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91_SB1531
LRB9112852JSpc
1 AN ACT in relation to secured transactions.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Uniform Commercial Code is amended by
5 changing Sections 9-101, 9-102, 9-103, 9-104, 9-105, 9-106,
6 9-107, 9-108, 9-109, 9-110, 9-112, 9-113, 9-114, 9-115,
7 9-116, 9-150, 9-201, 9-202, 9-203, 9-204, 9-205, 9-205.1,
8 9-206, 9-207, 9-208, 9-301, 9-302, 9-303, 9-304, 9-305,
9 9-306, 9-306.01, 9-306.02, 9-307, 9-307.1, 9-307.2, 9-308,
10 9-309, 9-310, 9-311, 9-312, 9-313, 9-314, 9-315, 9-316,
11 9-317, 9-318, 9-401, 9-401A, 9-402, 9-403, 9-404, 9-405,
12 9-406, 9-407, 9-408, 9-410, 9-501, 9-502, 9-503, 9-504,
13 9-505, 9-506, 9-507, 9-9901, and 9-9902, adding Sections
14 9-209, 9-210, 9-315.01, 9-315.02, 9-319, 9-320, 9-320.1,
15 9-320.2, 9-320.3, 9-321, 9-322, 9-323, 9-324, 9-325, 9-326,
16 9-327, 9-328, 9-329, 9-330, 9-331, 9-332, 9-333, 9-334,
17 9-335, 9-336, 9-337, 9-338, 9-339, 9-340, 9-341, 9-342,
18 9-409, 9-501.5, 9-508, 9-509, 9-510, 9-511, 9-512, 9-513,
19 9-514, 9-515, 9-516, 9-517, 9-518, 9-519, 9-520, 9-521,
20 9-522, 9-523, 9-524, 9-525, 9-526, 9-527, 9-601, 9-602,
21 9-603, 9-604, 9-605, 9-606, 9-607, 9-608, 9-609, 9-610,
22 9-611, 9-612, 9-613, 9-614, 9-615, 9-616, 9-617, 9-618,
23 9-619, 9-620, 9-621, 9-622, 9-623, 9-624, 9-625, 9-626,
24 9-627, 9-628, 9-701, 9-702, 9-703, 9-704, 9-705, 9-706,
25 9-707, and 9-708, changing the headings of Article 9 and
26 Parts 1, 2, 3, 4, 5, and 99 of Article 9, and adding headings
27 of Parts 6 and 7 of Article 9, Subparts 1 and 2 of Part 1 of
28 Article 9, Subparts 1 and 2 of Part 2 of Article 9, Subparts
29 1, 2, 3, and 4 of Part 3 of Article 9, Subparts 1 and 2 of
30 Part 5 of Article 9, and Subparts 1 and 2 of Part 6 of
31 Article 9 as follows:
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1 (810 ILCS 5/Art. 9 heading)
2 ARTICLE 9
3 SECURED TRANSACTIONS: SALES OF ACCOUNTS,
4 CONTRACT RIGHTS AND CHATTEL PAPER
5 (810 ILCS 5/Art. 9, Part 1 heading)
6 PART 1. GENERAL PROVISIONS
7 SHORT TITLE, APPLICABILITY AND DEFINITIONS
8 (810 ILCS 5/Art. 9, Part 1, Subpart 1 heading new)
9 SUBPART 1. SHORT TITLE, DEFINITIONS, AND GENERAL CONCEPTS
10 (810 ILCS 5/9-101) (from Ch. 26, par. 9-101)
11 Sec. 9-101. Short title. This Article may be cited as
12 Uniform Commercial Code - Secured Transactions. Short title.
13 This Article shall be known and may be cited as Uniform
14 Commercial Code--Secured Transactions.
15 (Source: Laws 1961, p. 2101.)
16 (810 ILCS 5/9-102) (from Ch. 26, par. 9-102)
17 Sec. 9-102. Definitions and index of definitions.
18 (a) Article 9 definitions. In this Article:
19 (1) "Accession" means goods that are physically
20 united with other goods in such a manner that the
21 identity of the original goods is not lost.
22 (2) "Account", except as used in "account for",
23 means a right to payment of a monetary obligation,
24 whether or not earned by performance, (i) for property
25 that has been or is to be sold, leased, licensed,
26 assigned, or otherwise disposed of, (ii) for services
27 rendered or to be rendered, (iii) for a policy of
28 insurance issued or to be issued, (iv) for a secondary
29 obligation incurred or to be incurred, (v) for energy
30 provided or to be provided, (vi) for the use or hire of a
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1 vessel under a charter or other contract, (vii) arising
2 out of the use of a credit or charge card or information
3 contained on or for use with the card, or (viii) as
4 winnings in a lottery or other game of chance operated or
5 sponsored by a State, governmental unit of a State, or
6 person licensed or authorized to operate the game by a
7 State or governmental unit of a State. The term includes
8 health-care-insurance receivables. The term does not
9 include (i) rights to payment evidenced by chattel paper
10 or an instrument, (ii) commercial tort claims, (iii)
11 deposit accounts, (iv) investment property, (v)
12 letter-of-credit rights or letters of credit, or (vi)
13 rights to payment for money or funds advanced or sold,
14 other than rights arising out of the use of a credit or
15 charge card or information contained on or for use with
16 the card.
17 (3) "Account debtor" means a person obligated on an
18 account, chattel paper, or general intangible. The term
19 does not include persons obligated to pay a negotiable
20 instrument, even if the instrument constitutes part of
21 chattel paper.
22 (4) "Accounting", except as used in "accounting
23 for", means a record:
24 (A) authenticated by a secured party;
25 (B) indicating the aggregate unpaid secured
26 obligations as of a date not more than 35 days
27 earlier or 35 days later than the date of the
28 record; and
29 (C) identifying the components of the
30 obligations in reasonable detail.
31 (5) "Agricultural lien" means an interest, other
32 than a security interest, in farm products:
33 (A) which secures payment or performance of an
34 obligation for:
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1 (i) goods or services furnished in
2 connection with a debtor's farming operation;
3 or
4 (ii) rent on real property leased by a
5 debtor in connection with its farming
6 operation;
7 (B) which is created by statute in favor of a
8 person that:
9 (i) in the ordinary course of its
10 business furnished goods or services to a
11 debtor in connection with a debtor's farming
12 operation; or
13 (ii) leased real property to a debtor in
14 connection with the debtor's farming operation;
15 and
16 (C) whose effectiveness does not depend on the
17 person's possession of the personal property.
18 (6) "As-extracted collateral" means:
19 (A) oil, gas, or other minerals that are
20 subject to a security interest that:
21 (i) is created by a debtor having an
22 interest in the minerals before extraction; and
23 (ii) attaches to the minerals as
24 extracted; or
25 (B) accounts arising out of the sale at the
26 wellhead or minehead of oil, gas, or other minerals
27 in which the debtor had an interest before
28 extraction.
29 (7) "Authenticate" means:
30 (A) to sign; or
31 (B) to execute or otherwise adopt a symbol, or
32 encrypt or similarly process a record in whole or in
33 part, with the present intent of the authenticating
34 person to identify the person and adopt or accept a
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1 record.
2 (8) "Bank" means an organization that is engaged in
3 the business of banking. The term includes savings
4 banks, savings and loan associations, credit unions, and
5 trust companies.
6 (9) "Cash proceeds" means proceeds that are money,
7 checks, deposit accounts, or the like.
8 (10) "Certificate of title" means a certificate of
9 title with respect to which a statute provides for the
10 security interest in question to be indicated on the
11 certificate as a condition or result of the security
12 interest's obtaining priority over the rights of a lien
13 creditor with respect to the collateral.
14 (11) "Chattel paper" means a record or records that
15 evidence both a monetary obligation and a security
16 interest in specific goods, a security interest in
17 specific goods and software used in the goods, a security
18 interest in specific goods and license of software used
19 in the goods, a lease of specific goods, or a lease of
20 specific goods and license of software used in the goods.
21 In this paragraph, "monetary obligation" means a monetary
22 obligation secured by the goods or owed under a lease of
23 the goods and includes a monetary obligation with respect
24 to software used in the goods. The term does not include
25 charters or other contracts involving the use or hire of
26 a vessel. If a transaction is evidenced by records that
27 include an instrument or series of instruments, the group
28 of records taken together constitutes chattel paper.
29 (12) "Collateral" means the property subject to a
30 security interest or agricultural lien. The term
31 includes:
32 (A) proceeds to which a security interest
33 attaches;
34 (B) accounts, chattel paper, payment
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1 intangibles, and promissory notes that have been
2 sold; and
3 (C) goods that are the subject of a
4 consignment.
5 (13) "Commercial tort claim" means a claim arising
6 in tort with respect to which:
7 (A) the claimant is an organization; or
8 (B) the claimant is an individual and the
9 claim:
10 (i) arose in the course of the claimant's
11 business or profession; and
12 (ii) does not include damages arising out
13 of personal injury to or the death of an
14 individual.
15 (14) "Commodity account" means an account
16 maintained by a commodity intermediary in which a
17 commodity contract is carried for a commodity customer.
18 (15) "Commodity contract" means a commodity futures
19 contract, an option on a commodity futures contract, a
20 commodity option, or another contract if the contract or
21 option is:
22 (A) traded on or subject to the rules of a
23 board of trade that has been designated as a
24 contract market for such a contract pursuant to
25 federal commodities laws; or
26 (B) traded on a foreign commodity board of
27 trade, exchange, or market, and is carried on the
28 books of a commodity intermediary for a commodity
29 customer.
30 (16) "Commodity customer" means a person for which
31 a commodity intermediary carries a commodity contract on
32 its books.
33 (17) "Commodity intermediary" means a person that:
34 (A) is registered as a futures commission
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1 merchant under federal commodities law; or
2 (B) in the ordinary course of its business
3 provides clearance or settlement services for a
4 board of trade that has been designated as a
5 contract market pursuant to federal commodities law.
6 (18) "Communicate" means:
7 (A) to send a written or other tangible
8 record;
9 (B) to transmit a record by any means agreed
10 upon by the persons sending and receiving the
11 record; or
12 (C) in the case of transmission of a record to
13 or by a filing office, to transmit a record by any
14 means prescribed by filing-office rule.
15 (19) "Consignee" means a merchant to which goods
16 are delivered in a consignment.
17 (20) "Consignment" means a transaction, regardless
18 of its form, in which a person delivers goods to a
19 merchant for the purpose of sale and:
20 (A) the merchant:
21 (i) deals in goods of that kind under a
22 name other than the name of the person making
23 delivery;
24 (ii) is not an auctioneer; and
25 (iii) is not generally known by its
26 creditors to be substantially engaged in
27 selling the goods of others;
28 (B) with respect to each delivery, the
29 aggregate value of the goods is $1,000 or more at
30 the time of delivery;
31 (C) the goods are not consumer goods
32 immediately before delivery; and
33 (D) the transaction does not create a security
34 interest that secures an obligation.
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1 (21) "Consignor" means a person that delivers goods
2 to a consignee in a consignment.
3 (22) "Consumer debtor" means a debtor in a consumer
4 transaction.
5 (23) "Consumer goods" means goods that are used or
6 bought for use primarily for personal, family, or
7 household purposes.
8 (24) "Consumer-goods transaction" means a consumer
9 transaction in which:
10 (A) an individual incurs an obligation
11 primarily for personal, family, or household
12 purposes; and
13 (B) a security interest in consumer goods
14 secures the obligation.
15 (25) "Consumer obligor" means an obligor who is an
16 individual and who incurred the obligation as part of a
17 transaction entered into primarily for personal, family,
18 or household purposes.
19 (26) "Consumer transaction" means a transaction in
20 which (i) an individual incurs an obligation primarily
21 for personal, family, or household purposes, (ii) a
22 security interest secures the obligation, and (iii) the
23 collateral is held or acquired primarily for personal,
24 family, or household purposes. The term includes
25 consumer-goods transactions.
26 (27) "Continuation statement" means an amendment of
27 a financing statement which:
28 (A) identifies, by its file number, the
29 initial financing statement to which it relates; and
30 (B) indicates that it is a continuation
31 statement for, or that it is filed to continue the
32 effectiveness of, the identified financing
33 statement.
34 (28) "Debtor" means:
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1 (A) a person having an interest, other than a
2 security interest or other lien, in the collateral,
3 whether or not the person is an obligor;
4 (B) a seller of accounts, chattel paper,
5 payment intangibles, or promissory notes; or
6 (C) a consignee.
7 (29) "Deposit account" means a demand, time,
8 savings, passbook, or similar account maintained with a
9 bank, including without limitation, non-negotiable
10 certificates of deposit, uncertificated certificates of
11 deposit, and non-transferable certificates of deposit.
12 The term does not include investment property or accounts
13 evidenced by an instrument.
14 (30) "Document" means a document of title or a
15 receipt of the type described in Section 7-201(2).
16 (31) "Electronic chattel paper" means chattel paper
17 evidenced by a record or records consisting of
18 information stored in an electronic medium.
19 (32) "Encumbrance" means a right, other than an
20 ownership interest, in real property. The term includes
21 mortgages and other liens on real property.
22 (33) "Equipment" means goods other than inventory,
23 farm products, or consumer goods.
24 (34) "Farm products" means goods, other than
25 standing timber, with respect to which the debtor is
26 engaged in a farming operation and which are:
27 (A) crops grown, growing, or to be grown,
28 including:
29 (i) crops produced on trees, vines, and
30 bushes; and
31 (ii) aquatic goods produced in
32 aquacultural operations;
33 (B) livestock, born or unborn, including
34 aquatic goods produced in aquacultural operations;
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1 (C) supplies used or produced in a farming
2 operation; or
3 (D) products of crops or livestock in their
4 unmanufactured states.
5 (35) "Farming operation" means raising,
6 cultivating, propagating, fattening, grazing, or any
7 other farming, livestock, or aquacultural operation.
8 (36) "File number" means the number assigned to an
9 initial financing statement pursuant to Section 9-519(a).
10 (37) "Filing office" means an office designated in
11 Section 9-501 as the place to file a financing statement.
12 (38) "Filing-office rule" means a rule adopted
13 pursuant to Section 9-526.
14 (39) "Financing statement" means a record or
15 records composed of an initial financing statement and
16 any filed record relating to the initial financing
17 statement.
18 (40) "Fixture filing" means the filing of a
19 financing statement covering goods that are or are to
20 become fixtures and satisfying Section 9-502(a) and (b).
21 The term includes the filing of a financing statement
22 covering goods of a transmitting utility which are or are
23 to become fixtures.
24 (41) "Fixtures" means goods that have become so
25 related to particular real property that an interest in
26 them arises under real property law.
27 (42) "General intangible" means any personal
28 property, including things in action, other than
29 accounts, chattel paper, commercial tort claims, deposit
30 accounts, documents, goods, instruments, investment
31 property, letter-of-credit rights, letters of credit,
32 money, and oil, gas, or other minerals before extraction.
33 The term includes payment intangibles and software.
34 (43) "Good faith" means honesty in fact and the
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1 observance of reasonable commercial standards of fair
2 dealing.
3 (44) "Goods" means all things that are movable when
4 a security interest attaches. The term includes (i)
5 fixtures, (ii) standing timber that is to be cut and
6 removed under a conveyance or contract for sale, (iii)
7 the unborn young of animals, (iv) crops grown, growing,
8 or to be grown, even if the crops are produced on trees,
9 vines, or bushes, and (v) manufactured homes. The term
10 also includes a computer program embedded in goods and
11 any supporting information provided in connection with a
12 transaction relating to the program if (i) the program is
13 associated with the goods in such a manner that it
14 customarily is considered part of the goods, or (ii) by
15 becoming the owner of the goods, a person acquires a
16 right to use the program in connection with the goods.
17 The term does not include a computer program embedded in
18 goods that consist solely of the medium in which the
19 program is embedded. The term also does not include
20 accounts, chattel paper, commercial tort claims, deposit
21 accounts, documents, general intangibles, instruments,
22 investment property, letter-of-credit rights, letters of
23 credit, money, or oil, gas, or other minerals before
24 extraction.
25 (45) "Governmental unit" means a subdivision,
26 agency, department, county, parish, municipality, or
27 other unit of the government of the United States, a
28 State, or a foreign country. The term includes an
29 organization having a separate corporate existence if the
30 organization is eligible to issue debt on which interest
31 is exempt from income taxation under the laws of the
32 United States.
33 (46) "Health-care-insurance receivable" means an
34 interest in or claim under a policy of insurance which is
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1 a right to payment of a monetary obligation for
2 health-care goods or services provided.
3 (47) "Instrument" means a negotiable instrument or
4 any other writing that evidences a right to the payment
5 of a monetary obligation, is not itself a security
6 agreement or lease, and is of a type that in ordinary
7 course of business is transferred by delivery with any
8 necessary indorsement or assignment. The term does not
9 include (i) investment property, (ii) letters of credit,
10 (iii) non-negotiable certificates of deposit, (iv)
11 uncertificated certificates of deposit, (v)
12 non-transferable certificates of deposit, or (vi)
13 writings that evidence a right to payment arising out of
14 the use of a credit or charge card or information
15 contained on or for use with the card.
16 (48) "Inventory" means goods, other than farm
17 products, which:
18 (A) are leased by a person as lessor;
19 (B) are held by a person for sale or lease or
20 to be furnished under a contract of service;
21 (C) are furnished by a person under a contract
22 of service; or
23 (D) consist of raw materials, work in process,
24 or materials used or consumed in a business.
25 (49) "Investment property" means a security,
26 whether certificated or uncertificated, security
27 entitlement, securities account, commodity contract, or
28 commodity account.
29 (50) "Jurisdiction of organization", with respect
30 to a registered organization, means the jurisdiction
31 under whose law the organization is organized.
32 (51) "Letter-of-credit right" means a right to
33 payment or performance under a letter of credit, whether
34 or not the beneficiary has demanded or is at the time
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1 entitled to demand payment or performance. The term does
2 not include the right of a beneficiary to demand payment
3 or performance under a letter of credit.
4 (52) "Lien creditor" means:
5 (A) a creditor that has acquired a lien on the
6 property involved by attachment, levy, or the like;
7 (B) an assignee for benefit of creditors from
8 the time of assignment;
9 (C) a trustee in bankruptcy from the date of
10 the filing of the petition; or
11 (D) a receiver in equity from the time of
12 appointment.
13 (53) "Manufactured home" means a structure,
14 transportable in one or more sections, which, in the
15 traveling mode, is eight body feet or more in width or 40
16 body feet or more in length, or, when erected on site, is
17 320 or more square feet, and which is built on a
18 permanent chassis and designed to be used as a dwelling
19 with or without a permanent foundation when connected to
20 the required utilities, and includes the plumbing,
21 heating, air-conditioning, and electrical systems
22 contained therein. The term includes any structure that
23 meets all of the requirements of this paragraph except
24 the size requirements and with respect to which the
25 manufacturer voluntarily files a certification required
26 by the United States Secretary of Housing and Urban
27 Development and complies with the standards established
28 under Title 42 of the United States Code.
29 (54) "Manufactured-home transaction" means a
30 secured transaction:
31 (A) that creates a purchase-money security
32 interest in a manufactured home, other than a
33 manufactured home held as inventory; or
34 (B) in which a manufactured home, other than a
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1 manufactured home held as inventory, is the primary
2 collateral.
3 (55) "Mortgage" means a consensual interest in real
4 property, including fixtures, which secures payment or
5 performance of an obligation.
6 (56) "New debtor" means a person that becomes bound
7 as debtor under Section 9-203(d) by a security agreement
8 previously entered into by another person.
9 (57) "New value" means (i) money, (ii) money's
10 worth in property, services, or new credit, or (iii)
11 release by a transferee of an interest in property
12 previously transferred to the transferee. The term does
13 not include an obligation substituted for another
14 obligation.
15 (58) "Noncash proceeds" means proceeds other than
16 cash proceeds.
17 (59) "Obligor" means a person that, with respect to
18 an obligation secured by a security interest in or an
19 agricultural lien on the collateral, (i) owes payment or
20 other performance of the obligation, (ii) has provided
21 property other than the collateral to secure payment or
22 other performance of the obligation, or (iii) is
23 otherwise accountable in whole or in part for payment or
24 other performance of the obligation. The term does not
25 include issuers or nominated persons under a letter of
26 credit.
27 (60) "Original debtor" means a person that, as
28 debtor, entered into a security agreement to which a new
29 debtor has become bound under Section 9-203(d).
30 (61) "Payment intangible" means a general
31 intangible under which the account debtor's principal
32 obligation is a monetary obligation.
33 (62) "Person related to", with respect to an
34 individual, means:
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1 (A) the spouse of the individual;
2 (B) a brother, brother-in-law, sister, or
3 sister-in-law of the individual;
4 (C) an ancestor or lineal descendant of the
5 individual or the individual's spouse; or
6 (D) any other relative, by blood or marriage,
7 of the individual or the individual's spouse who
8 shares the same home with the individual.
9 (63) "Person related to", with respect to an
10 organization, means:
11 (A) a person directly or indirectly
12 controlling, controlled by, or under common control
13 with the organization;
14 (B) an officer or director of, or a person
15 performing similar functions with respect to, the
16 organization;
17 (C) an officer or director of, or a person
18 performing similar functions with respect to, a
19 person described in subparagraph (A);
20 (D) the spouse of an individual described in
21 subparagraph (A), (B), or (C); or
22 (E) an individual who is related by blood or
23 marriage to an individual described in subparagraph
24 (A), (B), (C), or (D) and shares the same home with
25 the individual.
26 (64) "Proceeds" means the following property:
27 (A) whatever is acquired upon the sale, lease,
28 license, exchange, or other disposition of
29 collateral;
30 (B) whatever is collected on, or distributed
31 on account of, collateral;
32 (C) rights arising out of collateral;
33 (D) to the extent of the value of collateral,
34 claims arising out of the loss, nonconformity, or
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1 interference with the use of, defects or
2 infringement of rights in, or damage to, the
3 collateral; or
4 (E) to the extent of the value of collateral
5 and to the extent payable to the debtor or the
6 secured party, insurance payable by reason of the
7 loss or nonconformity of, defects or infringement of
8 rights in, or damage to, the collateral.
