisfies all of the following conditions: (1) It is taken for value. (2) It is taken in good faith. (3) It is taken without notice of a claim of a property or possessory right to the property assigned. (4) It is taken 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 subdivision (a) of Section 3305. (c) Subdivision (b) does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under subdivision (b) of Section 3305. (d) In a consumer transaction, if a record evidences the account debtor’s obligation, law other than this division 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 the record does not include such a statement, then both of the following apply: (1) The record has the same effect as if the record included such a statement. (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 this division 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 subdivision (d), this section does not displace law other than this division which gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee. (Repealed (by Sec. 19) and added by Stats. 2000, Ch. 1003, Sec. 20. Effective January 1, 2001. Operative July 1, 2001, by Sec. 56 of Ch. 1003.)
9404.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. )
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An assignee’s rights are limited by certain debtor defenses and claims, and an account debtor may assert a claim against the assignee only to reduce what is owed, subject to stated exceptions.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9404. (a) Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subdivisions (b) to (e), inclusive, the rights of an assignee are subject to both of the following: (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. (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 signed by the assignor or the assignee. (b) Subject to subdivision (c) and except as otherwise provided in subdivision (d), the claim of an account debtor against an assignor may be asserted against an assignee under subdivision (a) only to reduce the amount the account debtor owes. (c) This section is subject to law other than this division 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 this division 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 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. (Amended by Stats. 2023, Ch. 210, Sec. 56. (SB 95) Effective January 1, 2024.)
9405.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. )
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A good-faith modification or substitution of an assigned contract can be effective against the assignee, who then gets the corresponding rights, but the rule is limited by stated exceptions and related rules.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9405. (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 subdivision is subject to subdivisions (b) to (d), inclusive. (b) Subdivision (a) applies to the extent that either of the following apply: (1) The right to payment or a part thereof under an assigned contract has not been fully earned by performance. (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 subdivision (a) of Section 9406. (c) This section is subject to law other than this division 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) This section does not apply to an assignment of a health care insurance receivable. (Repealed (by Sec. 25) and added by Stats. 2000, Ch. 1003, Sec. 26. Effective January 1, 2001. Operative July 1, 2001, by Sec. 56 of Ch. 1003.)
9406.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. )
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An account debtor may pay the assignor until it receives a signed assignment notice, then may pay the assignee instead; the assignee must provide reasonable proof of the assignment if asked.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9406. (a) Subject to subdivisions (b) to (i), inclusive, and (l), 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, signed 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 subdivisions (h) and (l), notification is ineffective under subdivision (a) as follows: (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 this division. (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 any of the following conditions is satisfied: (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. (C) The account debtor knows that the assignment to that assignee is limited. (c) Subject to subdivisions (h) and (l), 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 subdivision (a). (d) In this subdivision, “promissory note” includes a negotiable instrument that evidences chattel paper. Except as otherwise provided in subdivisions (e) and (k) and in Sections 9407 and 10303, and subject to subdivision (h), a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it does either of the following: (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. (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) Subdivision (d) does not apply to the sale of a payment intangible or promissory note, other than a sale pursuant to a disposition under Section 9610 or an acceptance of collateral under Section 9620. (f) Except as otherwise provided in subdivision (k) and Sections 9407 and 10303, and subject to subdivisions (h) and (i), 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 does either of the following: (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. (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 or chattel paper. (g) Subject to subdivisions (h) and (l), an account debtor may not waive or vary its option under paragraph (3) of subdivision (b). (h) This section is subject to law other than this division 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) Subdivision (f) does not apply to an assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, a claim or right to receive compensation for injuries or sickness as described in paragraph (1) or (2) of subsection (a) of Section 104 of Title 26 of the United States Code, as amended, or a claim or right to receive benefits under a special needs trust as described in paragraph (4) of subsection (d) of Section 1396p of Title 42 of the United States Code, as amended, to the extent that subdivision (f) is inconsistent with those laws. (k) Subdivisions (d), (f), and (j) do not apply to a security interest in an ownership interest in a general partnership, limited partnership, or limited liability company. (l) Subdivisions (a) to (c), inclusive, and (g) do not apply to a controllable account or controllable payment intangible. (Amended by Stats. 2023, Ch. 210, Sec. 57. (SB 95) Effective January 1, 2024.)