9 (65) "Promissory note" means an instrument that
10 evidences a promise to pay a monetary obligation, does
11 not evidence an order to pay, and does not contain an
12 acknowledgment by a bank that the bank has received for
13 deposit a sum of money or funds.
14 (66) "Proposal" means a record authenticated by a
15 secured party which includes the terms on which the
16 secured party is willing to accept collateral in full or
17 partial satisfaction of the obligation it secures
18 pursuant to Sections 9-620, 9-621, and 9-622.
19 (67) "Public-finance transaction" means a secured
20 transaction in connection with which:
21 (A) debt securities are issued;
22 (B) all or a portion of the securities issued
23 have an initial stated maturity of at least 20
24 years; and
25 (C) the debtor, obligor, secured party,
26 account debtor or other person obligated on
27 collateral, assignor or assignee of a secured
28 obligation, or assignor or assignee of a security
29 interest is a State or a governmental unit of a
30 State.
31 (68) "Pursuant to commitment", with respect to an
32 advance made or other value given by a secured party,
33 means pursuant to the secured party's obligation, whether
34 or not a subsequent event of default or other event not
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1 within the secured party's control has relieved or may
2 relieve the secured party from its obligation.
3 (69) "Record", except as used in "for record", "of
4 record", "record or legal title", and "record owner",
5 means information that is inscribed on a tangible medium
6 or which is stored in an electronic or other medium and
7 is retrievable in perceivable form.
8 (70) "Registered organization" means an
9 organization organized solely under the law of a single
10 State or the United States and as to which the State or
11 the United States must maintain a public record showing
12 the organization to have been organized.
13 (71) "Secondary obligor" means an obligor to the
14 extent that:
15 (A) the obligor's obligation is secondary; or
16 (B) the obligor has a right of recourse with
17 respect to an obligation secured by collateral
18 against the debtor, another obligor, or property of
19 either.
20 (72) "Secured party" means:
21 (A) a person in whose favor a security
22 interest is created or provided for under a security
23 agreement, whether or not any obligation to be
24 secured is outstanding;
25 (B) a person that holds an agricultural lien;
26 (C) a consignor;
27 (D) a person to which accounts, chattel paper,
28 payment intangibles, or promissory notes have been
29 sold;
30 (E) a trustee, indenture trustee, agent,
31 collateral agent, or other representative in whose
32 favor a security interest or agricultural lien is
33 created or provided for; or
34 (F) a person that holds a security interest
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1 arising under Section 2-401, 2-505, 2-711(3),
2 2A-508(5), 4-210, or 5-118.
3 (73) "Security agreement" means an agreement that
4 creates or provides for a security interest.
5 (74) "Send", in connection with a record or
6 notification, means:
7 (A) to deposit in the mail, deliver for
8 transmission, or transmit by any other usual means
9 of communication, with postage or cost of
10 transmission provided for, addressed to any address
11 reasonable under the circumstances; or
12 (B) to cause the record or notification to be
13 received within the time that it would have been
14 received if properly sent under subparagraph (A).
15 (75) "Software" means a computer program and any
16 supporting information provided in connection with a
17 transaction relating to the program. The term does not
18 include a computer program that is included in the
19 definition of goods.
20 (76) "State" means a State of the United States,
21 the District of Columbia, Puerto Rico, the United States
22 Virgin Islands, or any territory or insular possession
23 subject to the jurisdiction of the United States.
24 (77) "Supporting obligation" means a
25 letter-of-credit right or secondary obligation that
26 supports the payment or performance of an account,
27 chattel paper, a document, a general intangible, an
28 instrument, or investment property.
29 (78) "Tangible chattel paper" means chattel paper
30 evidenced by a record or records consisting of
31 information that is inscribed on a tangible medium.
32 (79) "Termination statement" means an amendment of
33 a financing statement which:
34 (A) identifies, by its file number, the
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1 initial financing statement to which it relates; and
2 (B) indicates either that it is a termination
3 statement or that the identified financing statement
4 is no longer effective.
5 (80) "Transmitting utility" means a person
6 primarily engaged in the business of:
7 (A) operating a railroad, subway, street
8 railway, or trolley bus;
9 (B) transmitting communications electrically,
10 electromagnetically, or by light;
11 (C) transmitting goods by pipeline or sewer;
12 or
13 (D) transmitting or producing and transmitting
14 electricity, steam, gas, or water.
15 (b) Definitions in other Articles. The following
16 definitions in other Articles apply to this Article:
17 "Applicant". Section 5-102.
18 "Beneficiary". Section 5-102.
19 "Broker". Section 8-102.
20 "Certificated security". Section 8-102.
21 "Check". Section 3-104.
22 "Clearing corporation". Section 8-102.
23 "Contract for sale". Section 2-106.
24 "Customer". Section 4-104.
25 "Entitlement holder". Section 8-102.
26 "Financial asset". Section 8-102.
27 "Holder in due course". Section 3-302.
28 "Issuer" (with respect to a letter of Credit or
29 letter-of-credit right). Section 5-102.
30 "Issuer" (with respect to a security). Section 8-201.
31 "Lease". Section 2A-103.
32 "Lease agreement". Section 2A-103.
33 "Lease contract". Section 2A-103.
34 "Leasehold interest". Section 2A-103.
-20- LRB9112852JSpc
1 "Lessee". Section 2A-103.
2 "Lessee in ordinary course of business". Section 2A-103.
3 "Lessor". Section 2A-103.
4 "Lessor's residual interest". Section 2A-103.
5 "Letter of credit". Section 5-102.
6 "Merchant". Section 2-104.
7 "Negotiable instrument". Section 3-104.
8 "Nominated person". Section 5-102.
9 "Note". Section 3-104.
10 "Proceeds of a letter of credit". Section 5-114.
11 "Prove". Section 3-103.
12 "Sale". Section 2-106.
13 "Securities account". Section 8-501.
14 "Securities intermediary". Section 8-102.
15 "Security". Section 8-102.
16 "Security certificate". Section 8-102.
17 "Security entitlement". Section 8-102.
18 "Uncertificated security". Section 8-102.
19 (c) Article 1 definitions and principles. Article 1
20 contains general definitions and principles of construction
21 and interpretation applicable throughout this Article. Policy
22 and Subject Matter of Article.
23 (1) Except as otherwise provided in Section 9--104 on
24 excluded transactions, this Article applies
25 (a) to any transaction (regardless of its form)
26 which is intended to create a security interest in personal
27 property or fixtures including goods, documents, instruments,
28 general intangibles, chattel paper or accounts; and also
29 (b) to any sale of accounts or chattel paper.
30 (2) This Article applies to security interests created
31 by contract including pledge, assignment, chattel mortgage,
32 chattel trust, trust deed, factor's lien, equipment trust,
33 conditional sale, trust receipt, other lien or title
34 retention contract and lease or consignment intended as
-21- LRB9112852JSpc
1 security. This Article does not apply to statutory liens
2 except as provided in Section 9--310.
3 (3) The application of this Article to a security
4 interest in a secured obligation is not affected by the fact
5 that the obligation is itself secured by a transaction or
6 interest to which this Article does not apply.
7 (4) The application of this Article to a security
8 interest in a deposit account shall not displace a common law
9 right of set-off of the secured party as to a deposit account
10 maintained with the secured party.
11 (Source: P.A. 87-1037.)
12 (810 ILCS 5/9-103) (from Ch. 26, par. 9-103)
13 Sec. 9-103. Purchase-money security interest; application
14 of payments; burden of establishing.
15 (a) Definitions. In this Section:
16 (1) "purchase-money collateral" means goods or
17 software that secures a purchase-money obligation
18 incurred with respect to that collateral; and
19 (2) "purchase-money obligation" means an obligation
20 of an obligor incurred as all or part of the price of the
21 collateral or for value given to enable the debtor to
22 acquire rights in or the use of the collateral if the
23 value is in fact so used.
24 (b) Purchase-money security interest in goods. A
25 security interest in goods is a purchase-money security
26 interest:
27 (1) to the extent that the goods are purchase-money
28 collateral with respect to that security interest;
29 (2) if the security interest is in inventory that
30 is or was purchase-money collateral, also to the extent
31 that the security interest secures a purchase-money
32 obligation incurred with respect to other inventory in
33 which the secured party holds or held a purchase-money
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1 security interest; and
2 (3) also to the extent that the security interest
3 secures a purchase-money obligation incurred with respect
4 to software in which the secured party holds or held a
5 purchase-money security interest.
6 (c) Purchase-money security interest in software. A
7 security interest in software is a purchase-money security
8 interest to the extent that the security interest also
9 secures a purchase-money obligation incurred with respect to
10 goods in which the secured party holds or held a
11 purchase-money security interest if:
12 (1) the debtor acquired its interest in the
13 software in an integrated transaction in which it
14 acquired an interest in the goods; and
15 (2) the debtor acquired its interest in the
16 software for the principal purpose of using the software
17 in the goods.
18 (d) Consignor's inventory purchase-money security
19 interest. The security interest of a consignor in goods that
20 are the subject of a consignment is a purchase-money security
21 interest in inventory.
22 (e) Application of payment. If the extent to which a
23 security interest is a purchase-money security interest
24 depends on the application of a payment to a particular
25 obligation, the payment must be applied:
26 (1) in accordance with any reasonable method of
27 application to which the parties agree;
28 (2) in the absence of the parties' agreement to a
29 reasonable method, in accordance with any intention of
30 the obligor manifested at or before the time of payment;
31 or
32 (3) in the absence of an agreement to a reasonable
33 method and a timely manifestation of the obligor's
34 intention, in the following order:
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1 (A) to obligations that are not secured; and
2 (B) if more than one obligation is secured, to
3 obligations secured by purchase-money security
4 interests in the order in which those obligations
5 were incurred.
6 (f) No loss of status of purchase-money security. A
7 purchase-money security interest does not lose its status as
8 such, even if:
9 (1) the purchase-money collateral also secures an
10 obligation that is not a purchase-money obligation;
11 (2) collateral that is not purchase-money
12 collateral also secures the purchase-money obligation; or
13 (3) the purchase-money obligation has been renewed,
14 refinanced, consolidated, or restructured.
15 (g) Burden of proof. A secured party claiming a
16 purchase-money security interest has the burden of
17 establishing the extent to which the security interest is a
18 purchase-money security interest. Perfection of Security
19 Interests in Multiple State Transactions.
20 (1) Documents, instruments, letters of credit, and
21 ordinary goods.
22 (a) This subsection applies to documents,
23 instruments, rights to proceeds of written letters of
24 credit, and goods other than those covered by a
25 certificate of title described in subsection (2), mobile
26 goods described in subsection (3), and minerals described
27 in subsection (5).
28 (b) Except as otherwise provided in this
29 subsection, perfection and the effect of perfection or
30 non-perfection of a security interest in collateral are
31 governed by the law of the jurisdiction where the
32 collateral is when the last event occurs on which is
33 based the assertion that the security interest is
34 perfected or unperfected.
-24- LRB9112852JSpc
1 (c) If the parties to a transaction creating a
2 purchase money security interest in goods in one
3 jurisdiction understand at the time that the security
4 interest attaches that the goods will be kept in another
5 jurisdiction, then the law of the other jurisdiction
6 governs the perfection and the effect of perfection or
7 non-perfection of the security interest from the time it
8 attaches until 30 days after the debtor receives
9 possession of the goods and thereafter if the goods are
10 taken to the other jurisdiction before the end of the
11 30-day period.
12 (d) When collateral is brought into and kept in
13 this State while subject to a security interest perfected
14 under the law of the jurisdiction from which the
15 collateral was removed, the security interest remains
16 perfected, but if action is required by Part 3 of this
17 Article to perfect the security interest,
18 (i) if the action is not taken before the
19 expiration of the period of perfection in the other
20 jurisdiction or the end of 4 months after the
21 collateral is brought into this State, whichever
22 period first expires, the security interest becomes
23 unperfected at the end of that period and is
24 thereafter deemed to have been unperfected as
25 against a person who became a purchaser after
26 removal;
27 (ii) if the action is taken before the
28 expiration of the period specified in subparagraph
29 (i), the security interest continues perfected
30 thereafter;
31 (iii) for the purpose of priority over a buyer
32 of consumer goods (subsection (2) of Section 9-307),
33 the period of the effectiveness of a filing in the
34 jurisdiction from which the collateral is removed is
-25- LRB9112852JSpc
1 governed by the rules with respect to perfection in
2 subparagraphs (i) and (ii).
3 (2) Certificate of title.
4 (a) This subsection applies to goods covered by a
5 certificate of title issued under a statute of this State
6 or of another jurisdiction under the law of which
7 indication of a security interest on the certificate is
8 required as a condition of perfection.
9 (b) Except as otherwise provided in this
10 subsection, perfection and the effect of perfection or
11 non-perfection of the security interest are governed by
12 the law (including the conflict of laws rules) of the
13 jurisdiction issuing the certificate until 4 months after
14 the goods are removed from that jurisdiction and
15 thereafter until the goods are registered in another
16 jurisdiction, but in any event not beyond surrender of
17 the certificate. After the expiration of that period,
18 the goods are not covered by the certificate of title
19 within the meaning of this Section.
20 (c) Except with respect to the rights of a buyer
21 described in the next paragraph, a security interest,
22 perfected in another jurisdiction otherwise than by
23 notation on a certificate of title, in goods brought into
24 this State and thereafter covered by a certificate of
25 title issued by this State is subject to the rules stated
26 in paragraph (d) of subsection (1).
27 (d) If goods are brought into this State while a
28 security interest therein is perfected in any manner
29 under the law of the jurisdiction from which the goods
30 are removed and a certificate of title is issued by this
31 State and the certificate does not show that the goods
32 are subject to the security interest or that they may be
33 subject to security interests not shown on the
34 certificate, the security interest is subordinate to the
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1 rights of a buyer of the goods to the extent that he
2 gives value and receives delivery of the goods after
3 issuance of the certificate and without knowledge of the
4 security interest.
5 (3) Accounts, general intangibles and mobile goods.
6 (a) This subsection applies to accounts (other than
7 an account described in subsection (5) on minerals) and
8 general intangibles (other than uncertificated
9 securities) and to goods which are mobile and which are
10 of a type normally used in more than one jurisdiction,
11 such as motor vehicles, trailers, rolling stock,
12 airplanes, shipping containers, road building and
13 construction machinery and commercial harvesting
14 machinery and the like, if the goods are equipment or are
15 inventory leased or held for lease by the debtor to
16 others, and are not covered by a certificate of title
17 described in subsection (2).
18 (b) The law (including the conflict of laws rules)
19 of the jurisdiction in which the debtor is located
20 governs the perfection and the effect of perfection or
21 non-perfection of the security interest.
22 (c) If, however, the debtor is located in a
23 jurisdiction which is not a part of the United States,
24 and which does not provide for perfection of the security
25 interest by filing or recording in that jurisdiction, the
26 law of the jurisdiction in the United States in which the
27 debtor has its major executive office in the United
28 States governs the perfection and the effect of
29 perfection or non-perfection of the security interest
30 through filing. In the alternative, if the debtor is
31 located in a jurisdiction which is not a part of the
32 United States or Canada and the collateral is accounts or
33 general intangibles for money due or to become due, the
34 security interest may be perfected by notification to the
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1 account debtor. As used in this paragraph, "United
2 States" includes its territories and possessions and the
3 Commonwealth of Puerto Rico.
4 (d) A debtor shall be deemed located at his place
5 of business if he has one, at his chief executive office
6 if he has more than one place of business, otherwise at
7 his residence. If, however, the debtor is a foreign air
8 carrier under the Federal Aviation Act of 1958, as
9 amended, it shall be deemed located at the designated
10 office of the agent upon whom service of process may be
11 made on behalf of the foreign air carrier.
12 (e) A security interest perfected under the law of
13 the jurisdiction of the location of the debtor is
14 perfected until the expiration of 4 months after a change
15 of the debtor's location to another jurisdiction, or
16 until perfection would have ceased by the law of the
17 first jurisdiction, whichever period first expires.
18 Unless perfected in the new jurisdiction before the end
19 of that period, it becomes unperfected thereafter and is
20 deemed to have been unperfected as against a person who
21 became a purchaser after the change.
22 (4) Chattel paper. The rules stated for goods in
23 subsection (1) apply to a possessory security interest in
24 chattel paper. The rules stated for accounts in subsection
25 (3) apply to a non-possessory security interest in chattel
26 paper, but the security interest may not be perfected by
27 notification to the account debtor.
28 (5) Minerals. Perfection and the effect of perfection
29 or non-perfection of a security interest which is created by
30 a debtor who has an interest in minerals or the like
31 (including oil and gas) before extraction and which attaches
32 thereto as extracted, or which attaches to an account
33 resulting from the sale thereof at the wellhead or minehead
34 are governed by the law (including the conflict of laws
-28- LRB9112852JSpc
1 rules) of the jurisdiction wherein the wellhead or minehead
2 is located.
3 (6) Investment property.
4 (a) This subsection applies to investment property.
5 (b) Except as otherwise provided in paragraph (f),
6 during the time that a security certificate is located in
7 a jurisdiction, perfection of a security interest, the
8 effect of perfection or non-perfection, and the priority
9 of a security interest in the certificated security
10 represented thereby are governed by the local law of that
11 jurisdiction.
12 (c) Except as otherwise provided in paragraph (f),
13 perfection of a security interest, the effect of
14 perfection or non-perfection, and the priority of a
15 security interest in an uncertificated security are
16 governed by the local law of the issuer's jurisdiction as
17 specified in Section 8-110(d).
18 (d) Except as otherwise provided in paragraph (f),
19 perfection of a security interest, the effect of
20 perfection or non-perfection, and the priority of a
21 security interest in a security entitlement or securities
22 account are governed by the local law of the securities
23 intermediary's jurisdiction as specified in Section
24 8-110(e).
25 (e) Except as otherwise provided in paragraph (f),
26 perfection of a security interest, the effect of
27 perfection or non-perfection, and the priority of a
28 security interest in a commodity contract or commodity
29 account are governed by the local law of the commodity
30 intermediary's jurisdiction. The following rules
31 determine a "commodity intermediary's jurisdiction" for
32 purposes of this paragraph:
33 (i) If an agreement between the commodity
34 intermediary and commodity customer specifies that
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1 it is governed by the law of a particular
2 jurisdiction, that jurisdiction is the commodity
3 intermediary's jurisdiction.
4 (ii) If an agreement between the commodity
5 intermediary and commodity customer does not specify
6 the governing law as provided in subparagraph (i),
7 but expressly specifies that the commodity account
8 is maintained at an office in a particular
9 jurisdiction, that jurisdiction is the commodity
10 intermediary's jurisdiction.
11 (iii) If an agreement between the commodity
12 intermediary and commodity customer does not specify
13 a jurisdiction as provided in subparagraphs (i) or
14 (ii), the commodity intermediary's jurisdiction is
15 the jurisdiction in which is located the office
16 identified in an account statement as the office
17 serving the commodity customer's account.
18 (iv) If an agreement between the commodity
19 intermediary and commodity customer does not specify
20 a jurisdiction as provided in subparagraphs (i) or
21 (ii) and an account statement does not identify an
22 office serving the commodity customer's account as
23 provided in subparagraph (iii), the commodity
24 intermediary's jurisdiction is the jurisdiction in
25 which is located the chief executive office of the
26 commodity intermediary.
27 (f) Perfection of a security interest by filing,
28 automatic perfection of a security interest in investment
29 property granted by a broker or securities intermediary,
30 and automatic perfection of a security interest in a
31 commodity contract or commodity account granted by a
32 commodity intermediary are governed by the local law of
33 the jurisdiction in which the debtor is located.
34 (Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97;
-30- LRB9112852JSpc
1 89-626, eff. 8-9-96.)
2 (810 ILCS 5/9-104) (from Ch. 26, par. 9-104)
3 Sec. 9-104. Control of deposit account.
4 (a) Requirements for control. A secured party has
5 control of a deposit account if:
6 (1) the secured party is the bank with which the
7 deposit account is maintained;
8 (2) the debtor, secured party, and bank have agreed
9 in an authenticated record that the bank will comply with
10 instructions originated by the secured party directing
11 disposition of the funds in the deposit account without
12 further consent by the debtor; or
13 (3) the secured party becomes the bank's customer
14 with respect to the deposit account.
15 (b) Debtor's right to direct disposition. A secured
16 party that has satisfied subsection (a) has control, even if
17 the debtor retains the right to direct the disposition of
18 funds from the deposit account. Transactions excluded from
19 Article.
20 This Article does not apply
21 (a) to a security interest subject to any statute
22 of the United States to the extent that such statute
23 governs the rights of parties to and third parties
24 affected by transactions in particular types of property;
25 or
26 (b) to a landlord's lien; or
27 (c) to a lien given by statute or other rule of law
28 for services or materials except as provided in Section
29 9-310 on priority of such liens; or
30 (d) to a transfer of a claim for wages, salary or
31 other compensation of an employee; or
32 (e) to a transfer by a government or governmental
33 subdivision or agency; or
-31- LRB9112852JSpc
1 (f) to a sale of accounts or chattel paper as part
2 of a sale of the business out of which they arose, or an
3 assignment of accounts or chattel paper which is for the
4 purpose of collection only, or a transfer of a right to
5 payment under a contract to an assignee who is also to do
6 the performance under the contract or a transfer of a
7 single account to an assignee in whole or partial
8 satisfaction of a preexisting indebtedness; or
9 (g) to a transfer of an interest or claim in or
10 under any policy of insurance, except as provided with
11 respect to proceeds (Section 9-306) and priorities in
12 proceeds (Section 9-312); or
13 (h) to a right represented by a judgment (other
14 than a judgment taken on a right to payment which was
15 collateral); or
16 (i) to any right of set-off; or
17 (j) except to the extent that provision is made for
18 fixtures in Section 9-313, to the creation or transfer of
19 an interest in or lien on real estate, including a lease
20 or rents thereunder; or
21 (k) to a transfer in whole or in part of any claim
22 arising out of tort; or
23 (l) to a transfer of an interest in a letter of
24 credit other than the rights to proceeds of a written
25 letter of credit.
26 (Source: P.A. 89-534, eff. 1-1-97.)
27 (810 ILCS 5/9-105) (from Ch. 26, par. 9-105)
28 Sec. 9-105. Control of electronic chattel paper. A
29 secured party has control of electronic chattel paper if the
30 record or records comprising the chattel paper are created,
31 stored, and assigned in such a manner that:
32 (1) a single authoritative copy of the record or
33 records exists which is unique, identifiable and, except
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1 as otherwise provided in paragraphs (4), (5), and (6),
2 unalterable;
3 (2) the authoritative copy identifies the secured
4 party as the assignee of the record or records;
5 (3) the authoritative copy is communicated to and
6 maintained by the secured party or its designated
7 custodian;
8 (4) copies or revisions that add or change an
9 identified assignee of the authoritative copy can be made
10 only with the participation of the secured party;
11 (5) each copy of the authoritative copy and any
12 copy of a copy is readily identifiable as a copy that is
13 not the authoritative copy; and
14 (6) any revision of the authoritative copy is
15 readily identifiable as an authorized or unauthorized
16 revision. Definitions and index of definitions.
17 (1) In this Article unless the context otherwise
18 requires:
19 (a) "Account debtor" means the person who is
20 obligated on an account, chattel paper or general
21 intangible;
22 (b) "Chattel paper" means a writing or writings
23 which evidence both a monetary obligation and a security
24 interest in or a lease of specific goods, but a charter
25 or other contract involving the use or hire of a vessel
26 is not chattel paper. When a transaction is evidenced
27 both by such a security agreement or a lease and by an
28 instrument or a series of instruments, the group of
29 writings taken together constitutes chattel paper;
30 (c) "Collateral" means the property subject to a
31 security interest, and includes accounts and chattel
32 paper which have been sold;
33 (d) "Debtor" means the person who owes payment or
34 other performance of the obligation secured, whether or
-33- LRB9112852JSpc
1 not he owns or has rights in the collateral, and includes
2 the seller of accounts or chattel paper. Where the debtor
3 and the owner of the collateral are not the same person,
4 the term "debtor" means the owner of the collateral in
5 any provision of the Article dealing with the collateral,
6 the obligor in any provision dealing with the obligation,
7 and may include both where the context so requires;
8 (e) "Deposit account" means a demand, time,
9 savings, passbook or like account maintained with a bank,
10 as defined in subsection (1) of Section 4-105, other than
11 an account evidenced by a certificate of deposit;
12 (f) "Document" means document of title as defined
13 in the general definitions of Article 1 (Section 1-201),
14 and a receipt of the kind described in subsection (2) of
15 Section 7-201;
16 (g) "Encumbrance" includes real estate mortgages
17 and other liens on real estate and all other rights in
18 real estate that are not ownership interests;
19 (h) "Goods" includes all things which are movable
20 at the time the security interest attaches or which are
21 fixtures (Section 9-313), but does not include money,
22 documents, instruments, investment property, commodity
23 contracts, accounts, chattel paper, general intangibles,
24 or minerals or the like (including oil and gas) before
25 extraction. "Goods" also includes standing timber which
26 is to be cut and removed under a conveyance or contract
27 for sale, the unborn young of animals, and growing crops;
28 (i) "Instrument" means a negotiable instrument
29 (defined in Section 3-104), a non-transferable
30 certificate of deposit, a non-negotiable certificate of
31 deposit, or any other writing which evidences a right to
32 the payment of money and is not itself a security
33 agreement or lease and is of a type which is in ordinary
34 course of business transferred by delivery with any
-34- LRB9112852JSpc
1 necessary indorsement or assignment. The term does not
2 include investment property;
3 (j) "Mortgage" means a consensual interest created
4 by a real estate mortgage, a trust deed on real estate,
5 or the like;
6 (j-5) "Non-negotiable certificate of deposit" means
7 a written document issued by a bank, as defined in
8 subsection (1) of Section 4-105, that contains an
9 acknowledgement that a sum of money has been received by
10 the issuer and a promise by the issuer to repay the sum
11 of money, and is not a negotiable instrument as defined
12 in Section 3-104;
13 (j-7) "Non-transferable certificate of deposit"
14 means a non-negotiable certificate of deposit which may
15 not be transferred except on the books of the issuer,
16 with the consent of the issuer, or is subject to other
17 restrictions or conditions of the issuer on transfer;
18 (k) An advance is made "pursuant to commitment" if
19 the secured party has bound himself to make it, whether
20 or not a subsequent event of default or other event not
21 within his control has relieved or may relieve him from
22 his obligation;
23 (l) "Security agreement" means an agreement which
24 creates or provides for a security interest;
25 (m) "Secured party" means a lender, seller or other
26 person in whose favor there is a security interest,
27 including a person to whom accounts or chattel paper have
28 been sold. When the holders of obligations issued under
29 an indenture of trust, equipment trust agreement or the
30 like are represented by a trustee or other person, the
31 representative is the secured party;
32 (n) "Transmitting utility" means any person
33 primarily engaged in the railroad, street railway or
34 trolley bus business, the electric or electronics
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1 communications transmission business, the transmission of
2 goods by pipeline, or the distribution, transmission, or
3 the production and transmission of electricity, steam,
4 gas or water, or the provision of sewer service.
5 (o) "Uncertificated certificate of deposit" means an
6 obligation of a bank, as defined in subsection (1) of Section
7 4-105, to repay a sum of money it has received, that is not a
8 deposit account and is not represented by a writing, but only
9 by an entry on the books of the bank and any documentation
10 given to the customer by the bank.
11 (2) Other definitions applying to this Article and the
12 Sections in which they appear are:
13 "Account". Section 9-106.
14 "Attach". Section 9-203.
15 "Commodity contract". Section 9-115.
16 "Commodity customer". Section 9-115.
17 "Commodity intermediary". Section 9-115.
18 "Construction mortgage". Section 9-313 (1).
19 "Consumer goods". Section 9-109 (1).
20 "Control". Section 9-115.
21 "Equipment". Section 9-109 (2).
22 "Farm products". Section 9-109 (3).
23 "Fixture". Section 9-313 (1).
24 "Fixture filing". Section 9-313 (1).
25 "General intangibles". Section 9-106.
26 "Inventory". Section 9-109 (4).
27 "Investment property". Section 9-115.
28 "Lien creditor". Section 9-301 (3).
29 "Proceeds". Section 9-306 (1).
30 "Purchase money security interest". Section 9-107.
31 "United States". Section 9-103.
32 (3) The following definitions in other Articles apply to
33 this Article:
34 "Bank". Section 4-105.
-36- LRB9112852JSpc
1 "Broker". Section 8-102.
2 "Certificated security". Section 8-102.
3 "Check". Section 3-104.
4 "Clearing corporation". Section 8-102.
5 "Contract for sale". Section 2-106.
6 "Control". Section 8-106.
7 "Delivery". Section 8-301.
8 "Entitlement holder". Section 8-102.
9 "Financial asset". Section 8-102.
10 "Holder in due course". Section 3-302.
11 "Letter of credit". Section 5-102.
12 "Note". Section 3-104.
13 "Proceeds of a letter of credit". Section 5-114(a).
14 "Sale". Section 2-106.
15 "Securities intermediary". Section 8-102.
16 "Security". Section 8-102.
17 "Security certificate". Section 8-102.
18 "Security entitlement". Section 8-102.
19 "Uncertificated security". Section 8-102.
20 (4) In addition Article 1 contains general definitions
21 and principles of construction and interpretation applicable
22 throughout this Article.
23 (Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97;
24 90-665, eff. 7-30-98.)
25 (810 ILCS 5/9-106) (from Ch. 26, par. 9-106)
26 Sec. 9-106. Control of investment property.
27 (a) Control under Section 8-106. A person has control
28 of a certificated security, uncertificated security, or
29 security entitlement as provided in Section 8-106.
30 (b) Control of commodity contract. A secured party has
31 control of a commodity contract if:
32 (1) the secured party is the commodity intermediary
33 with which the commodity contract is carried; or
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1 (2) the commodity customer, secured party, and
2 commodity intermediary have agreed that the commodity
3 intermediary will apply any value distributed on account
4 of the commodity contract as directed by the secured
5 party without further consent by the commodity customer.
6 (c) Effect of control of securities account or commodity
7 account. A secured party having control of all security
8 entitlements or commodity contracts carried in a securities
9 account or commodity account has control over the securities
10 account or commodity account. Definitions: "account";
11 "general intangibles". "Account" means any right to payment
12 for goods sold or leased or for services rendered which is
13 not evidenced by an instrument or chattel paper, whether or
14 not it has been earned by performance. "General intangibles"
15 means any personal property (including things in action)
16 other than goods, accounts, chattel paper, documents,
17 instruments, investment property, rights to proceeds of
18 written letters of credit, deposit accounts, uncertificated
19 certificates of deposit, and money. All rights to payment
20 earned or unearned under a charter or other contract
21 involving the use or hire of a vessel and all rights incident
22 to the charter or contract are accounts.
23 (Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97;
24 90-665, eff. 7-30-98.)
25 (810 ILCS 5/9-107) (from Ch. 26, par. 9-107)
26 Sec. 9-107. Control of letter-of-credit right. A
27 secured party has control of a letter-of-credit right to the
28 extent of any right to payment or performance by the issuer
29 or any nominated person if the issuer or nominated person has
30 consented to an assignment of proceeds of the letter of
31 credit under Section 5-114(c) or otherwise applicable law or
32 practice. Definitions: "purchase money security interest".
33 A security interest is a "purchase money security
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1 interest" to the extent that it is
2 (a) taken or retained by the seller of the
3 collateral to secure all or part of its price; or
4 (b) taken by a person who by making advances or
5 incurring an obligation gives value to enable the debtor to
6 acquire rights in or the use of collateral if such value is
7 in fact so used.
8 (Source: Laws 1961, p. 2101.)
9 (810 ILCS 5/9-108) (from Ch. 26, par. 9-108)
10 Sec. 9-108. Sufficiency of description.
11 (a) Sufficiency of description. Except as otherwise
12 provided in subsections (c), (d), and (e), a description of
13 personal or real property is sufficient, whether or not it is
14 specific, if it reasonably identifies what is described. A
15 description of goods may be sufficient even though it omits
16 the make, model, or serial number of the goods.
17 (b) Examples of reasonable identification. Except as
18 otherwise provided in subsection (d), a description of
19 collateral reasonably identifies the collateral if it
20 identifies the collateral by:
21 (1) specific listing;
22 (2) category;
23 (3) except as otherwise provided in subsection (e),
24 a type of collateral defined in the Uniform Commercial
25 Code;
26 (4) quantity;
27 (5) computational or allocational formula or
28 procedure;
29 (6) if a description of the real estate related to
30 crops growing or to be grown is included, the
31 quarter-section, section, township, and range of the real
32 estate concerned and the name of the record owner if
33 other than the debtor; or
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1 (7) except as otherwise provided in subsection (c),
2 any other method, if the identity of the collateral is
3 objectively determinable.
4 (c) Supergeneric description not sufficient. A
5 description of collateral as "all the debtor's assets" or
6 "all the debtor's personal property" or using words of
7 similar import does not reasonably identify the collateral.
8 (d) Investment property. Except as otherwise provided
9 in subsection (e), a description of a security entitlement,
10 securities account, or commodity account is sufficient if it
11 describes:
12 (1) the collateral by those terms or as investment
13 property; or
14 (2) the underlying financial asset or commodity
15 contract.
16 (e) When description by type insufficient. A
17 description only by type of collateral defined in the Uniform
18 Commercial Code is an insufficient description of:
19 (1) a commercial tort claim; or
20 (2) in a consumer transaction, consumer goods, a
21 security entitlement, a securities account, or a
22 commodity account. When after-acquired collateral not
23 security for antecedent debt.
24 Where a secured party makes an advance, incurs an
25 obligation, releases a perfected security interest, or
26 otherwise gives new value which is to be secured in whole or
27 in part by after-acquired property his security interest in
28 the after-acquired collateral shall be deemed to be taken for
29 new value and not as security for an antecedent debt if the
30 debtor acquires his rights in such collateral either in the
31 ordinary course of his business or under a contract of
32 purchase made pursuant to the security agreement within a
33 reasonable time after new value is given.
34 (Source: Laws 1961, p. 2101.)
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1 (810 ILCS 5/Art. 9, Part 1, Subpart 2 heading new)
2 SUBPART 2. APPLICABILITY OF ARTICLE
3 (810 ILCS 5/9-109) (from Ch. 26, par. 9-109)
4 Sec. 9-109. Scope.
5 (a) General scope of Article. Except as otherwise
6 provided in subsections (c) and (d), this Article applies to:
7 (1) a transaction, regardless of its form, that
8 creates a security interest in personal property or
9 fixtures by contract;
10 (2) an agricultural lien;
11 (3) a sale of accounts, chattel paper, payment
12 intangibles, or promissory notes;
13 (4) a consignment;
14 (5) a security interest arising under Section
15 2-401, 2-505, 2-711(3), or 2A-508(5), as provided in
16 Section 9-110; and
17 (6) a security interest arising under Section 4-210
18 or 5-118.
19 (b) Security interest in secured obligation. The
20 application of this Article to a security interest in a
21 secured obligation is not affected by the fact that the
22 obligation is itself secured by a transaction or interest to
23 which this Article does not apply.
24 (c) Extent to which Article does not apply. This
25 Article does not apply to the extent that:
26 (1) a statute, regulation, or treaty of the United
27 States preempts this Article;
28 (2) another statute of this State expressly governs
29 the creation, perfection, priority, or enforcement of a
30 security interest created by this State or a governmental
31 unit of this State;
32 (3) a statute of another State, a foreign country,
33 or a governmental unit of another State or a foreign
-41- LRB9112852JSpc
1 country, other than a statute generally applicable to
2 security interests, expressly governs creation,
3 perfection, priority, or enforcement of a security
4 interest created by the State, country, or governmental
5 unit;
6 (4) the rights of a transferee beneficiary or
7 nominated person under a letter of credit are independent
8 and superior under Section 5-114; or
9 (5) this Article is in conflict with Section
10 205-410 of the Department of Agriculture Law of the Civil
11 Administrative Code of Illinois or the Grain Code.
12 (d) Inapplicability of Article. This Article does not
13 apply to:
14 (1) a landlord's lien, other than an agricultural
15 lien;
16 (2) a lien, other than an agricultural lien, given
17 by statute or other rule of law for services or
18 materials, but Section 9-333 applies with respect to
19 priority of the lien;
20 (3) an assignment of a claim for wages, salary, or
21 other compensation of an employee;
22 (4) a sale of accounts, chattel paper, payment
23 intangibles, or promissory notes as part of a sale of the
24 business out of which they arose;
25 (5) an assignment of accounts, chattel paper,
26 payment intangibles, or promissory notes which is for the
27 purpose of collection only;
28 (6) an assignment of a right to payment under a
29 contract to an assignee that is also obligated to perform
30 under the contract;
31 (7) an assignment of a single account, payment
32 intangible, or promissory note to an assignee in full or
33 partial satisfaction of a preexisting indebtedness;
34 (8) a transfer of an interest in or an assignment
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1 of a claim under a policy of insurance, other than an
2 assignment by or to a health-care provider of a
3 health-care-insurance receivable and any subsequent
4 assignment of the right to payment, but Sections 9-315
5 and 9-322 apply with respect to proceeds and priorities
6 in proceeds;
7 (9) an assignment of a right represented by a
8 judgment, other than a judgment taken on a right to
9 payment that was collateral;
10 (10) a right of recoupment or set-off, but:
11 (A) Section 9-340 applies with respect to the
12 effectiveness of rights of recoupment or set-off
13 against deposit accounts; and
14 (B) Section 9-404 applies with respect to
15 defenses or claims of an account debtor;
16 (11) the creation or transfer of an interest in or
17 lien on real property, including a lease or rents
18 thereunder, except to the extent that provision is made
19 for:
20 (A) liens on real property in Sections 9-203
21 and 9-308;
22 (B) fixtures in Section 9-334;
23 (C) fixture filings in Sections 9-501, 9-502,
24 9-512, 9-516, and 9-519; and
25 (D) security agreements covering personal and
26 real property in Section 9-604; or
27 (12) an assignment of a claim arising in tort,
28 other than a commercial tort claim, but Sections 9-315
29 and 9-322 apply with respect to proceeds and priorities
30 in proceeds. Classification of goods; "consumer goods";
31 "equipment"; "farm products"; "inventory". Goods are
32 (1) "consumer goods" if they are used or bought for use
33 primarily for personal, family or household purposes;
34 (2) "equipment" if they are used or bought for use
-43- LRB9112852JSpc
1 primarily in business (including farming or a profession) or
2 by a debtor who is a non-profit organization or a
3 governmental subdivision or agency or if the goods are not
4 included in the definitions of inventory, farm products or
5 consumer goods;
6 (3) "farm products" if they are crops or livestock or
7 supplies used or produced in farming operations or if they
8 are products of crops or livestock in their unmanufactured
9 states (such as ginned cotton, wool-clip, maple syrup, milk
10 and eggs) or if they are aquatic products as defined in the
11 Aquaculture Development Act, and if they are in the
12 possession of a debtor engaged in raising, fattening, grazing
13 or other farming or aquacultural operations. If goods are
14 farm products they are neither equipment nor inventory;
15 (4) "inventory" if they are held by a person who holds
16 them for sale or lease or to be furnished under contracts of
17 service or if he has so furnished them, or if they are raw
18 materials, work in process or materials used or consumed in a
19 business. Inventory of a person is not to be classified as
20 his equipment.
21 (Source: P.A. 85-856.)
22 (810 ILCS 5/9-110) (from Ch. 26, par. 9-110)
23 Sec. 9-110. Security interests arising under Article 2
24 or 2A. A security interest arising under Section 2-401,
25 2-505, 2-711(3), or 2A-508(5) is subject to this Article.
26 However, until the debtor obtains possession of the goods:
27 (1) the security interest is enforceable, even if
28 Section 9-203(b)(3) has not been satisfied;
29 (2) filing is not required to perfect the security
30 interest;
31 (3) the rights of the secured party after default
32 by the debtor are governed by Article 2 or 2A; and
33 (4) the security interest has priority over a
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1 conflicting security interest created by the debtor.
2 Sufficiency of description.
3 For the purposes of this Article any description of
4 personal property or real estate is sufficient whether or not
5 it is specific if it reasonably identifies what is described.
6 (Source: Laws 1961, p. 2101.)
7 (810 ILCS 5/9-112) (from Ch. 26, par. 9-112)
8 Sec. 9-112. (Blank). Where collateral is not owned by
9 debtor.
10 Unless otherwise agreed, when a secured party knows that
11 collateral is owned by a person who is not the debtor, the
12 owner of the collateral is entitled to receive from the
13 secured party any surplus under Section 9-- 502(2) or under
14 Section 9--504(1), and is not liable for the debt or for any
15 deficiency after resale, and he has the same right as the
16 debtor
17 (a) to receive statements under Section 9--208;
18 (b) to receive notice of and to object to a secured
19 party's proposal to retain the collateral in satisfaction of
20 the indebtedness under Section 9--505;
21 (c) to redeem the collateral under Section 9--506;
22 (d) to obtain injunctive or other relief under
23 Section 9--507(1); and
24 (e) to recover losses caused to him under Section
25 9--208(2).
26 (Source: Laws 1961, 1st S.S., p. 7.)
27 (810 ILCS 5/9-113) (from Ch. 26, par. 9-113)
28 Sec. 9-113. (Blank). Security interests arising under
29 Article on Sales or under Article on Leases.
30 A security interest arising solely under the Article on
31 Sales (Article 2) or the Article on Leases (Article 2A) is
32 subject to the provisions of this Article except that to the
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1 extent that and so long as the debtor does not have or does
2 not lawfully obtain possession of the goods
3 (a) no security agreement is necessary to make the
4 security interest enforceable; and
5 (b) no filing is required to perfect the security
6 interest; and
7 (c) the rights of the secured party on default by
8 the debtor are governed (i) by the Article on Sales
9 (Article 2) in the case of a security interest arising
10 solely under such Article or (ii) by the Article on
11 Leases (Article 2A) in the case of a security interest
12 arising solely under such Article.
13 (Source: P.A. 87-493.)
14 (810 ILCS 5/9-114) (from Ch. 26, par. 9-114)
15 Sec. 9-114. (Blank). Consignment.
16 (1) A person who delivers goods under a consignment
17 which is not a security interest and who would be required to
18 file under this Article by paragraph (3) (c) of Section 2-326
19 has priority over a secured party who is or becomes a
20 creditor of the consignee and who would have a perfected
21 security interest in the goods if they were the property of
22 the consignee, and also has priority with respect to
23 identifiable cash proceeds received on or before delivery of
24 the goods to a buyer, if
25 (a) the consignor complies with the filing provision of
26 the Article on Sales with respect to consignments (paragraph
27 (3) (c) of Section 2-326 before the consignee receives
28 possession of the goods; and
29 (b) the consignor gives notification in writing to the
30 holder of the security interest if the holder has filed a
31 financing statement covering the same types of goods before
32 the date of the filing made by the consignor; and
33 (c) the holder of the security interest receives the
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1 notification within 5 years before the consignee receives
2 possession of the goods; and
3 (d) the notification states that the consignor expects
4 to deliver goods on consignment to the consignee, describing
5 the goods by item or type.
6 (2) In the case of a consignment which is not a security
7 interest and in which the requirements of the preceding
8 subsection have not been met, a person who delivers goods to
9 another is subordinate to a person who would have a perfected
10 security interest in the goods if they were the property of
11 the debtor.
12 (Source: P.A. 78-238.)
13 (810 ILCS 5/9-115) (from Ch. 26, par. 9-115)
14 Sec. 9-115. (Blank). Investment property.
15 (1) In this Article:
16 (a) "Commodity account" means an account maintained
17 by a commodity intermediary in which a commodity contract
18 is carried for a commodity customer.
19 (b) "Commodity contract" means a commodity futures
20 contract, an option on a commodity futures contract, a
21 commodity option, or other contract that, in each case,
22 is:
23 (i) traded on or subject to the rules of a
24 board of trade that has been designated as a
25 contract market for such a contract pursuant to the
26 federal commodities laws; or
27 (ii) traded on a foreign commodity board of
28 trade, exchange, or market, and is carried on the
29 books of a commodity intermediary for a commodity
30 customer.
31 (c) "Commodity customer" means a person for whom a
32 commodity intermediary carries a commodity contract on
33 its books.