9407.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. )
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Some lease terms are ineffective if they restrict assignment, transfer, or security interests, or if they treat those actions as a default or breach, subject to stated exceptions.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9407. (a) Except as otherwise provided in subdivision (b), a term in a lease agreement is ineffective to the extent that it does either of the following: (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. (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 lease. (b) Except as otherwise provided in subdivision (g) of Section 10303, a term described in paragraph (2) of subdivision (a) is effective to the extent that there is either of the following: (1) A transfer by the lessee of the lessee’s right of possession or use of the goods in violation of the term. (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 subdivision (d) of Section 10303 unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor. (Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 30. Effective January 1, 2001. Addition and amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)
9408.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. )
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Certain anti-assignment or consent clauses affecting specified payment rights and security interests are ineffective in defined situations, with some carve-outs.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9408. (a) Except as otherwise provided in subdivisions (b) and (f), a term in a promissory note or in an agreement between an account debtor and a debtor that 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 the 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 does, or would do, either of the following: (1) It would impair the creation, attachment, or perfection of a security interest. (2) It 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) Subdivision (a) 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, other than a sale pursuant to a disposition under Section 9610 or an acceptance of collateral under Section 9620. (c) Except as otherwise provided in subdivision (f), 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 the 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 does, or would do, either of the following: (1) It would impair the creation, attachment, or perfection of a security interest. (2) It 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. (d) To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor that relates to a health care insurance receivable or general intangible or a rule of law, statute, or regulation described in subdivision (c) would be effective under law other than this division but is ineffective under subdivision (a) or (c), the creation, attachment, or perfection of a security interest in the promissory note, health care insurance receivable, or general intangible is subject to all of the following rules: (1) It is not enforceable against the person obligated on the promissory note or the account debtor. (2) It does not impose a duty or obligation on the person obligated on the promissory note or the account debtor. (3) It 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) It 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) It 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. (6) It does not entitle the secured party to enforce the security interest in the promissory note, health care insurance receivable, or general intangible. (e) Subdivision (c) does not apply to an assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, a claim or right to receive compensation for injuries or sickness as described in paragraph (1) or (2) of subsection (a) of Section 104 of Title 26 of the United States Code, as amended, or a claim or right to receive benefits under a special needs trust as described in paragraph (4) of subsection (d) of Section 1396p of Title 42 of the United States Code, as amended, to the extent that subdivision (c) is inconsistent with those laws. (f) This section does not apply to a security interest in an ownership interest in a general partnership, limited partnership, or limited liability company. (g) In this section, “promissory note” includes a negotiable instrument that evidences chattel paper. (Amended by Stats. 2023, Ch. 210, Sec. 58. (SB 95) Effective January 1, 2024.)
9409.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. )
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Some letter-of-credit restrictions on assigning or creating a security interest in a letter-of-credit right are ineffective if they would block perfection or trigger specified defaults or remedies.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 4. Rights of Third Parties [9401 - 9409] ( Chapter 4 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9409. (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 does, or would do, either of the following: (1) It would impair the creation, attachment, or perfection of a security interest in the letter-of-credit right. (2) It 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 subdivision (a) but would be effective under law other than this division 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, all of the following rules apply with respect to the creation, attachment, or perfection of a security interest in the letter-of-credit right: (1) It is not enforceable against the applicant, issuer, nominated person, or transferee beneficiary. (2) It imposes no duties or obligations on the applicant, issuer, nominated person, or transferee beneficiary. (3) It 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. (Repealed (by Sec. 33) and added by Stats. 2000, Ch. 1003, Sec. 34. Effective January 1, 2001. Operative July 1, 2001, by Sec. 56 of Ch. 1003.)