-47- LRB9112852JSpc
1 (d) "Commodity intermediary" means:
2 (i) a person who is registered as a futures
3 commission merchant under the federal commodities
4 laws; or
5 (ii) a person who in the ordinary course of
6 its business provides clearance or settlement
7 services for a board of trade that has been
8 designated as a contract market pursuant to the
9 federal commodities laws.
10 (e) "Control" with respect to a certificated
11 security, uncertificated security, or security
12 entitlement has the meaning specified in Section 8-106.
13 A secured party has control over a commodity contract if
14 by agreement among the commodity customer, the commodity
15 intermediary, and the secured party, the commodity
16 intermediary has agreed that it will apply any value
17 distributed on account of the commodity contract as
18 directed by the secured party without further consent by
19 the commodity customer. If a commodity customer grants a
20 security interest in a commodity contract to its own
21 commodity intermediary, the commodity intermediary as
22 secured party has control. A secured party has control
23 over a securities account or commodity account if the
24 secured party has control over all security entitlements
25 or commodity contracts carried in the securities account
26 or commodity account.
27 (f) "Investment property" means:
28 (i) a security, whether certificated or
29 uncertificated;
30 (ii) a security entitlement;
31 (iii) a securities account;
32 (iv) a commodity contract; or
33 (v) a commodity account.
34 (2) Attachment or perfection of a security interest in a
-48- LRB9112852JSpc
1 securities account is also attachment or perfection of a
2 security interest in all security entitlements carried in the
3 securities account. Attachment or perfection of a security
4 interest in a commodity account is also attachment or
5 perfection of a security interest in all commodity contracts
6 carried in the commodity account.
7 (3) A description of collateral in a security agreement
8 or financing statement is sufficient to create or perfect a
9 security interest in a certificated security, uncertificated
10 security, security entitlement, securities account, commodity
11 contract, or commodity account whether it describes the
12 collateral by those terms, or as investment property, or by
13 description of the underlying security, financial asset, or
14 commodity contract. A description of investment property
15 collateral in a security agreement or financing statement is
16 sufficient if it identifies the collateral by specific
17 listing, by category, by quantity, by a computational or
18 allocational formula or procedure, or by any other method, if
19 the identity of the collateral is objectively determinable.
20 (4) Perfection of a security interest in investment
21 property is governed by the following rules:
22 (a) A security interest in investment property may
23 be perfected by control.
24 (b) Except as otherwise provided in paragraphs (c)
25 and (d), a security interest in investment property may
26 be perfected by filing.
27 (c) If the debtor is a broker or securities
28 intermediary a security interest in investment property
29 is perfected when it attaches. The filing of a financing
30 statement with respect to a security interest in
31 investment property granted by a broker or securities
32 intermediary has no effect for purposes of perfection or
33 priority with respect to that security interest.
34 (d) If a debtor is a commodity intermediary, a
-49- LRB9112852JSpc
1 security interest in a commodity contract or a commodity
2 account is perfected when it attaches. The filing of a
3 financing statement with respect to a security interest
4 in a commodity contract or a commodity account granted by
5 a commodity intermediary has no effect for purposes of
6 perfection or priority with respect to that security
7 interest.
8 (5) Priority between conflicting security interests in
9 the same investment property is governed by the following
10 rules:
11 (a) A security interest of a secured party who has
12 control over investment property has priority over a
13 security interest of a secured party who does not have
14 control over the investment property.
15 (b) Except as otherwise provided in paragraphs (c)
16 and (d), conflicting security interests of secured
17 parties each of whom has control rank equally.
18 (c) Except as otherwise agreed by the securities
19 intermediary, a security interest in a security
20 entitlement or a securities account granted to the
21 debtor's own securities intermediary has priority over
22 any security interest granted by the debtor to another
23 secured party.
24 (d) Except as otherwise agreed by the commodity
25 intermediary, a security interest in a commodity contract
26 or a commodity account granted to the debtor's own
27 commodity intermediary has priority over any security
28 interest granted by the debtor to another secured party.
29 (e) Conflicting security interests granted by a
30 broker, a securities intermediary, or a commodity
31 intermediary which are perfected without control rank
32 equally.
33 (f) In all other cases, priority between
34 conflicting security interests in investment property is
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1 governed by Section 9-312(5), (6), and (7). Section
2 9-312(4) does not apply to investment property.
3 (6) If a security certificate in registered form is
4 delivered to a secured party pursuant to agreement, a written
5 security agreement is not required for attachment or
6 enforceability of the security interest, delivery suffices
7 for perfection of the security interest, and the security
8 interest has priority over a conflicting security interest
9 perfected by means other than control, even if a necessary
10 indorsement is lacking.
11 (Source: P.A. 89-364, eff. 1-1-96.)
12 (810 ILCS 5/9-116)
13 Sec. 9-116. (Blank). Security interest arising in
14 purchase or delivery of financial asset.
15 (1) If a person buys a financial asset through a
16 securities intermediary in a transaction in which the buyer
17 is obligated to pay the purchase price to the securities
18 intermediary at the time of the purchase, and the securities
19 intermediary credits the financial asset to the buyer's
20 securities account before the buyer pays the securities
21 intermediary, the securities intermediary has a security
22 interest in the buyer's security entitlement securing the
23 buyer's obligation to pay. A security agreement is not
24 required for attachment or enforceability of the security
25 interest, and the security interest is automatically
26 perfected.
27 (2) If a certificated security, or other financial asset
28 represented by a writing which in the ordinary course of
29 business is transferred by delivery with any necessary
30 indorsement or assignment is delivered pursuant to an
31 agreement between persons in the business of dealing with
32 such securities or financial assets and the agreement calls
33 for delivery versus payment, the person delivering the
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1 certificate or other financial asset has a security interest
2 in the certificated security or other financial asset
3 securing the seller's right to receive payment. A security
4 agreement is not required for attachment or enforceability of
5 the security interest, and the security interest is
6 automatically perfected.
7 (Source: P.A. 89-364, eff. 1-1-96.)
8 (810 ILCS 5/9-150)
9 Sec. 9-150. (Blank). Secretary of State; rules. The
10 Secretary of State, under the Illinois Administrative
11 Procedure Act, may adopt rules necessary to administer the
12 Secretary of State's responsibilities under this Article.
13 (Source: P.A. 89-364, eff. 1-1-96.)
14 (810 ILCS 5/Art. 9, Part 2 heading)
15 PART 2. EFFECTIVENESS OF SECURITY AGREEMENT;
16 ATTACHMENT OF SECURITY INTEREST;
17 RIGHTS OF PARTIES TO SECURITY AGREEMENT
18 VALIDITY OF SECURITY AGREEMENT
19 AND RIGHTS OF PARTIES THERETO
20 (810 ILCS 5/Art. 9, Part 2, Subpart 1 heading new)
21 SUBPART 1. EFFECTIVENESS AND ATTACHMENT
22 (810 ILCS 5/9-201) (from Ch. 26, par. 9-201)
23 Sec. 9-201. General effectiveness of security agreement.
24 (a) General effectiveness. Except as otherwise provided
25 in the Uniform Commercial Code, a security agreement is
26 effective according to its terms between the parties, against
27 purchasers of the collateral, and against creditors.
28 (b) Applicable consumer laws and other law. A
29 transaction subject to this Article is subject to any
30 applicable rule of law which establishes a different rule for
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1 consumers and:
2 (1) the Retail Installment Sales Act;
3 (2) the Motor Vehicle Retail Installment Sales Act;
4 (3) Article II of Chapter 3 of the Illinois Vehicle
5 Code;
6 (4) Article IIIB of the Boat Registration and
7 Safety Act;
8 (5) the Pawnbroker Regulation Act;
9 (6) the Motor Vehicle Leasing Act;
10 (7) the Consumer Installment Loan Act; and
11 (8) the Consumer Deposit Security Act of 1987.
12 (c) Other applicable law controls. In case of conflict
13 between this Article and a rule of law, statute, or
14 regulation described in subsection (b), the rule of law,
15 statute, or regulation controls. Failure to comply with any
16 other statute, rule of law, or regulation, including, without
17 limitation, those described in subsection (b), has only the
18 effect such other rule of law, statute, or regulation
19 specifies.
20 (d) Further deference to other applicable law. This
21 Article does not:
22 (1) validate any rate, charge, agreement, or
23 practice that violates a rule of law, statute, or
24 regulation described in subsection (b); or
25 (2) extend the application of the rule of law,
26 statute, or regulation to a transaction not otherwise
27 subject to it. General validity of security agreement.
28 Except as otherwise provided by this Act a security
29 agreement is effective according to its terms between the
30 parties, against purchasers of the collateral and against
31 creditors. Nothing in this Article validates any charge or
32 practice illegal under any statute or regulation thereunder
33 governing usury, small loans, retail installment sales, or
34 the like, or extends the application of any such statute or
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1 regulation to any transaction not otherwise subject thereto.
2 (Source: Laws 1961, p. 2101.)
3 (810 ILCS 5/9-202) (from Ch. 26, par. 9-202)
4 Sec. 9-202. Title to collateral immaterial. Except as
5 otherwise provided with respect to consignments or sales of
6 accounts, chattel paper, payment intangibles, or promissory
7 notes, the provisions of this Article with regard to rights
8 and obligations apply whether title to collateral is in the
9 secured party or the debtor.
10 Each provision of this Article with regard to rights,
11 obligations and remedies applies whether title to collateral
12 is in the secured party or in the debtor.
13 (Source: Laws 1961, p. 2101.)
14 (810 ILCS 5/9-203) (from Ch. 26, par. 9-203)
15 Sec. 9-203. Attachment and enforceability of security
16 interest; proceeds; supporting obligations; formal
17 requisites.
18 (a) Attachment. A security interest attaches to
19 collateral when it becomes enforceable against the debtor
20 with respect to the collateral, unless an agreement expressly
21 postpones the time of attachment.
22 (b) Enforceability. Except as otherwise provided in
23 subsections (c) through (i), a security interest is
24 enforceable against the debtor and third parties with respect
25 to the collateral only if :
26 (1) value has been given;
27 (2) the debtor has rights in the collateral or the
28 power to transfer rights in the collateral to a secured
29 party; and
30 (3) one of the following conditions is met:
31 (A) the debtor has authenticated a security
32 agreement that provides a description of the
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1 collateral and, if the security interest covers
2 timber to be cut, a description of the land
3 concerned;
4 (B) the collateral is not a certificated
5 security and is in the possession of the secured
6 party under Section 9-313 pursuant to the debtor's
7 security agreement;
8 (C) the collateral is a certificated security
9 in registered form and the security certificate has
10 been delivered to the secured party under Section
11 8-301 pursuant to the debtor's security agreement;
12 or
13 (D) the collateral is deposit accounts,
14 electronic chattel paper, investment property, or
15 letter-of-credit rights, and the secured party has
16 control under Section 9-104, 9-105, 9-106, or 9-107
17 pursuant to the debtor's security agreement.
18 (c) Other UCC provisions. Subsection (b) is subject to
19 Section 4-210 on the security interest of a collecting bank,
20 Section 5-118 on the security interest of a letter-of-credit
21 issuer or nominated person, Section 9-110 on a security
22 interest arising under Article 2 or 2A, and Section 9-206 on
23 security interests in investment property.
24 (d) When person becomes bound by another person's
25 security agreement. A person becomes bound as debtor by a
26 security agreement entered into by another person if, by
27 operation of law other than this Article or by contract:
28 (1) the security agreement becomes effective to
29 create a security interest in the person's property; or
30 (2) the person becomes generally obligated for the
31 obligations of the other person, including the obligation
32 secured under the security agreement, and acquires or
33 succeeds to all or substantially all of the assets of the
34 other person.
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1 (e) Effect of new debtor becoming bound. If a new
2 debtor becomes bound as debtor by a security agreement
3 entered into by another person:
4 (1) the agreement satisfies subsection (b)(3) with
5 respect to existing or after-acquired property of the new
6 debtor to the extent the property is described in the
7 agreement; and
8 (2) another agreement is not necessary to make a
9 security interest in the property enforceable.
10 (f) Proceeds and supporting obligations. The attachment
11 of a security interest in collateral gives the secured party
12 the rights to proceeds provided by Section 9-315 and is also
13 attachment of a security interest in a supporting obligation
14 for the collateral.
15 (g) Lien securing right to payment. The attachment of a
16 security interest in a right to payment or performance
17 secured by a security interest or other lien on personal or
18 real property is also attachment of a security interest in
19 the security interest, mortgage, or other lien.
20 (h) Security entitlement carried in securities account.
21 The attachment of a security interest in a securities account
22 is also attachment of a security interest in the security
23 entitlements carried in the securities account.
24 (i) Commodity contracts carried in commodity account.
25 The attachment of a security interest in a commodity account
26 is also attachment of a security interest in the commodity
27 contracts carried in the commodity account. Attachment and
28 Enforceability of Security Interest; Proceeds; Requisites.
29 (1) Subject to the provisions of Section 4-208 on the
30 security interest of a collecting bank, Sections 9-115 and
31 9-116 on security interests in investment property, and
32 Section 9-113 on a security interest arising under the
33 Article on Sales, a security interest is not enforceable
34 against the debtor or third parties with respect to the
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1 collateral and does not attach unless:
2 (a) the collateral is in the possession of the
3 secured party pursuant to agreement, the collateral is
4 investment property and the secured party has control
5 pursuant to agreement, or the debtor has signed a
6 security agreement which contains a description of the
7 collateral and, in addition, a description of the land
8 when the security agreement covers (i) crops growing or
9 to be grown and is signed by the debtor prior to January
10 1, 1996, or (ii) timber to be cut;
11 (b) value has been given; and
12 (c) the debtor has rights in the collateral.
13 (2) A security interest attaches when it becomes
14 enforceable against the debtor with respect to the
15 collateral. Attachment occurs as soon as all of the events
16 specified in subsection (1) have taken place unless explicit
17 agreement postpones the time of attaching.
18 (3) Unless otherwise agreed a security agreement gives
19 the secured party the rights to proceeds provided by Section
20 9-306.
21 (4) A transaction, although subject to this Article, is
22 also subject to the "Consumer Finance Act", approved July 10,
23 1935, as now or hereafter amended; the "Retail Installment
24 Sales Act", approved July 28, 1967, as now or hereafter
25 amended; the "Motor Vehicle Retail Installment Sales Act",
26 approved July 28, 1967, as now or hereafter amended; Article
27 II of Chapter 3 of The Illinois Vehicle Code; Article IIIB of
28 the "Boat Registration and Safety Act", as now or hereafter
29 amended; and "An Act for the regulation of pawnbrokers, and
30 repealing a certain act therein named", approved June 9,
31 1909, as now or hereafter amended; and in the case of
32 conflict between the provisions of this Article and any such
33 statute, the provisions of such statute control. Failure to
34 comply with any applicable statute has only the effect which
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1 is specified therein.
2 (Source: P.A. 89-228, eff. 1-1-96; 89-364, eff. 1-1-96;
3 89-626, eff. 8-9-96.)
4 (810 ILCS 5/9-204) (from Ch. 26, par. 9-204)
5 Sec. 9-204. After-acquired property; future advances.
6 (a) After-acquired collateral. Except as otherwise
7 provided in subsection (b), a security agreement may create
8 or provide for a security interest in after-acquired
9 collateral.
10 (b) When after-acquired property clause not effective.
11 A security interest does not attach under a term constituting
12 an after-acquired property clause to:
13 (1) consumer goods, other than an accession when
14 given as additional security, unless the debtor acquires
15 rights in them within 10 days after the secured party
16 gives value; or
17 (2) a commercial tort claim.
18 (c) Future advances and other value. A security
19 agreement may provide that collateral secures, or that
20 accounts, chattel paper, payment intangibles, or promissory
21 notes are sold in connection with, future advances or other
22 value, whether or not the advances or value are given
23 pursuant to commitment. After-acquired property; future
24 advances.
25 (1) Except as provided in Subsection (2), a security
26 agreement may provide that any obligations covered by the
27 security agreement are to be secured by after-acquired
28 collateral.
29 (2) No security interest attaches under an
30 after-acquired property clause to consumer goods other than
31 accessions (Section 9-314) when given as additional security
32 unless the debtor acquires rights in them within 10 days
33 after the secured party gives value.
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1 (3) Obligations covered by a security agreement may
2 include future advances or other value whether or not the
3 advances or value are given pursuant to commitment
4 (subsection (1) of Section 9-105).
5 (Source: P.A. 77-2810.)
6 (810 ILCS 5/9-205) (from Ch. 26, par. 9-205)
7 Sec. 9-205. Use or disposition of collateral
8 permissible.
9 (a) When security interest not invalid or fraudulent. A
10 security interest is not invalid or fraudulent against
11 creditors solely because:
12 (1) the debtor has the right or ability to:
13 (A) use, commingle, or dispose of all or part
14 of the collateral, including returned or repossessed
15 goods;
16 (B) collect, compromise, enforce, or otherwise
17 deal with collateral;
18 (C) accept the return of collateral or make
19 repossessions; or
20 (D) use, commingle, or dispose of proceeds; or
21 (2) the secured party fails to require the debtor
22 to account for proceeds or replace collateral.
23 (b) Requirements of possession not relaxed. This
24 Section does not relax the requirements of possession if
25 attachment, perfection, or enforcement of a security interest
26 depends upon possession of the collateral by the secured
27 party. Use or Disposition of Collateral Without Accounting
28 Permissible.
29 A security interest is not invalid or fraudulent against
30 creditors by reason of liberty in the debtor to use,
31 commingle or dispose of all or part of the collateral
32 (including returned or repossessed goods) or to collect or
33 compromise accounts or chattel paper, or to accept the return
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1 of goods or make repossessions, or to use, commingle or
2 dispose of proceeds, or by reason of the failure of the
3 secured party to require the debtor to account for proceeds
4 or replace collateral. This Section does not relax the
5 requirements of possession where perfection of a security
6 interest depends upon possession of the collateral by the
7 secured party or by a bailee.
8 (Source: P.A. 77-2810.)
9 (810 ILCS 5/9-205.1) (from Ch. 26, par. 9-205.1)
10 Sec. 9-205.1. Listing by debtor of purchasers or
11 receivers of collateral. A secured party may require that
12 the debtor include as part of the security agreement a list
13 of persons to whom the debtor desires to sell or otherwise
14 dispose of the collateral. The debtor shall not sell or
15 otherwise dispose of the collateral to a person not included
16 in that list unless the debtor has notified the secured party
17 of his desire to sell or otherwise dispose of the collateral
18 to such person at least 7 days prior to the sale or other
19 disposition.
20 (Source: P.A. 83-69.)
21 (810 ILCS 5/9-206) (from Ch. 26, par. 9-206)
22 Sec. 9-206. Security interest arising in purchase or
23 delivery of financial asset.
24 (a) Security interest when person buys through
25 securities intermediary. A security interest in favor of a
26 securities intermediary attaches to a person's security
27 entitlement if:
28 (1) the person buys a financial asset through the
29 securities intermediary in a transaction in which the
30 person is obligated to pay the purchase price to the
31 securities intermediary at the time of the purchase; and
32 (2) the securities intermediary credits the
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1 financial asset to the buyer's securities account before
2 the buyer pays the securities intermediary.
3 (b) Security interest secures obligation to pay for
4 financial asset. The security interest described in
5 subsection (a) secures the person's obligation to pay for the
6 financial asset.
7 (c) Security interest in payment against delivery
8 transaction. A security interest in favor of a person that
9 delivers a certificated security or other financial asset
10 represented by a writing attaches to the security or other
11 financial asset if:
12 (1) the security or other financial asset:
13 (A) in the ordinary course of business is
14 transferred by delivery with any necessary
15 indorsement or assignment; and
16 (B) is delivered under an agreement between
17 persons in the business of dealing with such
18 securities or financial assets; and
19 (2) the agreement calls for delivery against
20 payment.
21 (d) Security interest secures obligation to pay for
22 delivery. The security interest described in subsection (c)
23 secures the obligation to make payment for the delivery.
24 Agreement not to assert defenses against assignee;
25 modification of sales warranties where security agreement
26 exists.
27 (1) Subject to any statute or decision which establishes
28 a different rule for buyers or lessees of consumer goods, an
29 agreement by a buyer or lessee that he will not assert
30 against an assignee any claim or defense which he may have
31 against the seller or lessor is enforceable by an assignee
32 who takes his assignment for value, in good faith and without
33 notice of a claim or defense, except as to defenses of a type
34 which may be asserted against a holder in due course of a
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1 negotiable instrument under the Article on Commercial Paper
2 (Article 3). A buyer who as part of one transaction signs
3 both a negotiable instrument and a security agreement makes
4 such an agreement.
5 (2) When a seller retains a purchase money security
6 interest in goods the Article on Sales (Article 2) governs
7 the sale and any disclaimer, limitation or modification of
8 the seller's warranties.
9 (Source: Laws 1965, p. 803.)
10 (810 ILCS 5/Art. 9, Part 2, Subpart 2 heading new)
11 SUBPART 2. RIGHTS AND DUTIES
12 (810 ILCS 5/9-207) (from Ch. 26, par. 9-207)
13 Sec. 9-207. Rights and duties of secured party having
14 possession or control of collateral.
15 (a) Duty of care when secured party in possession.
16 Except as otherwise provided in subsection (d), a secured
17 party shall use reasonable care in the custody and
18 preservation of collateral in the secured party's possession.
19 In the case of chattel paper or an instrument, reasonable
20 care includes taking necessary steps to preserve rights
21 against prior parties unless otherwise agreed.
22 (b) Expenses, risks, duties, and rights when secured
23 party in possession. Except as otherwise provided in
24 subsection (d), if a secured party has possession of
25 collateral:
26 (1) reasonable expenses, including the cost of
27 insurance and payment of taxes or other charges, incurred
28 in the custody, preservation, use, or operation of the
29 collateral are chargeable to the debtor and are secured
30 by the collateral;
31 (2) the risk of accidental loss or damage is on the
32 debtor to the extent of a deficiency in any effective
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1 insurance coverage;
2 (3) the secured party shall keep the collateral
3 identifiable, but fungible collateral may be commingled;
4 and
5 (4) the secured party may use or operate the
6 collateral:
7 (A) for the purpose of preserving the
8 collateral or its value;
9 (B) as permitted by an order of a court having
10 competent jurisdiction; or
11 (C) except in the case of consumer goods, in
12 the manner and to the extent agreed by the debtor.