9501.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says where to file a financing statement to perfect a security interest or agricultural lien, with different offices depending on the collateral and whether the filing is a fixture filing.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9501. (a) Except as otherwise provided in subdivision (b), 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 either of the following: (1) The office designated for the filing or recording of a record of a mortgage on the related real property, if either of the following conditions is satisfied: (A) The collateral is as-extracted collateral or timber to be cut. (B) The financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures. (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. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9502.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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A financing statement is sufficient only if it meets the stated naming and collateral-description requirements, with extra requirements for fixture filings and certain collateral.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9502. (a) Subject to subdivision (b), a financing statement is sufficient only if it satisfies all of the following conditions: (1) It provides the name of the debtor. (2) It provides the name of the secured party or a representative of the secured party. (3) It indicates the collateral covered by the financing statement. (b) Except as otherwise provided in subdivision (b) of Section 9501, 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 subdivision (a) and also satisfy all of the following conditions: (1) Indicate that it covers this type of collateral. (2) Indicate that it is to be recorded 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 under the law of this state if the description were contained in a record of the mortgage of the real property. (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 of recording, as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if all of the following conditions are satisfied: (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, except that both of the following apply: (A) The record need not indicate that it is to be filed in the real property records. (B) The record sufficiently provides the name of a debtor who is an individual if it provides the individual name of the debtor or the surname and first personal name of the debtor, even if the debtor is an individual to whom paragraph (4) of subdivision (a) of Section 9503 applies. (4) The record is duly recorded. (d) A financing statement may be filed before a security agreement is made or a security interest otherwise attaches. (Amended by Stats. 2025, Ch. 43, Sec. 1. (AB 771) Effective January 1, 2026.)
9503.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says a financing statement counts only if it lists the debtor’s name in the specific form required for that type of debtor.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9503. (a) A financing statement sufficiently provides the name of the debtor only if it does so in accordance with the following rules: (1) Except as otherwise provided in paragraph (3), if the debtor is a registered organization or the collateral is held in a trust that is a registered organization, only if the financing statement provides the name that is stated to be the registered organization’s name on the public organic record most recently filed with or issued or enacted by the registered organization’s jurisdiction of organization which purports to state, amend, or restate the registered organization’s name. (2) Subject to subdivision (f), if the collateral is being administered by the personal representative of a decedent, only if the financing statement provides, as the name of the debtor, the name of the decedent and, in a separate part of the financing statement, indicates that the collateral is being administered by a personal representative. (3) If the collateral is held in a trust that is not a registered organization, only if the financing statement satisfies both of the following conditions: (A) Provides, as the name of the debtor, either of the following: (i) If the organic record of the trust specifies a name for the trust, the name specified. (ii) If the organic record of the trust does not specify a name for the trust, the name of the settlor or testator. (B) In a separate part of the financing statement, the following information is provided, as applicable: (i) If the name is provided in accordance with clause (i) of subparagraph (A), the financing statement indicates that the collateral is held in a trust. (ii) If the name is provided in accordance with clause (ii) of subparagraph (A), the financing statement provides additional information sufficient to distinguish the trust from other trusts having one or more of the same settlors or the same testator and indicates that the collateral is held in a trust, unless the additional information so indicates. (4) Subject to subdivision (g), if the debtor is an individual to whom the Department of Motor Vehicles has issued a driver’s license that has not expired or an identification card that has not expired, only if the financing statement provides the name of the individual indicated on that driver’s license or identification card. (5) If debtor is an individual to whom paragraph (4) does not apply, only if the financing statement provides the individual name of the debtor or the surname and first personal name of the debtor. (6) In other cases, according to the following rules: (A) If the debtor has a name, only if the financing statement provides the organizational name of the debtor. (B) If the debtor does not have a name, only if the financing statement provides the names of the partners, members, associates, or other persons comprising the debtor, in a manner that each name provided would be sufficient if the person named were the debtor. (7) Subject to the following sentence of this paragraph, it is a violation of Section 51 of the Civil Code for a secured party or proposed