13 (c) Duties and rights when secured party in possession
14 or control. Except as otherwise provided in subsection (d), a
15 secured party having possession of collateral or control of
16 collateral under Section 9-104, 9-105, 9-106, or 9-107:
17 (1) may hold as additional security any proceeds,
18 except money or funds, received from the collateral;
19 (2) shall apply money or funds received from the
20 collateral to reduce the secured obligation, unless
21 remitted to the debtor; and
22 (3) may create a security interest in the
23 collateral.
24 (d) Buyer of certain rights to payment. If the secured
25 party is a buyer of accounts, chattel paper, payment
26 intangibles, or promissory notes or a consignor:
27 (1) subsection (a) does not apply unless the
28 secured party is entitled under an agreement:
29 (A) to charge back uncollected collateral; or
30 (B) otherwise to full or limited recourse
31 against the debtor or a secondary obligor based on
32 the nonpayment or other default of an account debtor
33 or other obligor on the collateral; and
34 (2) subsections (b) and (c) do not apply. Rights
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1 and duties when collateral is in secured party's
2 possession.
3 (1) A secured party must use reasonable care in the
4 custody and preservation of collateral in his possession. In
5 the case of an instrument or chattel paper reasonable care
6 includes taking necessary steps to preserve rights against
7 prior parties unless otherwise agreed.
8 (2) Unless otherwise agreed, when collateral is in the
9 secured party's possession
10 (a) reasonable expenses (including the cost of any
11 insurance and payment of taxes or other charges) incurred in
12 the custody, preservation, use or operation of the collateral
13 are chargeable to the debtor and are secured by the
14 collateral;
15 (b) the risk of accidental loss or damage is on the
16 debtor to the extent of any deficiency in any effective
17 insurance coverage;
18 (c) the secured party may hold as additional
19 security any increase or profits (except money) received from
20 the collateral, but money so received, unless remitted to the
21 debtor, shall be applied in reduction of the secured
22 obligation;
23 (d) the secured party must keep the collateral
24 identifiable but fungible collateral may be commingled;
25 (e) the secured party may repledge the collateral
26 upon terms which do not impair the debtor's right to redeem
27 it.
28 (3) A secured party is liable for any loss caused by his
29 failure to meet any obligation imposed by the preceding
30 subsections but does not lose his security interest.
31 (4) A secured party may use or operate the collateral
32 for the purpose of preserving the collateral or its value or
33 pursuant to the order of a court of appropriate jurisdiction
34 or, except in the case of consumer goods, in the manner and
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1 to the extent provided in the security agreement.
2 (Source: Laws 1961, p. 2101.)
3 (810 ILCS 5/9-208) (from Ch. 26, par. 9-208)
4 Sec. 9-208. Additional duties of secured party having
5 control of collateral.
6 (a) Applicability of Section. This Section applies to
7 cases in which there is no outstanding secured obligation and
8 the secured party is not committed to make advances, incur
9 obligations, or otherwise give value.
10 (b) Duties of secured party after receiving demand from
11 debtor. Within 10 days after receiving an authenticated
12 demand by the debtor:
13 (1) a secured party having control of a deposit
14 account under Section 9-104(a)(2) shall send to the bank
15 with which the deposit account is maintained an
16 authenticated statement that releases the bank from any
17 further obligation to comply with instructions originated
18 by the secured party;
19 (2) a secured party having control of a deposit
20 account under Section 9-104(a)(3) shall:
21 (A) pay the debtor the balance on deposit in
22 the deposit account; or
23 (B) transfer the balance on deposit into a
24 deposit account in the debtor's name;
25 (3) a secured party, other than a buyer, having
26 control of electronic chattel paper under Section 9-105
27 shall:
28 (A) communicate the authoritative copy of the
29 electronic chattel paper to the debtor or its
30 designated custodian;
31 (B) if the debtor designates a custodian that
32 is the designated custodian with which the
33 authoritative copy of the electronic chattel paper
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1 is maintained for the secured party, communicate to
2 the custodian an authenticated record releasing the
3 designated custodian from any further obligation to
4 comply with instructions originated by the secured
5 party and instructing the custodian to comply with
6 instructions originated by the debtor; and
7 (C) take appropriate action to enable the
8 debtor or its designated custodian to make copies of
9 or revisions to the authoritative copy which add or
10 change an identified assignee of the authoritative
11 copy without the consent of the secured party;
12 (4) a secured party having control of investment
13 property under Section 8-106(d)(2) or 9-106(b) shall send
14 to the securities intermediary or commodity intermediary
15 with which the security entitlement or commodity contract
16 is maintained an authenticated record that releases the
17 securities intermediary or commodity intermediary from
18 any further obligation to comply with entitlement orders
19 or directions originated by the secured party; and
20 (5) a secured party having control of a
21 letter-of-credit right under Section 9-107 shall send to
22 each person having an unfulfilled obligation to pay or
23 deliver proceeds of the letter of credit to the secured
24 party an authenticated release from any further
25 obligation to pay or deliver proceeds of the letter of
26 credit to the secured party. Request for statement of
27 account or list of collateral.
28 (1) A debtor may sign a statement indicating what he
29 believes to be the aggregate amount of unpaid indebtedness as
30 of a specified date and may send it to the secured party with
31 a request that the statement be approved or corrected and
32 returned to the debtor. When the security agreement or any
33 other record kept by the secured party identifies the
34 collateral a debtor may similarly request the secured party
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1 to approve or correct a list of the collateral.
2 (2) The secured party must comply with such a request
3 within two weeks after receipt by sending a written
4 correction or approval. If the secured party claims a
5 security interest in all of a particular type of collateral
6 owned by the debtor he may indicate that fact in his reply
7 and need not approve or correct an itemized list of such
8 collateral. If the secured party without reasonable excuse
9 fails to comply he is liable for any loss caused to the
10 debtor thereby; and if the debtor has properly included in
11 his request a good faith statement of the obligation or a
12 list of the collateral or both the secured party may claim a
13 security interest only as shown in the statement against
14 persons misled by his failure to comply. If he no longer has
15 an interest in the obligation or collateral at the time the
16 request is received he must disclose the name and address of
17 any successor in interest known to him and he is liable for
18 any loss caused to the debtor as a result of failure to
19 disclose. A successor in interest is not subject to this
20 Section until a request is received by him.
21 (3) A debtor is entitled to such a statement once every
22 6 months without charge. The secured party may require
23 payment of a charge not exceeding $10 for each additional
24 statement furnished.
25 (Source: Laws 1961, p. 2101.)
26 (810 ILCS 5/9-209 new)
27 Sec. 9-209. Duties of secured party if account debtor
28 has been notified of assignment.
29 (a) Applicability of Section. Except as otherwise
30 provided in subsection (c), this Section applies if:
31 (1) there is no outstanding secured obligation; and
32 (2) the secured party is not committed to make
33 advances, incur obligations, or otherwise give value.
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1 (b) Duties of secured party after receiving demand from
2 debtor. Within 10 days after receiving an authenticated
3 demand by the debtor, a secured party shall send to an
4 account debtor that has received notification of an
5 assignment to the secured party as assignee under Section
6 9-406(a) an authenticated record that releases the account
7 debtor from any further obligation to the secured party.
8 (c) Inapplicability to sales. This Section does not
9 apply to an assignment constituting the sale of an account,
10 chattel paper, or payment intangible.
11 (810 ILCS 5/9-210 new)
12 Sec. 9-210. Request for accounting; request regarding
13 list of collateral or statement of account.
14 (a) Definitions. In this Section:
15 (1) "Request" means a record of a type described in
16 paragraph (2), (3), or (4).
17 (2) "Request for an accounting" means a record
18 authenticated by a debtor requesting that the recipient
19 provide an accounting of the unpaid obligations secured
20 by collateral and reasonably identifying the transaction
21 or relationship that is the subject of the request.
22 (3) "Request regarding a list of collateral" means
23 a record authenticated by a debtor requesting that the
24 recipient approve or correct a list of what the debtor
25 believes to be the collateral securing an obligation and
26 reasonably identifying the transaction or relationship
27 that is the subject of the request.
28 (4) "Request regarding a statement of account"
29 means a record authenticated by a debtor requesting that
30 the recipient approve or correct a statement indicating
31 what the debtor believes to be the aggregate amount of
32 unpaid obligations secured by collateral as of a
33 specified date and reasonably identifying the transaction
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1 or relationship that is the subject of the request.
2 (b) Duty to respond to requests. Subject to subsections
3 (c), (d), (e), and (f), a secured party, other than a buyer
4 of accounts, chattel paper, payment intangibles, or
5 promissory notes or a consignor, shall comply with a request
6 within 14 days after receipt:
7 (1) in the case of a request for an accounting, by
8 authenticating and sending to the debtor an accounting;
9 and
10 (2) in the case of a request regarding a list of
11 collateral or a request regarding a statement of account,
12 by authenticating and sending to the debtor an approval
13 or correction.
14 (c) Request regarding list of collateral; statement
15 concerning type of collateral. A secured party that claims a
16 security interest in all of a particular type of collateral
17 owned by the debtor may comply with a request regarding a
18 list of collateral by sending to the debtor an authenticated
19 record including a statement to that effect within 14 days
20 after receipt.
21 (d) Request regarding list of collateral; no interest
22 claimed. A person that receives a request regarding a list
23 of collateral, claims no interest in the collateral when it
24 receives the request, and claimed an interest in the
25 collateral at an earlier time shall comply with the request
26 within 14 days after receipt by sending to the debtor an
27 authenticated record:
28 (1) disclaiming any interest in the collateral; and
29 (2) if known to the recipient, providing the name
30 and mailing address of any assignee of or successor to
31 the recipient's interest in the collateral.
32 (e) Request for accounting or regarding statement of
33 account; no interest in obligation claimed. A person that
34 receives a request for an accounting or a request regarding a
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1 statement of account, claims no interest in the obligations
2 when it receives the request, and claimed an interest in the
3 obligations at an earlier time shall comply with the request
4 within 14 days after receipt by sending to the debtor an
5 authenticated record:
6 (1) disclaiming any interest in the obligations;
7 and
8 (2) if known to the recipient, providing the name
9 and mailing address of any assignee of or successor to
10 the recipient's interest in the obligations.
11 (f) Charges for responses. A debtor is entitled without
12 charge to one response to a request under this Section during
13 any six-month period. The secured party may require payment
14 of a charge not exceeding $25 for each additional response.
15 (810 ILCS 5/Art. 9, Part 3 heading)
16 PART 3. PERFECTION AND PRIORITY
17 RIGHTS OF THIRD PARTIES;
18 PERFECTED AND UNPERFECTED SECURITY
19 INTERESTS: RULES OF PRIORITY
20 (810 ILCS 5/Art. 9, Part 3, Subpart 1 heading new)
21 SUBPART 1. LAW GOVERNING PERFECTION AND PRIORITY
22 (810 ILCS 5/9-301) (from Ch. 26, par. 9-301)
23 Sec. 9-301. Law governing perfection and priority of
24 security interests. Except as otherwise provided in Sections
25 9-303 through 9-306, the following rules determine the law
26 governing perfection, the effect of perfection or
27 nonperfection, and the priority of a security interest in
28 collateral:
29 (1) Except as otherwise provided in this Section,
30 while a debtor is located in a jurisdiction, the local
31 law of that jurisdiction governs perfection, the effect
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1 of perfection or nonperfection, and the priority of a
2 security interest in collateral.
3 (2) While collateral is located in a jurisdiction,
4 the local law of that jurisdiction governs perfection,
5 the effect of perfection or nonperfection, and the
6 priority of a possessory security interest in that
7 collateral.
8 (3) Except as otherwise provided in paragraph (4),
9 while negotiable documents, goods, instruments, money, or
10 tangible chattel paper is located in a jurisdiction, the
11 local law of that jurisdiction governs:
12 (A) perfection of a security interest in the
13 goods by filing a fixture filing;
14 (B) perfection of a security interest in
15 timber to be cut; and
16 (C) the effect of perfection or nonperfection
17 and the priority of a nonpossessory security
18 interest in the collateral.
19 (4) The local law of the jurisdiction in which the
20 wellhead or minehead is located governs perfection, the
21 effect of perfection or nonperfection, and the priority
22 of a security interest in as-extracted collateral.
23 Persons Who Take Priority Over Unperfected Security
24 Interests; Rights of "Lien Creditor".
25 (1) Except as otherwise provided in subsection (2), an
26 unperfected security interest is subordinate to the rights of
27 (a) persons entitled to priority under Section
28 9-312;
29 (b) a person who becomes a lien creditor before the
30 security interest is perfected;
31 (c) in the case of goods, instruments, documents,
32 and chattel paper, a person who is not a secured party
33 and who is a transferee in bulk or other buyer not in
34 ordinary course of business or is a buyer of farm
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1 products in ordinary course of business, to the extent
2 that he gives value and receives delivery of the
3 collateral without knowledge of the security interest and
4 before it is perfected;
5 (d) in the case of accounts, general intangibles,
6 and investment property, a person who is not a secured
7 party and who is a transferee to the extent that he gives
8 value without knowledge of the security interest and
9 before it is perfected;
10 provided, however, that an unperfected security interest
11 shall take priority over the rights of a lien creditor if (i)
12 the lien creditor is a trustee or receiver of a state or
13 federally chartered financial institution acting in
14 furtherance of its supervisory authority over the financial
15 institution and (ii) a security interest is granted by the
16 financial institution to secure a deposit of public funds
17 with the financial institution or a repurchase agreement with
18 the financial institution pursuant to the Government
19 Securities Act of 1986, as amended.
20 (2) If the secured party files with respect to a
21 purchase money security interest before or within 20 days
22 after the debtor receives possession of the collateral, he
23 takes priority over the rights of a transferee in bulk or of
24 a lien creditor which arise between the time the security
25 interest attaches and the time of filing.
26 (3) A "lien creditor" means a creditor who has acquired
27 a lien on the property involved by attachment, levy or the
28 like and includes an assignee for benefit of creditors from
29 the time of assignment, and a trustee in bankruptcy from the
30 date of the filing of the petition or a receiver in equity
31 from the time of appointment.
32 (4) A person who becomes a lien creditor while a
33 security interest is perfected takes subject to the security
34 interest only to the extent that it secures advances made
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1 before he becomes a lien creditor or within 45 days
2 thereafter or made without knowledge of the lien or pursuant
3 to a commitment entered into without knowledge of the lien.
4 (Source: P.A. 89-364, eff. 1-1-96; 90-696, eff. 8-7-98.)
5 (810 ILCS 5/9-302) (from Ch. 26, par. 9-302)
6 Sec. 9-302. Law governing perfection and priority of
7 agricultural liens. While farm products are located in a
8 jurisdiction, the local law of that jurisdiction governs
9 perfection, the effect of perfection or nonperfection, and
10 the priority of an agricultural lien on the farm products.
11 When filing is required to perfect security interest;
12 security interests to which filing provisions of this Article
13 do not apply.
14 (1) A financing statement must be filed to perfect all
15 security interests except the following:
16 (a) a security interest in collateral in possession
17 of the secured party under Section 9-305;
18 (b) a security interest temporarily perfected in
19 instruments, certificated securities, or documents
20 without delivery under Section 9-304 or in proceeds for a
21 20 day period under Section 9-306;
22 (c) a security interest created by an assignment of
23 a beneficial interest in a trust or a decedent's estate;
24 (d) a purchase money security interest in consumer
25 goods; but filing is required for a motor vehicle
26 required to be registered; and fixture filing is required
27 for priority over conflicting interests in fixtures to
28 the extent provided in Section 9-313;
29 (e) an assignment of accounts which does not alone
30 or in conjunction with other assignments to the same
31 assignee transfer a significant part of the outstanding
32 accounts of the assignor;
33 (f) a security interest of a collecting bank
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1 (Section 4-208) or arising under the Article on Sales
2 (see Section 9-113) or covered in subsection (3) of this
3 Section;
4 (g) an assignment for the benefit of all creditors
5 of the transferor, and subsequent transfers by the
6 assignee thereunder;
7 (h) a security interest in investment property
8 which is perfected without filing under Section 9-115 or
9 Section 9-116;
10 (i) a security interest in a deposit account. Such
11 a security interest is perfected:
12 (i) as to a deposit account maintained with
13 the secured party, when the security agreement is
14 executed;
15 (ii) as to a deposit account maintained with
16 any organization other than the secured party, when
17 notice thereof is given in writing to the
18 organization with whom the deposit account is
19 maintained and that organization provides written
20 acknowledgement of and consent to the notice of the
21 secured party.
22 (j) a security interest in an uncertificated
23 certificate of deposit. Such a security interest is
24 perfected;
25 (i) as to an uncertificated certificate of
26 deposit issued by the secured party, when the
27 security agreement is executed;
28 (ii) as to an uncertificated certificate of
29 deposit issued by any organization other than the
30 secured party, when notice thereof is given in
31 writing to the issuer of the uncertificated
32 certificate of deposit and the issuer provides
33 written acknowledgement of and consent to the notice
34 of the secured party.
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1 (2) If a secured party assigns a perfected security
2 interest, no filing under this Article is required in order
3 to continue the perfected status of the security interest
4 against creditors of and transferees from the original
5 debtor.
6 (3) The filing of a financing statement otherwise
7 required by this Article is not necessary or effective to
8 perfect a security interest in property subject to
9 (a) a statute or treaty of the United States which
10 provides for a national or international registration or
11 a national or international certificate of title or which
12 specifies a place of filing different from that specified
13 in this Article for filing of the security interest; or
14 (b) the following statutes of this State: the
15 Illinois Vehicle Code; the Boat Registration and Safety
16 Act; but during any period in which collateral is
17 inventory held for sale by a person who is in the
18 business of selling goods of that kind, the filing
19 provisions of this Article (Part 4) apply to a security
20 interest in that collateral created by him as debtor; or
21 (c) a certificate of title statute of another
22 jurisdiction under the law of which indication of a
23 security interest on the certificate is required as a
24 condition of perfection (subsection (2) of Section
25 9-103).
26 (4) Compliance with a statute or treaty described in
27 subsection (3) is equivalent to the filing of a financing
28 statement under this Article, and a security interest in
29 property subject to the statute or treaty can be perfected
30 only by compliance therewith except as provided in Section
31 9-103 on multiple state transactions. Duration and renewal of
32 perfection of a security interest perfected by compliance
33 with the statute or treaty are governed by the provisions of
34 the statute or treaty; in other respects the security
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1 interest is subject to this Article.
2 (Source: P.A. 89-364, eff. 1-1-96; 90-665, eff. 7-30-98.)
3 (810 ILCS 5/9-303) (from Ch. 26, par. 9-303)
4 Sec. 9-303. Law governing perfection and priority of
5 security interests in goods covered by a certificate of
6 title.
7 (a) Applicability of Section. This Section applies to
8 goods covered by a certificate of title, even if there is no
9 other relationship between the jurisdiction under whose
10 certificate of title the goods are covered and the goods or
11 the debtor.
12 (b) When goods covered by certificate of title. Goods
13 become covered by a certificate of title when a valid
14 application for the certificate of title and the applicable
15 fee are delivered to the appropriate authority. Goods cease
16 to be covered by a certificate of title at the earlier of the
17 time the certificate of title ceases to be effective under
18 the law of the issuing jurisdiction or the time the goods
19 become covered subsequently by a certificate of title issued
20 by another jurisdiction.
21 (c) Applicable law. The local law of the jurisdiction
22 under whose certificate of title the goods are covered
23 governs perfection, the effect of perfection or
24 nonperfection, and the priority of a security interest in
25 goods covered by a certificate of title from the time the
26 goods become covered by the certificate of title until the
27 goods cease to be covered by the certificate of title. When
28 security interest is perfected; continuity of perfection.
29 (1) A security interest is perfected when it has
30 attached and when all of the applicable steps required for
31 perfection have been taken. Such steps are specified in
32 Sections 9--302, 9--304, 9--305 and 9--306. If such steps are
33 taken before the security interest attaches, it is perfected
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1 at the time when it attaches.
2 (2) If a security interest is originally perfected in
3 any way permitted under this Article and is subsequently
4 perfected in some other way under this Article, without an
5 intermediate period when it was unperfected, the security
6 interest shall be deemed to be perfected continuously for the
7 purposes of this Article.
8 (Source: Laws 1961, p. 2101.)
9 (810 ILCS 5/9-304) (from Ch. 26, par. 9-304)
10 Sec. 9-304. Law governing perfection and priority of
11 security interests in deposit accounts.
12 (a) Law of bank's jurisdiction governs. The local law
13 of a bank's jurisdiction governs perfection, the effect of
14 perfection or nonperfection, and the priority of a security
15 interest in a deposit account maintained with that bank.
16 (b) Bank's jurisdiction. The following rules determine
17 a bank's jurisdiction for purposes of this Part:
18 (1) If an agreement between the bank and the debtor
19 governing the deposit account expressly provides that a
20 particular jurisdiction is the bank's jurisdiction for
21 purposes of this Part, this Article, or the Uniform
22 Commercial Code, that jurisdiction is the bank's
23 jurisdiction.
24 (2) If paragraph (1) does not apply and an
25 agreement between the bank and its customer governing the
26 deposit account expressly provides that the agreement is
27 governed by the law of a particular jurisdiction, that
28 jurisdiction is the bank's jurisdiction.
29 (3) If neither paragraph (1) nor paragraph (2)
30 applies and an agreement between the bank and its
31 customer governing the deposit account expressly provides
32 that the deposit account is maintained at an office in a
33 particular jurisdiction, that jurisdiction is the bank's
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1 jurisdiction.
2 (4) If none of the preceding paragraphs applies,
3 the bank's jurisdiction is the jurisdiction in which the
4 office identified in an account statement as the office
5 serving the customer's account is located.
6 (5) If none of the preceding paragraphs applies,
7 the bank's jurisdiction is the jurisdiction in which the
8 chief executive office of the bank is located. Perfection
9 of security interest in instruments, documents, proceeds
10 of a written letter of credit, and goods covered by
11 documents; perfection by permissive filing; temporary
12 perfection without filing or transfer of possession.
13 (1) A security interest in chattel paper or negotiable
14 documents may be perfected by filing. A security interest in
15 the rights to proceeds of a written letter of credit can be
16 perfected only by the secured party's taking possession of
17 the letter of credit. A security interest in money or
18 instruments (other than instruments which constitute part of
19 chattel paper) can be perfected only by the secured party's
20 taking possession, except as provided in subsections (4) and
21 (5) of this Section and subsections (2) and (3) of Section
22 9-306 on proceeds.
23 (2) During the period that goods are in the possession
24 of the issuer of a negotiable document therefor, a security
25 interest in the goods is perfected by perfecting a security
26 interest in the document, and any security interest in the
27 goods otherwise perfected during such period is subject
28 thereto.
29 (3) A security interest in goods in the possession of a
30 bailee other than one who has issued a negotiable document
31 therefor is perfected by issuance of a document in the name
32 of the secured party or by the bailee's receipt of
33 notification of the secured party's interest or by filing as
34 to the goods.
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1 (4) A security interest in instruments, certificated
2 securities, or negotiable documents is perfected without
3 filing or the taking of possession for a period of 21 days
4 from the time it attaches to the extent that it arises for
5 new value given under a written security agreement.
6 (5) A security interest remains perfected for a period
7 of 21 days without filing where a secured party having a
8 perfected security interest in an instrument, a certificated
9 security, a negotiable document, or goods in possession of a
10 bailee other than one who has issued a negotiable document
11 therefor.
12 (a) makes available to the debtor the goods or
13 documents representing the goods for the purpose of
14 ultimate sale or exchange or for the purpose of loading,
15 unloading, storing, shipping, transshipping,
16 manufacturing, processing or otherwise dealing with them
17 in a manner preliminary to their sale or exchange, but
18 priority between conflicting security interests in the
19 goods is subject to subsection (3) of Section 9-312; or
20 (b) delivers the instrument or certificated
21 security to the debtor for the purpose of ultimate sale
22 or exchange or of presentation, collection, renewal or
23 registration of transfer.
24 (6) After the 21 day period in subsections (4) and (5)
25 perfection depends upon compliance with applicable provisions
26 of this Article.
27 (Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97.)
28 (810 ILCS 5/9-305) (from Ch. 26, par. 9-305)
29 Sec. 9-305. Law governing perfection and priority of
30 security interests in investment property.
31 (a) Governing law: general rules. Except as otherwise
32 provided in subsection (c), the following rules apply:
33 (1) While a security certificate is located in a
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1 jurisdiction, the local law of that jurisdiction governs
2 perfection, the effect of perfection or nonperfection,
3 and the priority of a security interest in the
4 certificated security represented thereby.
5 (2) The local law of the issuer's jurisdiction as
6 specified in Section 8-110(d) governs perfection, the
7 effect of perfection or nonperfection, and the priority
8 of a security interest in an uncertificated security.
9 (3) The local law of the securities intermediary's
10 jurisdiction as specified in Section 8-110(e) governs
11 perfection, the effect of perfection or nonperfection,
12 and the priority of a security interest in a security
13 entitlement or securities account.
14 (4) The local law of the commodity intermediary's
15 jurisdiction governs perfection, the effect of perfection
16 or nonperfection, and the priority of a security interest
17 in a commodity contract or commodity account.
18 (b) Commodity intermediary's jurisdiction. The
19 following rules determine a commodity intermediary's
20 jurisdiction for purposes of this Part:
21 (1) If an agreement between the commodity
22 intermediary and commodity customer governing the
23 commodity account expressly provides that a particular
24 jurisdiction is the commodity intermediary's jurisdiction
25 for purposes of this Part, this Article, or the Uniform
26 Commercial Code, that jurisdiction is the commodity
27 intermediary's jurisdiction.
28 (2) If paragraph (1) does not apply and an
29 agreement between the commodity intermediary and
30 commodity customer governing the commodity account
31 expressly provides that the agreement is governed by the
32 law of a particular jurisdiction, that jurisdiction is
33 the commodity intermediary's jurisdiction.
34 (3) If neither paragraph (1) nor paragraph (2)
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1 applies and an agreement between the commodity
2 intermediary and commodity customer governing the
3 commodity account expressly provides that the commodity
4 account is maintained at an office in a particular
5 jurisdiction, that jurisdiction is the commodity
6 intermediary's jurisdiction.
7 (4) If none of the preceding paragraphs applies,
8 the commodity intermediary's jurisdiction is the
9 jurisdiction in which the office identified in an account
10 statement as the office serving the commodity customer's
11 account is located.
12 (5) If none of the preceding paragraphs applies,
13 the commodity intermediary's jurisdiction is the
14 jurisdiction in which the chief executive office of the
15 commodity intermediary is located.
16 (c) When perfection governed by law of jurisdiction
17 where debtor located. The local law of the jurisdiction in
18 which the debtor is located governs:
19 (1) perfection of a security interest in investment
20 property by filing;
21 (2) automatic perfection of a security interest in
22 investment property created by a broker or securities
23 intermediary; and
24 (3) automatic perfection of a security interest in
25 a commodity contract or commodity account created by a
26 commodity intermediary. When possession by secured party
27 perfects security interest without filing. A security
28 interest in goods, instruments, money, negotiable
29 documents, or chattel paper may be perfected by the
30 secured party's taking possession of the collateral. A
31 security interest in the right to proceeds of a written
32 letter of credit may be perfected by the secured party's
33 taking possession of the letter of credit. If such
34 collateral other than goods covered by a negotiable
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1 document is held by a bailee, the secured party is deemed
2 to have possession from the time the bailee receives
3 notification of the secured party's interest. A security
4 interest is perfected by possession from the time
5 possession is taken without relation back and continues
6 only so long as possession is retained, unless otherwise
7 specified in this Article. The security interest may be
8 otherwise perfected as provided in this Article before or
9 after the period of possession by the secured party.
10 (Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97.)
11 (810 ILCS 5/9-306) (from Ch. 26, par. 9-306)
12 Sec. 9-306. Law governing perfection and priority of
13 security interests in letter-of-credit rights.
14 (a) Governing law: issuer's or nominated person's
15 jurisdiction. Subject to subsection (c), the local law of the
16 issuer's jurisdiction or a nominated person's jurisdiction
17 governs perfection, the effect of perfection or
18 nonperfection, and the priority of a security interest in a
19 letter-of-credit right if the issuer's jurisdiction or
20 nominated person's jurisdiction is a State.
21 (b) Issuer's or nominated person's jurisdiction. For
22 purposes of this Part, an issuer's jurisdiction or nominated
23 person's jurisdiction is the jurisdiction whose law governs
24 the liability of the issuer or nominated person with respect
25 to the letter-of-credit right as provided in Section 5-116.
26 (c) When Section not applicable. This Section does not
27 apply to a security interest that is perfected only under
28 Section 9-308(d). "Proceeds"; Secured Party's Rights on
29 Disposition of Collateral.
30 (1) "Proceeds" includes whatever is received upon the
31 sale, exchange, collection or other disposition of collateral
32 or proceeds. Insurance payable by reason of loss or damage to
33 the collateral is proceeds, except to the extent that it is
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1 payable to a person other than a party to the security
2 agreement. Any payments or distributions made with respect to
3 investment property collateral are proceeds. Money, checks,
4 deposit accounts, and the like are "cash proceeds". All other
5 proceeds are "non-cash proceeds".
6 (2) Except where this Article otherwise provides, a
7 security interest continues in collateral notwithstanding
8 sale, exchange or other disposition thereof unless the
9 disposition was authorized by the secured party in the
10 security agreement or otherwise, and also continues in any
11 identifiable proceeds including collections received by the
12 debtor.
13 (3) The security interest in proceeds is a continuously
14 perfected security interest if the interest in the original
15 collateral was perfected but it ceases to be a perfected
16 security interest and becomes unperfected 20 days after
17 receipt of the proceeds by the debtor unless
18 (a) a filed financing statement covers the original
19 collateral and the proceeds are collateral in which a
20 security interest may be perfected by filing in the
21 office or offices where the financing statement has been
22 filed and, if the proceeds are acquired with cash
23 proceeds, the description of collateral in the financing
24 statement indicates the types of property constituting
25 the proceeds; or
26 (b) a filed financing statement covers the original
27 collateral and the proceeds are identifiable cash
28 proceeds;
29 (c) the original collateral was investment property
30 and the proceeds are identifiable cash proceeds; or
31 (d) the security interest in the proceeds is
32 perfected before the expiration of the 20 day period.
33 Except as provided in this Section, a security interest
34 in proceeds can be perfected only by the methods or under the
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1 circumstances permitted in this Article for original
2 collateral of the same type.
3 (4) In the event of insolvency proceedings instituted by
4 or against a debtor, a secured party with a perfected
5 security interest in proceeds has a perfected security
6 interest only in the following proceeds:
7 (a) in identifiable non-cash proceeds and in
8 separate deposit accounts containing only proceeds;
9 (b) in identifiable cash proceeds in the form of
10 money which is neither commingled with other money nor
11 deposited in a deposit account prior to the insolvency
12 proceedings;
13 (c) in identifiable cash proceeds in the form of
14 checks and the like which are not deposited in a deposit
15 account prior to the insolvency proceedings; and
16 (d) in all cash and deposit accounts of the debtor
17 in which proceeds have been commingled with other funds,
18 but the perfected security interest under this paragraph
19 (d) is
20 (i) subject to any right to set-off; and
21 (ii) limited to an amount not greater than the
22 amount of any cash proceeds received by the debtor
23 within 20 days before the institution of the
24 insolvency proceedings less the sum of (I) the
25 payments to the secured party on account of cash
26 proceeds received by the debtor during such period
27 and (II) the cash proceeds received by the debtor
28 during such period to which the secured party is
29 entitled under paragraphs (a) through (c) of this
30 subsection (4).
31 (5) If a sale of goods results in an account or chattel
32 paper which is transferred by the seller to a secured party,
33 and if the goods are returned to or are repossessed by the
34 seller or the secured party, the following rules determine
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1 priorities:
2 (a) If the goods were collateral at the time of
3 sale, for an indebtedness of the seller which is still
4 unpaid, the original security interest attaches again to
5 the goods and continues as a perfected security interest
6 if it was perfected at the time when the goods were sold.
7 If the security interest was originally perfected by a
8 filing which is still effective, nothing further is
9 required to continue the perfected status; in any other
10 case, the secured party must take possession of the
11 returned or repossessed goods or must file.
12 (b) An unpaid transferee of the chattel paper has a
13 security interest in the goods against the transferor.
14 Such security interest is prior to a security interest
15 asserted under paragraph (a) to the extent that the
16 transferee of the chattel paper was entitled to priority
17 under Section 9-308.
18 (c) An unpaid transferee of the account has a
19 security interest in the goods against the transferor.
20 Such security interest is subordinate to a security
21 interest asserted under paragraph (a).
22 (d) A security interest of an unpaid transferee
23 asserted under paragraph (b) or (c) must be perfected for
24 protection against creditors of the transferor and
25 purchasers of the returned or repossessed goods.
26 (Source: P.A. 89-364, eff. 1-1-96.)
27 (810 ILCS 5/9-306.01) (from Ch. 26, par. 9-306.01)
28 Sec. 9-306.01. (Blank). Debtor disposing of collateral
29 and failing to pay secured party amount due under security
30 agreement; penalties for violation.
31 (1) It is unlawful for a debtor under the terms of a
32 security agreement (a) who has no right of sale or other
33 disposition of the collateral or (b) who has a right of sale
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1 or other disposition of the collateral and is to account to
2 the secured party for the proceeds of any sale or other
3 disposition of the collateral, to sell or otherwise dispose
4 of the collateral and willfully and wrongfully to fail to pay
5 the secured party the amount of said proceeds due under the
6 security agreement. Failure to pay such proceeds to the
7 secured party within 10 days after the sale or other
8 disposition of the collateral is prima facie evidence of a
9 willful and wanton failure to pay.
10 (2) An individual convicted of a violation of this
11 Section shall be guilty of a Class 3 felony.
12 (3) A corporation convicted of a violation of this
13 Section shall be guilty of a business offense and shall be
14 fined not less than two thousand dollars nor more than ten
15 thousand dollars.
16 (4) In the event the debtor under the terms of a
17 security agreement is a corporation or a partnership, any
18 officer, director, manager, or managerial agent of the debtor
19 who violates this Section or causes the debtor to violate
20 this Section shall be guilty of a Class 3 felony.
21 (Source: P.A. 83-69.)
22 (810 ILCS 5/9-306.02) (from Ch. 26, par. 9-306.02)
23 Sec. 9-306.02. (Blank). (1) Where, pursuant to Section
24 9-205.1, a secured party has required that before the debtor
25 sells or otherwise disposes of collateral in the debtor's
26 possession he disclose to the secured party the persons to
27 whom he desires to sell or otherwise dispose of such
28 collateral, it is unlawful for the debtor to sell or
29 otherwise dispose of the collateral to a person other than a
30 person so disclosed to the secured party.
31 (2) An individual convicted of a violation of this
32 Section shall be guilty of a Class A misdemeanor.
33 (3) A corporation convicted of a violation of this
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1 Section shall be guilty of a business offense and shall be
2 fined not less than $2,000 nor more than $10,000.
3 (4) In the event the debtor under the terms of a
4 security agreement is a corporation or a partnership, any
5 officer, director, manager or managerial agent of the debtor
6 who violates this Section or causes the debtor to violate
7 this Section shall be guilty of a Class A misdemeanor.
8 (5) It is an affirmative defense to a prosecution for
9 the violation of this Section that the debtor has paid to the
10 secured party the proceeds from the sale or other disposition
11 of the collateral within 10 days after such sale or
12 disposition.
13 (Source: P.A. 84-1372.)
14 (810 ILCS 5/9-307) (from Ch. 26, par. 9-307)
15 Sec. 9-307. Location of debtor.
16 (a) "Place of business." In this Section, "place of
17 business" means a place where a debtor conducts its affairs.
18 (b) Debtor's location: general rules. Except as
19 otherwise provided in this Section, the following rules
20 determine a debtor's location:
21 (1) A debtor who is an individual is located at the
22 individual's principal residence.
23 (2) A debtor that is an organization and has only
24 one place of business is located at its place of
25 business.
26 (3) A debtor that is an organization and has more
27 than one place of business is located at its chief
28 executive office.
29 (c) Limitation of applicability of subsection (b).
30 Subsection (b) applies only if a debtor's residence, place of
31 business, or chief executive office, as applicable, is
32 located in a jurisdiction whose law generally requires
33 information concerning the existence of a nonpossessory
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1 security interest to be made generally available in a filing,
2 recording, or registration system as a condition or result of
3 the security interest's obtaining priority over the rights of
4 a lien creditor with respect to the collateral. If
5 subsection (b) does not apply, the debtor is located in the
6 District of Columbia.
7 (d) Continuation of location: cessation of existence,
8 etc. A person that ceases to exist, have a residence, or
9 have a place of business continues to be located in the
10 jurisdiction specified by subsections (b) and (c).
11 (e) Location of registered organization organized under
12 State law. A registered organization that is organized under
13 the law of a State is located in that State.
14 (f) Location of registered organization organized under
15 federal law; bank branches and agencies. Except as otherwise
16 provided in subsection (i), a registered organization that is
17 organized under the law of the United States and a branch or
18 agency of a bank that is not organized under the law of the
19 United States or a State are located:
20 (1) in the State that the law of the United States
21 designates, if the law designates a State of location;
22 (2) in the State that the registered organization,
23 branch, or agency designates, if the law of the United
24 States authorizes the registered organization, branch, or
25 agency to designate its State of location; or
26 (3) in the District of Columbia, if neither
27 paragraph (1) nor paragraph (2) applies.
28 (g) Continuation of location: change in status of
29 registered organization. A registered organization continues
30 to be located in the jurisdiction specified by subsection (e)
31 or (f) notwithstanding:
32 (1) the suspension, revocation, forfeiture, or
33 lapse of the registered organization's status as such in
34 its jurisdiction of organization; or
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1 (2) the dissolution, winding up, or cancellation of
2 the existence of the registered organization.
3 (h) Location of United States. The United States is
4 located in the District of Columbia.
5 (i) Location of foreign bank branch or agency if
6 licensed in only one State. A branch or agency of a bank
7 that is not organized under the law of the United States or a
8 State is located in the State in which the branch or agency
9 is licensed, if all branches and agencies of the bank are
10 licensed in only one State.
11 (j) Location of foreign air carrier. A foreign air
12 carrier under the Federal Aviation Act of 1958, as amended,
13 is located at the designated office of the agent upon which
14 service of process may be made on behalf of the carrier.
15 (k) Section applies only to this Part. This Section
16 applies only for purposes of this Part. Protection of Buyers
17 of Goods.
18 (1) Except as provided in subsection (4), a buyer in the
19 ordinary course of business, as defined in subsection (9) of
20 Section 1-201, takes free of a security interest created by
21 his seller even though the security interest is perfected and
22 even though the buyer knows of its existence.
23 (2) In the case of consumer goods, a buyer takes free of
24 a security interest even though perfected if he buys without
25 knowledge of the security interest, for value and for his own
26 personal, family or household purposes unless prior to the
27 purchase the secured party has filed a financing statement
28 covering such goods.
29 (3) A buyer other than a buyer in ordinary course of
30 business (subsection (1) of this Section) takes free of a
31 security interest to the extent that it secures future
32 advances made after the secured party acquires knowledge of
33 the purchase, or more than 45 days after the purchase,
34 whichever first occurs, unless made pursuant to a commitment
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1 entered into without knowledge of the purchase and before the
2 expiration of the 45 day period.
3 (4) A buyer of farm products takes subject to a security
4 interest created by the seller if:
5 (a) within one year before the sale of the farm
6 products, the buyer has received from the secured party
7 or the seller written notice of the security interest
8 organized according to farm products that:
9 (i) is an original or reproduced copy thereof;
10 (ii) contains:
11 (I) the name and address of the secured
12 party;
13 (II) the name and address of the person
14 indebted to the secured party;
15 (III) the social security number of the
16 debtor or, in the case of a debtor doing
17 business other than as an individual, the
18 Internal Revenue Service taxpayer
19 identification number of such debtor; and
20 (IV) a description of the farm products
21 subject to the security interest created by the
22 debtor, including the amount of such products
23 where applicable, crop year, county, and a
24 reasonable description of the property;
25 (iii) must be amended in writing, within 3
26 months, similarly signed and transmitted, to reflect
27 material changes;
28 (iv) will lapse on either the expiration
29 period of the statement or the transmission of a
30 notice signed by the secured party that the
31 statement has lapsed, whichever occurs first; and
32 (v) sets forth any payment obligations imposed
33 on the buyer by the secured party as conditions for
34 waiver or release of the security interest; and
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1 (b) the buyer has failed to perform the payment
2 obligations.
3 For the purposes of this subsection (4), a buyer of farm
4 products has received notice from the secured party or seller
5 when written notice of the security interest is sent to the
6 buyer by registered or certified mail.
7 (Source: P.A. 91-357, eff. 7-29-99.)
8 (810 ILCS 5/9-307.1) (from Ch. 26, par. 9-307.1)
9 Sec. 9-307.1. (Blank). A commission merchant or selling
10 agent who sells a farm product for others shall be subject to
11 a security interest created by the seller in such farm
12 product if-
13 (a) within one year before the sale of the farm
14 products, the buyer has received from the secured party or
15 the seller written notice of the security interest organized
16 according to farm products that:
17 (i) is an original or reproduced copy thereof;
18 (ii) contains,
19 (I) the name and address of the secured party;
20 (II) the name and address of the person indebted to the
21 secured party;
22 (III) the social security number of the debtor or, in
23 the case of a debtor doing business other than as an
24 individual, the Internal Revenue Service taxpayer
25 identification number of such debtor;
26 (IV) a description of the farm products subject to the
27 security interest created by the debtor, including the amount
28 of such products where applicable, crop year, county, and a
29 reasonable description of the property;
30 (iii) must be amended in writing, within 3 months,
31 similarly signed and transmitted, to reflect material
32 changes;
33 (iv) will lapse on either the expiration period of the
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1 statement or the transmission of a notice signed by the
2 secured party that the statement has lapsed, whichever occurs
3 first; and
4 (v) sets forth any payment obligations imposed on the
5 buyer by the secured party as conditions for waiver or
6 release of the security interest; and
7 (b) the commission merchant or selling agent has failed
8 to perform the payment obligations.
9 For the purposes of this Section, a commission merchant
10 or selling agent has received notice from the secured party
11 or seller when written notice of the security interest is
12 sent to the commission merchant or selling agent by
13 registered or certified mail.
14 (Source: P.A. 84-1372.)
15 (810 ILCS 5/9-307.2) (from Ch. 26, par. 9-307.2)
16 Sec. 9-307.2. (Blank). A commission merchant or
17 selling agent who sells farm products for others, and
18 any person buying farm products in the ordinary course
19 of business from a person engaged in farming operations,
20 shall post at each licensed location where said
21 merchant, agent or person buying farm products in the
22 ordinary course of business does business a notice
23 which shall read as follows:
24 "NOTICE TO SELLERS OF FARM PRODUCTS
25 It is a criminal offense to sell farm products subject to
26 a security interest without making payment to the secured
27 party. You should notify the purchaser if there is a security
28 interest in the farm products you are selling."
29 Such notice shall be posted in a conspicuous manner and
30 shall be in contrasting type, large enough to be read from a
31 distance of 10 feet.
32 (Source: P.A. 83-69.)
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1 (810 ILCS 5/Art. 9, Part 3, Subpart 2 heading new)
2 SUBPART 2. PERFECTION
3 (810 ILCS 5/9-308) (from Ch. 26, par. 9-308)
4 Sec. 9-308. When security interest or agricultural lien
5 is perfected; continuity of perfection.
6 (a) Perfection of security interest. Except as
7 otherwise provided in this Section and Section 9-309, a
8 security interest is perfected if it has attached and all of
9 the applicable requirements for perfection in Sections 9-310
10 through 9-316 have been satisfied. A security interest is
11 perfected when it attaches if the applicable requirements are
12 satisfied before the security interest attaches.