secured party to decline to provide credit to a debtor or proposed debtor, or offer to make the terms and conditions of the credit less favorable to the debtor or proposed debtor if (A) that decision was based on the fact that the debtor’s name to be included on the financing statement is or would be that provided under paragraph (5) rather than under paragraph (4), and (B) all elements that would be required to establish a claim for violation of Section 51 of the Civil Code are established. Any affirmative defenses that would be available to a claim under Section 51 of the Civil Code would be affirmative defenses to a claim under this paragraph. This paragraph shall not be construed to alter, expand, limit, or negate any other rights, defenses, or remedies under Section 51 of the Civil Code. (b) A financing statement that provides the name of the debtor in accordance with subdivision (a) is not rendered ineffective by the absence of either of the following: (1) A trade name or other name of the debtor. (2) Unless required under subparagraph (B) of paragraph (6) of subdivision (a), 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. (f) The name of the decedent indicated on the order appointing the personal representative of the decedent issued by the court having jurisdiction over the collateral is sufficient as the “name of the decedent” under paragraph (2) of subdivision (a). (g) If the Department of Motor Vehicles has issued to an individual more than one driver’s licenses or identification cards of a kind described in paragraph (4) of subdivision (a), paragraph (4) of subdivision (a) refers to the most recently issued license or card. (h) For purposes of this section: (1) “Driver’s license” and “identification card” includes a driver’s license or identification card issued pursuant to subdivision (a) of Section 12801.9 of the Vehicle Code. (2) “Name of the settlor or testator” means either of the following: (A) If the settlor is a registered organization, the name that is stated to be the settlor’s name on the public organic record most recently filed with or issued or enacted by the settlor’s jurisdiction of organization which purports to state, amend, or restate the settlor’s name. (B) In other cases, the name of the settlor or testator indicated in the trust’s organic record. (Amended by Stats. 2022, Ch. 482, Sec. 2. (AB 1766) Effective January 1, 2023.)
9504.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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A financing statement counts as sufficiently describing collateral if it either describes the collateral under Section 9108 or says it covers all assets or all personal property.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9504. A financing statement sufficiently indicates the collateral that it covers if the financing statement provides either of the following: (1) A description of the collateral pursuant to Section 9108. (2) An indication that the financing statement covers all assets or all personal property. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9505.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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Certain consignors, lessors, bailors, licensors, and buyers may file or comply using substitute terms instead of “secured party” and “debtor.”

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9505. (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 or treaty described in subdivision (a) of Section 9311, 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) This chapter applies to the filing of a financing statement under subdivision (a) and, as appropriate, to compliance that is equivalent to filing a financing statement under subdivision (b) of Section 9311, 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. (Amended (as to be added by Stats. 1999, Ch. 991) by Stats. 2000, Ch. 1003, Sec. 36. Effective January 1, 2001. Addition and amendment operative July 1, 2001, by Stats. 1999, Ch. 991, Sec. 75, and Stats. 2000, Ch. 1003, Sec. 56.)
9506.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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A financing statement is effective if it substantially meets the rules, even with minor errors or omissions, unless those mistakes make it seriously misleading.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9506. (a) A financing statement substantially satisfying the requirements of this part 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 subdivision (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with subdivision (a) of Section 9503 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 subdivision (a) of Section 9503, the name provided does not make the financing statement seriously misleading. (d) For purposes of subdivision (b) of Section 9508, the “debtor’s correct name” in subdivision (c) means the correct name of the new debtor. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9507.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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A filed financing statement can stay effective after collateral is disposed of, and some misleading debtor-name problems do not immediately defeat it.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9507. (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 subdivision (c) and in Section 9508, 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 9506. (c) If the name that a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under subdivision (a) of Section 9503 so that the financing statement becomes seriously misleading under Section 9506, the following rules apply: (1) The financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the filed financing statement becomes seriously misleading. (2) The financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the filed financing statement becomes seriously misleading, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the financing statement became seriously misleading. (Amended by Stats. 2013, Ch. 531, Sec. 17. (AB 502) Effective January 1, 2014. Operative July 1, 2014, by Sec. 28 of Ch. 531.)