13 (b) Perfection of agricultural lien. An agricultural
14 lien is perfected if it has become effective and all of the
15 applicable requirements for perfection in Section 9-310 have
16 been satisfied. An agricultural lien is perfected when it
17 becomes effective if the applicable requirements are
18 satisfied before the agricultural lien becomes effective.
19 (c) Continuous perfection; perfection by different
20 methods. A security interest or agricultural lien is
21 perfected continuously if it is originally perfected by one
22 method under this Article and is later perfected by another
23 method under this Article, without an intermediate period
24 when it was unperfected.
25 (d) Supporting obligation. Perfection of a security
26 interest in collateral also perfects a security interest in a
27 supporting obligation for the collateral.
28 (e) Lien securing right to payment. Perfection of a
29 security interest in a right to payment or performance also
30 perfects a security interest in a security interest,
31 mortgage, or other lien on personal or real property securing
32 the right.
33 (f) Security entitlement carried in securities account.
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1 Perfection of a security interest in a securities account
2 also perfects a security interest in the security
3 entitlements carried in the securities account.
4 (g) Commodity contract carried in commodity account.
5 Perfection of a security interest in a commodity account also
6 perfects a security interest in the commodity contracts
7 carried in the commodity account. Purchase of Chattel Paper
8 and Instruments.
9 A purchaser of chattel paper or an instrument who gives
10 new value and takes possession of it in the ordinary course
11 of his business has priority over a security interest in the
12 chattel paper or instrument
13 (a) which is perfected under Section 9-304 (permissive
14 filing and temporary perfection) or under Section 9-306
15 (perfection as to proceeds) if he acts without knowledge that
16 the specific paper or instrument is subject to a security
17 interest; or
18 (b) which is claimed merely as proceeds of inventory
19 subject to a security interest (Section 9-306) even though he
20 knows that the specific paper or instrument is subject to the
21 security interest.
22 (Source: P.A. 77-2810.)
23 (810 ILCS 5/9-309) (from Ch. 26, par. 9-309)
24 Sec. 9-309. Security interest perfected upon attachment.
25 The following security interests are perfected when they
26 attach:
27 (1) a purchase-money security interest in consumer
28 goods, except as otherwise provided in Section 9-311(b)
29 with respect to consumer goods that are subject to a
30 statute or treaty described in Section 9-311(a);
31 (2) an assignment of accounts or payment
32 intangibles which does not by itself or in conjunction
33 with other assignments to the same assignee transfer a
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1 significant part of the assignor's outstanding accounts
2 or payment intangibles;
3 (3) a sale of a payment intangible;
4 (4) a sale of a promissory note;
5 (5) a security interest created by the assignment
6 of a health-care-insurance receivable to the provider of
7 the health-care goods or services;
8 (6) a security interest arising under Section
9 2-401, 2-505, 2-711(3), or 2A-508(5), until the debtor
10 obtains possession of the collateral;
11 (7) a security interest of a collecting bank
12 arising under Section 4-210;
13 (8) a security interest of an issuer or nominated
14 person arising under Section 5-118;
15 (9) a security interest arising in the delivery of
16 a financial asset under Section 9-206(c);
17 (10) a security interest in investment property
18 created by a broker or securities intermediary;
19 (11) a security interest in a commodity contract or
20 a commodity account created by a commodity intermediary;
21 (12) an assignment for the benefit of all creditors
22 of the transferor and subsequent transfers by the
23 assignee thereunder; and
24 (13) a security interest created by an assignment
25 of a beneficial interest in a decedent's estate.
26 Protection of purchasers of instruments, documents and
27 securities. Nothing in this Article limits the rights of
28 a holder in due course of a negotiable instrument
29 (Section 3-302) or a holder to whom a negotiable document
30 of title has been duly negotiated (Section 7-501) or a
31 protected purchaser of a security (Section 8-303) and
32 such holders or purchasers take priority over an earlier
33 security interest even though perfected. Filing under
34 this Article does not constitute notice of the security
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1 interest to such holders or purchasers.
2 (Source: P.A. 89-364, eff. 1-1-96.)
3 (810 ILCS 5/9-310) (from Ch. 26, par. 9-310)
4 Sec. 9-310. When filing required to perfect security
5 interest or agricultural lien; security interests and
6 agricultural liens to which filing provisions do not apply.
7 (a) General rule: perfection by filing. Except as
8 otherwise provided in subsection (b) and Section 9-312(b), a
9 financing statement must be filed to perfect all security
10 interests and agricultural liens.
11 (b) Exceptions: filing not necessary. The filing of a
12 financing statement is not necessary to perfect a security
13 interest:
14 (1) that is perfected under Section 9-308(d), (e),
15 (f), or (g);
16 (2) that is perfected under Section 9-309 when it
17 attaches;
18 (3) in property subject to a statute, regulation,
19 or treaty described in Section 9-311(a);
20 (4) in goods in possession of a bailee which is
21 perfected under Section 9-312(d)(1) or (2);
22 (5) in certificated securities, documents, goods,
23 or instruments which is perfected without filing or
24 possession under Section 9-312(e), (f), or (g);
25 (6) in collateral in the secured party's possession
26 under Section 9-313;
27 (7) in a certificated security which is perfected
28 by delivery of the security certificate to the secured
29 party under Section 9-313;
30 (8) in deposit accounts, electronic chattel paper,
31 investment property, or letter-of-credit rights which is
32 perfected by control under Section 9-314;
33 (9) in proceeds which is perfected under Section
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1 9-315; or
2 (10) that is perfected under Section 9-316.
3 (c) Assignment of perfected security interest. If a
4 secured party assigns a perfected security interest or
5 agricultural lien, a filing under this Article is not
6 required to continue the perfected status of the security
7 interest against creditors of and transferees from the
8 original debtor. Priority of certain liens arising by
9 operation of law.
10 When a person in the ordinary course of his business
11 furnishes services or materials with respect to goods subject
12 to a security interest, a lien upon goods in the possession
13 of such person given by statute or rule of law for such
14 materials or services takes priority over a perfected
15 security interest unless the lien is statutory and the
16 statute expressly provides otherwise.
17 (Source: Laws 1961, p. 2101.)
18 (810 ILCS 5/9-311) (from Ch. 26, par. 9-311)
19 Sec. 9-311. Perfection of security interests in property
20 subject to certain statutes, regulations, and treaties.
21 (a) Security interest subject to other law. Except as
22 otherwise provided in subsection (d), the filing of a
23 financing statement is not necessary or effective to perfect
24 a security interest in property subject to:
25 (1) a statute, regulation, or treaty of the United
26 States whose requirements for a security interest's
27 obtaining priority over the rights of a lien creditor
28 with respect to the property preempt Section 9-310(a);
29 (2) the Illinois Vehicle Code and the Boat
30 Registration and Safety Act; or
31 (3) a certificate-of-title statute of another
32 jurisdiction which provides for a security interest to be
33 indicated on the certificate as a condition or result of
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1 the security interest's obtaining priority over the
2 rights of a lien creditor with respect to the property.
3 (b) Compliance with other law. Compliance with the
4 requirements of a statute, regulation, or treaty described in
5 subsection (a) for obtaining priority over the rights of a
6 lien creditor is equivalent to the filing of a financing
7 statement under this Article. Except as otherwise provided
8 in subsection (d) and Sections 9-313 and 9-316(d) and (e) for
9 goods covered by a certificate of title, a security interest
10 in property subject to a statute, regulation, or treaty
11 described in subsection (a) may be perfected only by
12 compliance with those requirements, and a security interest
13 so perfected remains perfected notwithstanding a change in
14 the use or transfer of possession of the collateral.
15 (c) Duration and renewal of perfection. Except as
16 otherwise provided in subsection (d) and Section 9-316(d) and
17 (e), duration and renewal of perfection of a security
18 interest perfected by compliance with the requirements
19 prescribed by a statute, regulation, or treaty described in
20 subsection (a) are governed by the statute, regulation, or
21 treaty. In other respects, the security interest is subject
22 to this Article.
23 (d) Inapplicability to certain inventory. During any
24 period in which collateral is inventory held for sale or
25 lease by a person or leased by that person as lessor and that
26 person is in the business of selling or leasing goods of that
27 kind, this Section does not apply to a security interest in
28 that collateral created by that person as debtor.
29 Alienability of debtor's rights: judicial process.
30 The debtor's rights in collateral may be voluntarily or
31 involuntarily transferred (by way of sale, creation of a
32 security interest, attachment, levy, garnishment or other
33 judicial process) notwithstanding a provision in the security
34 agreement prohibiting any transfer or making the transfer
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1 constitute a default.
2 (Source: Laws 1961, p. 2101.)
3 (810 ILCS 5/9-312) (from Ch. 26, par. 9-312)
4 Sec. 9-312. Perfection of security interests in chattel
5 paper, deposit accounts, documents, goods covered by
6 documents, instruments, investment property, letter-of-credit
7 rights, and money; perfection by permissive filing; temporary
8 perfection without filing or transfer of possession.
9 (a) Perfection by filing permitted. A security interest
10 in chattel paper, negotiable documents, instruments, or
11 investment property may be perfected by filing.
12 (b) Control or possession of certain collateral. Except
13 as otherwise provided in Section 9-315(c) and (d) for
14 proceeds:
15 (1) a security interest in a deposit account may be
16 perfected only by control under Section 9-314;
17 (2) and except as otherwise provided in Section
18 9-308(d), a security interest in a letter-of-credit right
19 may be perfected only by control under Section 9-314; and
20 (3) a security interest in money may be perfected
21 only by the secured party's taking possession under
22 Section 9-313.
23 (c) Goods covered by negotiable document. While goods
24 are in the possession of a bailee that has issued a
25 negotiable document covering the goods:
26 (1) a security interest in the goods may be
27 perfected by perfecting a security interest in the
28 document; and
29 (2) a security interest perfected in the document
30 has priority over any security interest that becomes
31 perfected in the goods by another method during that
32 time.
33 (d) Goods covered by nonnegotiable document. While
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1 goods are in the possession of a bailee that has issued a
2 nonnegotiable document covering the goods, a security
3 interest in the goods may be perfected by:
4 (1) issuance of a document in the name of the
5 secured party;
6 (2) the bailee's receipt of notification of the
7 secured party's interest; or
8 (3) filing as to the goods.
9 (e) Temporary perfection: new value. A security
10 interest in certificated securities, negotiable documents, or
11 instruments is perfected without filing or the taking of
12 possession for a period of 20 days from the time it attaches
13 to the extent that it arises for new value given under an
14 authenticated security agreement.
15 (f) Temporary perfection: goods or documents made
16 available to debtor. A perfected security interest in a
17 negotiable document or goods in possession of a bailee, other
18 than one that has issued a negotiable document for the goods,
19 remains perfected for 20 days without filing if the secured
20 party makes available to the debtor the goods or documents
21 representing the goods for the purpose of:
22 (1) ultimate sale or exchange; or
23 (2) loading, unloading, storing, shipping,
24 transshipping, manufacturing, processing, or otherwise
25 dealing with them in a manner preliminary to their sale
26 or exchange.
27 (g) Temporary perfection: delivery of security
28 certificate or instrument to debtor. A perfected security
29 interest in a certificated security or instrument remains
30 perfected for 20 days without filing if the secured party
31 delivers the security certificate or instrument to the debtor
32 for the purpose of:
33 (1) ultimate sale or exchange; or
34 (2) presentation, collection, enforcement, renewal,
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1 or registration of transfer.
2 (h) Expiration of temporary perfection. After the
3 20-day period specified in subsection (e), (f), or (g)
4 expires, perfection depends upon compliance with this
5 Article. Priorities Among Conflicting Security Interests in
6 the Same Collateral.
7 (1) The rules of priority stated in other Sections of
8 this Part and in the following Sections shall govern when
9 applicable: Section 4-210 with respect to the security
10 interests of collecting banks in items being collected,
11 accompanying documents and proceeds; Section 9-103 on
12 security interests related to other jurisdictions; Section
13 9-114 on consignments; Section 9-115 on security interests in
14 investment property.
15 (2) A perfected security interest in crops for new value
16 given to enable the debtor to produce the crops during the
17 production season and given not more than three months before
18 the crops become growing crops by planting or otherwise takes
19 priority over an earlier perfected security interest to the
20 extent that such earlier interest secures obligations due
21 more than six months before the crops become growing crops by
22 planting or otherwise, even though the person giving new
23 value had knowledge of the earlier security interest.
24 (3) A perfected purchase money security interest in
25 inventory has priority over a conflicting security interest
26 in the same inventory and also has priority in identifiable
27 cash proceeds received on or before the delivery of the
28 inventory to a buyer if
29 (a) the purchase money security interest is
30 perfected at the time the debtor receives possession of
31 the inventory; and
32 (b) the purchase money secured party gives
33 notification in writing to the holder of the conflicting
34 security interest if the holder had filed a financing
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1 statement covering the same types of inventory (i) before
2 the date of the filing made by the purchase money secured
3 party, or (ii) before the beginning of the 21 day period
4 where the purchase money security interest is temporarily
5 perfected without filing or possession (subsection (5) of
6 Section 9-304); and
7 (c) the holder of the conflicting security interest
8 receives the notification within 5 years before the
9 debtor receives possession of the inventory; and
10 (d) the notification states that the person giving
11 the notice has or expects to acquire a purchase money
12 security interest in inventory of the debtor, describing
13 such inventory by item or type.
14 (4) A purchase money security interest in collateral
15 other than inventory has priority over a conflicting security
16 interest in the same collateral or its proceeds if the
17 purchase money security interest is perfected at the time the
18 debtor receives possession of the collateral or within 20
19 days thereafter.
20 (5) In all cases not governed by other rules stated in
21 this Section (including cases of purchase money security
22 interests which do not qualify for the special priorities set
23 forth in subsections (3) and (4) of this Section), priority
24 between conflicting security interests in the same collateral
25 shall be determined according to the following rules:
26 (a) Conflicting security interests rank according
27 to priority in time of filing or perfection. Priority
28 dates from the time a filing is first made covering the
29 collateral or the time the security interest is first
30 perfected, whichever is earlier, provided that there is
31 no period thereafter when there is neither filing nor
32 perfection.
33 (b) So long as conflicting security interests are
34 unperfected, the first to attach has priority.
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1 (6) For the purposes of subsection (5) a date of filing
2 or perfection as to collateral is also a date of filing or
3 perfection as to proceeds.
4 (7) If future advances are made while a security
5 interest is perfected by filing, the taking of possession or
6 under Section 9-115 or 9-116 on investment property, the
7 security interest has the same priority for the purposes of
8 subsection (5) with respect to the future advances as it does
9 with respect to the first advance. If a commitment is made
10 before or while the security interest is so perfected, the
11 security interest has the same priority with respect to
12 advances made pursuant thereto. In other cases a perfected
13 security interest has priority from the date the advance is
14 made.
15 (Source: P.A. 89-364, eff. 1-1-96.)
16 (810 ILCS 5/9-313) (from Ch. 26, par. 9-313)
17 Sec. 9-313. When possession by or delivery to secured
18 party perfects security interest without filing.
19 (a) Perfection by possession or delivery. Except as
20 otherwise provided in subsection (b), a secured party may
21 perfect a security interest in negotiable documents, goods,
22 instruments, money, or tangible chattel paper by taking
23 possession of the collateral. A secured party may perfect a
24 security interest in certificated securities by taking
25 delivery of the certificated securities under Section 8-301.
26 (b) Goods covered by certificate of title. With respect
27 to goods covered by a certificate of title issued by this
28 State, a secured party may perfect a security interest in the
29 goods by taking possession of the goods only in the
30 circumstances described in Section 9-316(d).
31 (c) Collateral in possession of person other than
32 debtor. With respect to collateral other than certificated
33 securities and goods covered by a document, a secured party
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1 takes possession of collateral in the possession of a person
2 other than the debtor, the secured party, or a lessee of the
3 collateral from the debtor in the ordinary course of the
4 debtor's business, when:
5 (1) the person in possession authenticates a record
6 acknowledging that it holds possession of the collateral
7 for the secured party's benefit; or
8 (2) the person takes possession of the collateral
9 after having authenticated a record acknowledging that it
10 will hold possession of collateral for the secured
11 party's benefit.
12 (d) Time of perfection by possession; continuation of
13 perfection. If perfection of a security interest depends upon
14 possession of the collateral by a secured party, perfection
15 occurs no earlier than the time the secured party takes
16 possession and continues only while the secured party retains
17 possession.
18 (e) Time of perfection by delivery; continuation of
19 perfection. A security interest in a certificated security in
20 registered form is perfected by delivery when delivery of the
21 certificated security occurs under Section 8-301 and remains
22 perfected by delivery until the debtor obtains possession of
23 the security certificate.
24 (f) Acknowledgment not required. A person in possession
25 of collateral is not required to acknowledge that it holds
26 possession for a secured party's benefit.
27 (g) Effectiveness of acknowledgment; no duties or
28 confirmation. If a person acknowledges that it holds
29 possession for the secured party's benefit:
30 (1) the acknowledgment is effective under
31 subsection (c) or Section 8-301(a), even if the
32 acknowledgment violates the rights of a debtor; and
33 (2) unless the person otherwise agrees or law other
34 than this Article otherwise provides, the person does not
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1 owe any duty to the secured party and is not required to
2 confirm the acknowledgment to another person.
3 (h) Secured party's delivery to person other than
4 debtor. A secured party having possession of collateral does
5 not relinquish possession by delivering the collateral to a
6 person other than the debtor or a lessee of the collateral
7 from the debtor in the ordinary course of the debtor's
8 business if the person was instructed before the delivery or
9 is instructed contemporaneously with the delivery:
10 (1) to hold possession of the collateral for the
11 secured party's benefit; or
12 (2) to redeliver the collateral to the secured
13 party.
14 (i) Effect of delivery under subsection (h); no duties
15 or confirmation. A secured party does not relinquish
16 possession, even if a delivery under subsection (h) violates
17 the rights of a debtor. A person to which collateral is
18 delivered under subsection (h) does not owe any duty to the
19 secured party and is not required to confirm the delivery to
20 another person unless the person otherwise agrees or law
21 other than this Article otherwise provides.
22 Priority of Security Interests in Fixtures.
23 (1) In this Section and in the provisions of Part 4 of
24 this Article referring to fixture filing, unless the context
25 otherwise requires:
26 (a) Goods are "fixtures" when they become so
27 related to particular real estate that an interest in
28 them arises under real estate law.
29 (b) A "fixture filing" is the filing in the office
30 where a mortgage on the real estate would be filed or
31 recorded of a financing statement covering goods which
32 are or are to become fixtures and conforming to the
33 requirements of subsection (5) of Section 9-402.
34 (c) A mortgage is a "construction mortgage" to the
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1 extent that it secures an obligation incurred for the
2 construction of an improvement on land including the
3 acquisition cost of the land, if the recorded writing so
4 indicates.
5 (2) A security interest under this Article may be
6 created in goods which are fixtures or may continue in goods
7 which become fixtures, but no security interest exists under
8 this Article in ordinary building materials incorporated into
9 an improvement on land.
10 (3) This Article does not prevent creation of an
11 encumbrance upon fixtures pursuant to real estate law.
12 (4) A perfected security interest in fixtures has
13 priority over the conflicting interest of an encumbrancer or
14 owner of the real estate where:
15 (a) the security interest is a purchase money
16 security interest, the interest of the encumbrancer or
17 owner arises before the goods become fixtures, the
18 security interest is perfected by a fixture filing before
19 the goods become fixtures or within 10 days thereafter,
20 and the debtor has an interest of record in the real
21 estate or is in possession of the real estate; or
22 (b) the security interest is perfected by a fixture
23 filing before the interest of the encumbrancer or owner
24 is of record, the security interest has priority over any
25 conflicting interest of a predecessor in title of the
26 encumbrancer or owner, and the debtor has an interest of
27 record in the real estate or is in possession of the real
28 estate; or
29 (c) the fixtures are readily removable factory or
30 office machines or readily removable replacements of
31 domestic appliances which are consumer goods, and before
32 the goods become fixtures the security interest is
33 perfected by any method permitted by this Article; or
34 (d) the conflicting interest is a lien on the real
-106- LRB9112852JSpc
1 estate obtained by legal or equitable proceedings after
2 the security interest was perfected by any method
3 permitted by this Article.
4 (5) A security interest in fixtures, whether or not
5 perfected, has priority over the conflicting interest of an
6 encumbrancer or owner of the real estate where:
7 (a) the encumbrancer or owner has consented in
8 writing to the security interest or has disclaimed an
9 interest in the goods as fixtures; or
10 (b) the debtor has a right to remove the goods as
11 against the encumbrancer or owner. If the debtor's right
12 terminates, the priority of the security interest
13 continues for a reasonable time.
14 (6) Notwithstanding paragraph (a) of subsection (4) but
15 otherwise subject to subsections (4) and (5), a security
16 interest in fixtures is subordinate to a construction
17 mortgage recorded before the goods become fixtures if the
18 goods become fixtures before the completion of the
19 construction. To the extent that it is given to refinance a
20 construction mortgage, a mortgage has this priority to the
21 same extent as the construction mortgage.
22 (7) In cases not within the preceding subsections, a
23 security interest in fixtures is subordinate to the
24 conflicting interest of an encumbrancer or owner of the
25 related real estate who is not the debtor.
26 (8) When the secured party has priority over all owners
27 and encumbrancers of the real estate, he may, on default,
28 subject to the provisions of Part 5, remove his collateral
29 from the real estate but he must reimburse any encumbrancer
30 or owner of the real estate who is not the debtor and who has
31 not otherwise agreed for the cost of repair of any physical
32 injury, but not for any diminution in value of the real
33 estate caused by the absence of the goods removed or by any
34 necessity of replacing them. A person entitled to
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1 reimbursement may refuse permission to remove until the
2 secured party gives adequate security for the performance of
3 this obligation.
4 (Source: P.A. 91-357, eff. 7-29-99.)
5 (810 ILCS 5/9-314) (from Ch. 26, par. 9-314)
6 Sec. 9-314. Perfection by control.
7 (a) Perfection by control. A security interest in
8 investment property, deposit accounts, letter-of-credit
9 rights, or electronic chattel paper may be perfected by
10 control of the collateral under Section 9-104, 9-105, 9-106,
11 or 9-107.