9508.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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A filed financing statement naming the original debtor can still perfect a security interest in collateral the new debtor has or acquires, but special timing rules apply if the name change makes the filing seriously misleading.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9508. (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 subdivision (a) to be seriously misleading under Section 9506, the following rules apply: (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 subdivision (d) of Section 9203. (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 subdivision (d) of Section 9203 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 subdivision (a) of Section 9507. (Repealed and added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9509.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section says when a person may file certain financing statements or amendments, and it requires debtor or secured-party authorization in the listed cases.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9509. (a) A person may file an initial financing statement, an amendment that adds collateral covered by a financing statement, or an amendment that adds a debtor to a financing statement only if either of the following conditions is satisfied: (1) The debtor authorizes the filing in a signed record or pursuant to subdivision (b) or (c). (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 signing 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 both of the following: (1) The collateral described in the security agreement. (2) Property that becomes collateral under paragraph (2) of subdivision (a) of Section 9315, 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 subdivision (a) of Section 9315, 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 subdivision (a) of Section 9315. (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 either of the following conditions is satisfied: (1) The secured party of record authorizes the filing. (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 subdivision (a) or (c) of Section 9513, 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 subdivision (d). (Amended by Stats. 2023, Ch. 210, Sec. 59. (SB 95) Effective January 1, 2024.)
9510.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section limits when filed records and continuation statements are effective.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9510. (a) A filed record is effective only to the extent that it was filed by a person that may file it under Section 9509. (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 subdivision (d) of Section 9515 is ineffective. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9511.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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This section defines when a person or assignee is treated as the secured party of record for a financing statement, and when that status continues.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9511. (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 subdivision (a) of Section 9514, 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 subdivision (b) of Section 9514, 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. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9512.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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A person may amend a financing statement to add or delete collateral, continue or end its effectiveness, or otherwise change it, but the amendment must follow the stated filing rules.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9512. (a) Subject to Section 9509, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to subdivision (e), otherwise amend the information provided in, a financing statement by filing an amendment that does both of the following: (1) Identifies, by its file number, the initial financing statement to which the amendment relates. (2) If the amendment relates to an initial financing statement filed or recorded in a filing office described in paragraph (1) of subdivision (a) of Section 9501, provides the date that the initial financing statement was filed or recorded and the information specified in subdivision (b) of Section 9502. (b) Except as otherwise provided in Section 9515, 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 that it does either of the following: (1) It purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing statement. (2) It purports to delete all secured parties of record and fails to provide the name of a new secured party of record. (Added by Stats. 1999, Ch. 991, Sec. 35. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991 and Section 9701.)
9513.
## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. )
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A secured party must cause a termination statement to be filed when a consumer-goods financing statement is paid off or was unauthorized, and must act within the stated deadlines.

## Commercial Code - COM ## DIVISION 9. SECURED TRANSACTIONS [9101 - 9907] ( Division 9 repealed and added by Stats. 1999, Ch. 991, Sec. 35. ) ## CHAPTER 5. Filing [9501 - 9528] ( Chapter 5 added by Stats. 1999, Ch. 991, Sec. 35. ) ## 9513. (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 either of the following conditions is satisfied: (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. (2) The debtor did not authorize the filing of the initial financing statement. (b) To comply with subdivision (a), a secured party shall cause the secured party of record to file the termination statement in accordance with either of the following rules: (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. (2) If earlier, within 20 days after the secured party receives a signed demand from a debtor. (c) In cases not governed by subdivision (a), within 20 days after a secured party receives a signed 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 any of the following conditions is satisfied: (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. (4) The debtor did not authorize the filing of the initial financing statement. (d) Except as otherwise provided in Section 9510, 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 9510, for purposes of subdivision (g) of Section 9519, subdivision (a) of Section 9522, and subdivision (c) of Section 9523, 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. (Amended by Stats. 2023, Ch. 210, Sec. 60. (SB 95) Effective January 1, 2024.)

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