12 (b) Specified collateral: time of perfection by
13 control; continuation of perfection. A security interest in
14 deposit accounts, electronic chattel paper, or
15 letter-of-credit rights is perfected by control under Section
16 9-104, 9-105, or 9-107 when the secured party obtains control
17 and remains perfected by control only while the secured party
18 retains control.
19 (c) Investment property: time of perfection by control;
20 continuation of perfection. A security interest in
21 investment property is perfected by control under Section
22 9-106 from the time the secured party obtains control and
23 remains perfected by control until:
24 (1) the secured party does not have control; and
25 (2) one of the following occurs:
26 (A) if the collateral is a certificated
27 security, the debtor has or acquires possession of
28 the security certificate;
29 (B) if the collateral is an uncertificated
30 security, the issuer has registered or registers the
31 debtor as the registered owner; or
32 (C) if the collateral is a security
33 entitlement, the debtor is or becomes the
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1 entitlement holder. Accessions.
2 (1) A security interest in goods which attaches before
3 they are installed in or affixed to other goods takes
4 priority as to the goods installed or affixed (called in this
5 section "accessions") over the claims of all persons to the
6 whole except as stated in subsection (3) and subject to
7 Section 9--315(1).
8 (2) A security interest which attaches to goods after
9 they become part of a whole is valid against all persons
10 subsequently acquiring interests in the whole except as
11 stated in subsection (3) but is invalid against any person
12 with an interest in the whole at the time the security
13 interest attaches to the goods who has not in writing
14 consented to the security interest or disclaimed an interest
15 in the goods as part of the whole.
16 (3) The security interests described in subsections (1)
17 and (2) do not take priority over
18 (a) a subsequent purchaser for value of any
19 interest in the whole; or
20 (b) a creditor with a lien on the whole
21 subsequently obtained by judicial proceedings; or
22 (c) a creditor with a prior perfected security
23 interest in the whole to the extent that he makes subsequent
24 advances if the subsequent purchase is made, the lien by
25 judicial proceedings obtained or the subsequent advance under
26 the prior perfected security interest is made or contracted
27 for without knowledge of the security interest and before it
28 is perfected. A purchaser of the whole at a foreclosure sale
29 other than the holder of a perfected security interest
30 purchasing at his own foreclosure sale is a subsequent
31 purchaser within this Section.
32 (4) When under subsections (1) or (2) and (3) a secured
33 party has an interest in accessions which has priority over
34 the claims of all persons who have interests in the whole, he
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1 may on default subject to the provisions of Part 5 remove his
2 collateral from the whole but he must reimburse any
3 encumbrancer or owner of the whole who is not the debtor and
4 who has not otherwise agreed for the cost of repair of any
5 physical injury but not for any diminution in value of the
6 whole caused by the absence of the goods removed or by any
7 necessity for replacing them. A person entitled to
8 reimbursement may refuse permission to remove until the
9 secured party gives adequate security for the performance of
10 this obligation.
11 (Source: Laws 1961, p. 2101.)
12 (810 ILCS 5/9-315) (from Ch. 26, par. 9-315)
13 Sec. 9-315. Secured party's rights on disposition of
14 collateral and in proceeds.
15 (a) Disposition of collateral: continuation of security
16 interest or agricultural lien; proceeds. Except as otherwise
17 provided in this Article and in Section 2-403(2):
18 (1) a security interest or agricultural lien
19 continues in collateral notwithstanding sale, lease,
20 license, exchange, or other disposition thereof unless
21 the secured party authorized the disposition free of the
22 security interest or agricultural lien; and
23 (2) a security interest attaches to any
24 identifiable proceeds of collateral.
25 (b) When commingled proceeds identifiable. Proceeds
26 that are commingled with other property are identifiable
27 proceeds:
28 (1) if the proceeds are goods, to the extent
29 provided by Section 9-336; and
30 (2) if the proceeds are not goods, to the extent
31 that the secured party identifies the proceeds by a
32 method of tracing, including application of equitable
33 principles, that is permitted under law other than this
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1 Article with respect to commingled property of the type
2 involved.
3 (c) Perfection of security interest in proceeds. A
4 security interest in proceeds is a perfected security
5 interest if the security interest in the original collateral
6 was perfected.
7 (d) Continuation of perfection. A perfected security
8 interest in proceeds becomes unperfected on the 21st day
9 after the security interest attaches to the proceeds unless:
10 (1) the following conditions are satisfied:
11 (A) a filed financing statement covers the
12 original collateral;
13 (B) the proceeds are collateral in which a
14 security interest may be perfected by filing in the
15 office in which the financing statement has been
16 filed; and
17 (C) the proceeds are not acquired with cash
18 proceeds;
19 (2) the proceeds are identifiable cash proceeds; or
20 (3) the security interest in the proceeds is
21 perfected other than under subsection (c) when the
22 security interest attaches to the proceeds or within 20
23 days thereafter.
24 (e) When perfected security interest in proceeds becomes
25 unperfected. If a filed financing statement covers the
26 original collateral, a security interest in proceeds which
27 remains perfected under subsection (d)(1) becomes unperfected
28 at the later of:
29 (1) when the effectiveness of the filed financing
30 statement lapses under Section 9-515 or is terminated
31 under Section 9-513; or
32 (2) the 21st day after the security interest
33 attaches to the proceeds. Priority when goods are
34 commingled or processed.
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1 (1) If a security interest in goods was perfected and
2 subsequently the goods or a part thereof have become part of
3 a product or mass, the security interest continues in the
4 product or mass if
5 (a) the goods are so manufactured, processed,
6 assembled or commingled that their identity is lost in the
7 product or mass; or
8 (b) a financing statement covering the original
9 goods also covers the product into which the goods have been
10 manufactured, processed or assembled. In a case to which
11 paragraph (b) applies, no separate security interest in that
12 part of the original goods which has been manufactured,
13 processed or assembled into the product may be claimed under
14 Section 9--314.
15 (2) When under subsection (1) more than one security
16 interest attaches to the product or mass, they rank equally
17 according to the ratio that the cost of the goods to which
18 each interest originally attached bears to the cost of the
19 total product or mass.
20 (Source: Laws 1961, p. 2101.)
21 (810 ILCS 5/9-315.01 new)
22 Sec. 9-315.01. Debtor disposing of collateral and
23 failing to pay secured party amount due under security
24 agreement; penalties for violation.
25 (1) It is unlawful for a debtor under the terms of a
26 security agreement (a) who has no right of sale or other
27 disposition of the collateral or (b) who has a right of sale
28 or other disposition of the collateral and is to account to
29 the secured party for the proceeds of any sale or other
30 disposition of the collateral, to sell or otherwise dispose
31 of the collateral and willfully and wrongfully to fail to pay
32 the secured party the amount of said proceeds due under the
33 security agreement. Failure to pay such proceeds to the
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1 secured party within 10 days after the sale or other
2 disposition of the collateral is prima facie evidence of a
3 willful and wanton failure to pay.
4 (2) An individual convicted of a violation of this
5 Section shall be guilty of a Class 3 felony.
6 (3) A corporation convicted of a violation of this
7 Section shall be guilty of a business offense and shall be
8 fined not less than $2,000 nor more than $10,000.
9 (4) In the event the debtor under the terms of a
10 security agreement is a corporation or a partnership, any
11 officer, director, manager, or managerial agent of the debtor
12 who violates this Section or causes the debtor to violate
13 this Section shall be guilty of a Class 3 felony.
14 (810 ILCS 5/9-315.02 new)
15 Sec. 315.02. Disposal of collateral by debtor to persons
16 other than those previously disclosed to secured
17 party-penalties for violation-defense.
18 (1) Where, pursuant to Section 9-205.1, a secured party
19 has required that before the debtor sells or otherwise
20 disposes of collateral in the debtor's possession he disclose
21 to the secured party the persons to whom he desires to sell
22 or otherwise dispose of such collateral, it is unlawful for
23 the debtor to sell or otherwise dispose of the collateral to
24 a person other than a person so disclosed to the secured
25 party.
26 (2) An individual convicted of a violation of this
27 Section shall be guilty of a Class A misdemeanor.
28 (3) A corporation convicted of a violation of this
29 Section shall be guilty of a business offense and shall be
30 fined not less than $2,000 nor more than $10,000.
31 (4) In the event the debtor under the terms of a
32 security agreement is a corporation or a partnership, any
33 officer, director, manager, or managerial agent of the debtor
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1 who violates this Section or causes the debtor to violate
2 this Section shall be guilty of a Class A misdemeanor.
3 (5) It is an affirmative defense to a prosecution for
4 the violation of this Section that the debtor has paid to the
5 secured party the proceeds from the sale or other disposition
6 of the collateral within 10 days after such sale or
7 disposition.
8 (810 ILCS 5/9-316) (from Ch. 26, par. 9-316)
9 Sec. 9-316. Continued perfection of security interest
10 following change in governing law.
11 (a) General rule: effect on perfection of change in
12 governing law. A security interest perfected pursuant to the
13 law of the jurisdiction designated in Section 9-301(1) or
14 9-305(c) remains perfected until the earliest of:
15 (1) the time perfection would have ceased under the
16 law of that jurisdiction;
17 (2) the expiration of four months after a change of
18 the debtor's location to another jurisdiction; or
19 (3) the expiration of one year after a transfer of
20 collateral to a person that thereby becomes a debtor and
21 is located in another jurisdiction.
22 (b) Security interest perfected or unperfected under law
23 of new jurisdiction. If a security interest described in
24 subsection (a) becomes perfected under the law of the other
25 jurisdiction before the earliest time or event described in
26 that subsection, it remains perfected thereafter. If the
27 security interest does not become perfected under the law of
28 the other jurisdiction before the earliest time or event, it
29 becomes unperfected and is deemed never to have been
30 perfected as against a purchaser of the collateral for value.
31 (c) Possessory security interest in collateral moved to
32 new jurisdiction. A possessory security interest in
33 collateral, other than goods covered by a certificate of
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1 title and as-extracted collateral consisting of goods,
2 remains continuously perfected if:
3 (1) the collateral is located in one jurisdiction
4 and subject to a security interest perfected under the
5 law of that jurisdiction;
6 (2) thereafter the collateral is brought into
7 another jurisdiction; and
8 (3) upon entry into the other jurisdiction, the
9 security interest is perfected under the law of the other
10 jurisdiction.
11 (d) Goods covered by certificate of title from this
12 State. Except as otherwise provided in subsection (e), a
13 security interest in goods covered by a certificate of title
14 which is perfected by any method under the law of another
15 jurisdiction when the goods become covered by a certificate
16 of title from this State remains perfected until the security
17 interest would have become unperfected under the law of the
18 other jurisdiction had the goods not become so covered.
19 (e) When subsection (d) security interests becomes
20 unperfected against purchasers. A security interest
21 described in subsection (d) becomes unperfected as against a
22 purchaser of the goods for value and is deemed never to have
23 been perfected as against a purchaser of the goods for value
24 if the applicable requirements for perfection under Section
25 9-311(b) or 9-313 are not satisfied before the earlier of:
26 (1) the time the security interest would have
27 become unperfected under the law of the other
28 jurisdiction had the goods not become covered by a
29 certificate of title from this State; or
30 (2) the expiration of four months after the goods
31 had become so covered.
32 (f) Change in jurisdiction of bank, issuer, nominated
33 person, securities intermediary, or commodity intermediary.
34 A security interest in deposit accounts, letter-of-credit
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1 rights, or investment property which is perfected under the
2 law of the bank's jurisdiction, the issuer's jurisdiction, a
3 nominated person's jurisdiction, the securities
4 intermediary's jurisdiction, or the commodity intermediary's
5 jurisdiction, as applicable, remains perfected until the
6 earlier of:
7 (1) the time the security interest would have
8 become unperfected under the law of that jurisdiction; or
9 (2) the expiration of four months after a change of
10 the applicable jurisdiction to another jurisdiction.
11 (g) Subsection (f) security interest perfected or
12 unperfected under law of new jurisdiction. If a security
13 interest described in subsection (f) becomes perfected under
14 the law of the other jurisdiction before the earlier of the
15 time or the end of the period described in that subsection,
16 it remains perfected thereafter. If the security interest
17 does not become perfected under the law of the other
18 jurisdiction before the earlier of that time or the end of
19 that period, it becomes unperfected and is deemed never to
20 have been perfected as against a purchaser of the collateral
21 for value. Priority subject to subordination.
22 Nothing in this Article prevents subordination by
23 agreement by any person entitled to priority.
24 (Source: Laws 1961, p. 2101.)
25 (810 ILCS 5/Art. 9, Part 3, Subpart 3 heading new)
26 SUBPART 3. PRIORITY
27 (810 ILCS 5/9-317) (from Ch. 26, par. 9-317)
28 Sec. 9-317. Interests that take priority over or take
29 free of security interest or agricultural lien.
30 (a) Conflicting security interests and rights of lien
31 creditors. A security interest or agricultural lien is
32 subordinate to the rights of:
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1 (1) a person entitled to priority under Section
2 9-322; and
3 (2) except as otherwise provided in subsection (e),
4 a person that becomes a lien creditor before the earlier
5 of the time the security interest or agricultural lien is
6 perfected or a financing statement covering the
7 collateral is filed; provided, however, that an
8 unperfected security interest shall take priority over
9 the rights of a lien creditor if (i) the lien creditor is
10 a trustee or receiver of a bank or federally chartered
11 financial institution acting in furtherance of its
12 supervisory authority over the financial institution and
13 (ii) a security interest is granted by the bank or
14 financial institution to secure a deposit of public funds
15 with the bank or financial institution or a repurchase
16 agreement with the bank or financial institution pursuant
17 to the Government Securities Act of 1986, as amended.
18 (b) Buyers that receive delivery. Except as otherwise
19 provided in subsection (e), a buyer, other than a secured
20 party, of tangible chattel paper, documents, goods,
21 instruments, or a security certificate takes free of a
22 security interest or agricultural lien if the buyer gives
23 value and receives delivery of the collateral without
24 knowledge of the security interest or agricultural lien and
25 before it is perfected.
26 (c) Lessees that receive delivery. Except as otherwise
27 provided in subsection (e), a lessee of goods takes free of a
28 security interest or agricultural lien if the lessee gives
29 value and receives delivery of the collateral without
30 knowledge of the security interest or agricultural lien and
31 before it is perfected.
32 (d) Licensees and buyers of certain collateral. A
33 licensee of a general intangible or a buyer, other than a
34 secured party, of accounts, electronic chattel paper, general
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1 intangibles, or investment property other than a certificated
2 security takes free of a security interest if the licensee or
3 buyer gives value without knowledge of the security interest
4 and before it is perfected.
5 (e) Purchase-money security interest. Except as
6 otherwise provided in Sections 9-320 and 9-321, if a person
7 files a financing statement with respect to a purchase-money
8 security interest before or within 20 days after the debtor
9 receives delivery of the collateral, the security interest
10 takes priority over the rights of a buyer, lessee, or lien
11 creditor which arise between the time the security interest
12 attaches and the time of filing. Secured party not obligated
13 on contract of debtor.
14 The mere existence of a security interest or authority
15 given to the debtor to dispose of or use collateral does not
16 impose contract or tort liability upon the secured party for
17 the debtor's acts or omissions.
18 (Source: Laws 1961, p. 2101.)
19 (810 ILCS 5/9-318) (from Ch. 26, par. 9-318)
20 Sec. 9-318. No interest retained in right to payment
21 that is sold; rights and title of seller of account or
22 chattel paper with respect to creditors and purchasers.
23 (a) Seller retains no interest. A debtor that has sold
24 an account, chattel paper, payment intangible, or promissory
25 note does not retain a legal or equitable interest in the
26 collateral sold.
27 (b) Deemed rights of debtor if buyer's security interest
28 unperfected. For purposes of determining the rights of
29 creditors of, and purchasers for value of an account or
30 chattel paper from, a debtor that has sold an account or
31 chattel paper, while the buyer's security interest is
32 unperfected, the debtor is deemed to have rights and title to
33 the account or chattel paper identical to those the debtor
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1 sold. Defenses Against Assignee; Modification of Contract
2 After Notification of Assignment; Term Prohibiting Assignment
3 Ineffective; Identification and Proof of Assignment.
4 (1) Unless an account debtor has made an enforceable
5 agreement not to assert defenses or claims arising out of a
6 sale as provided in Section 9-- 206 the rights of an assignee
7 are subject to
8 (a) all the terms of the contract between the
9 account debtor and assignor and any defense or claim arising
10 therefrom; and
11 (b) any other defense or claim of the account
12 debtor against the assignor which accrues before the account
13 debtor receives notification of the assignment.
14 (2) So far as the right to payment or a part thereof
15 under an assigned contract has not been fully earned by
16 performance, and notwithstanding notification of the
17 assignment, any modification of or substitution for the
18 contract made in good faith and in accordance with reasonable
19 commercial standards is effective against an assignee unless
20 the account debtor has otherwise agreed but the assignee
21 acquires corresponding rights under the modified or
22 substituted contract. The assignment may provide that such
23 modification or substitution is a breach by the assignor.
24 (3) The account debtor is authorized to pay the assignor
25 until the account debtor receives notification that the
26 amount due or to become due has been assigned and that
27 payment is to be made to the assignee. A notification which
28 does not reasonably identify the rights assigned is
29 ineffective. If requested by the account debtor, the assignee
30 must seasonably furnish reasonable proof that the assignment
31 has been made and unless he does so the account debtor may
32 pay the assignor.
33 (4) A term in any contract between an account debtor and
34 an assignor is ineffective if it prohibits assignment of an
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1 account or prohibits creation of a security interest in a
2 general intangible for money due or to become due or requires
3 the account debtor's consent to such assignment or security
4 interest.
5 (Source: P.A. 77-2810.)
6 (810 ILCS 5/9-319 new)
7 Sec. 9-319. Rights and title of consignee with respect
8 to creditors and purchasers.
9 (a) Consignee has consignor's rights. Except as
10 otherwise provided in subsection (b), for purposes of
11 determining the rights of creditors of, and purchasers for
12 value of goods from, a consignee, while the goods are in the
13 possession of the consignee, the consignee is deemed to have
14 rights and title to the goods identical to those the
15 consignor had or had power to transfer.
16 (b) Applicability of other law. For purposes of
17 determining the rights of a creditor of a consignee, law
18 other than this Article determines the rights and title of a
19 consignee while goods are in the consignee's possession if,
20 under this Part, a perfected security interest held by the
21 consignor would have priority over the rights of the
22 creditor.
23 (810 ILCS 5/9-320 new)
24 Sec. 9-320. Buyer of goods.
25 (a) Buyer in ordinary course of business. Except as
26 otherwise provided in subsection (e), a buyer in ordinary
27 course of business, other than a person buying farm products
28 from a person engaged in farming operations, takes free of a
29 security interest created by the buyer's seller, even if the
30 security interest is perfected and the buyer knows of its
31 existence.
32 (b) Buyer of consumer goods. Except as otherwise
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1 provided in subsection (e), a buyer of goods from a person
2 who used or bought the goods for use primarily for personal,
3 family, or household purposes takes free of a security
4 interest, even if perfected, if the buyer buys:
5 (1) without knowledge of the security interest;
6 (2) for value;
7 (3) primarily for the buyer's personal, family, or
8 household purposes; and
9 (4) before the filing of a financing statement
10 covering the goods.
11 (c) Effectiveness of filing for subsection (b). To the
12 extent that it affects the priority of a security interest
13 over a buyer of goods under subsection (b), the period of
14 effectiveness of a filing made in the jurisdiction in which
15 the seller is located is governed by Section 9-316(a) and
16 (b).
17 (d) Buyer in ordinary course of business at wellhead or
18 minehead. A buyer in ordinary course of business buying oil,
19 gas, or other minerals at the wellhead or minehead or after
20 extraction takes free of an interest arising out of an
21 encumbrance.
22 (e) Possessory security interest not affected.
23 Subsections (a) and (b) do not affect a security interest in
24 goods in the possession of the secured party under Section
25 9-313.
26 (810 ILCS 5/9-320.1 new)
27 Sec. 9-320.1. Buyers of farm products.
28 (a) Notwithstanding any other provisions of Article 9, a
29 buyer of farm products takes subject to a security interest
30 created by the seller if:
31 (1) within one year before the sale of the farm
32 products, the buyer has received from the secured party
33 or the seller notice of the security interest in a record
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1 that:
2 (A) contains: (i) the name and address of the
3 secured party; (ii) the name and address of the
4 person indebted to the secured party; (iii) the
5 social security number of the debtor or, in case of
6 a debtor doing business other than as an individual,
7 the Internal Revenue Service tax payer
8 identification number of such debtor; (iv) a
9 description of the farm products subject to the
10 security interest created by the debtor, including
11 the amount of such products where applicable, crop
12 year, county, and a reasonable description of the
13 property;
14 (B) must be amended in writing, within 3
15 months, similarly authenticated and transmitted, to
16 reflect material changes;
17 (C) will lapse on the earlier of the
18 expiration period of the statement or the
19 transmission of a notice signed by the secured party
20 that the statement has lapsed, whichever occurs
21 first; and
22 (D) sets forth any payment obligations imposed
23 on the buyer by the secured party as conditions for
24 waiver or release of the security interest; and
25 (2) the buyer has failed to perform the payment
26 obligations.
27 (b) For the purposes of this Section, a buyer of farm
28 products has received notice from the secured party or seller
29 when written notice of the security interest is sent to the
30 buyer by registered or certified mail or when notice in an
31 electronic record is sent to an information processing system
32 that the buyer has designated or uses for the purpose of
33 receiving electronic records to be retrieved by the buyer.
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1 (810 ILCS 5/9-320.2 new)
2 Sec. 9-320.2. Liability of commission merchant or
3 selling agent engaged in sale of livestock or other farm
4 products to holder of security interest.
5 (a) Notwithstanding any other provisions of Article 9, a
6 commission merchant or selling agent who sells a farm product
7 for others shall be subject to a security interest created by
8 the seller in such farm product if:
9 (1) within one year before the sale of the farm
10 products, the buyer has received from the secured party
11 or the seller notice of the security interest in a record
12 that:
13 (A) contains: (i) the name and address of the
14 secured party; (ii) the name and address of the
15 person indebted to the secured party; (iii) the
16 social security number of the debtor or, in case of
17 a debtor doing business other than as an individual,
18 the Internal Revenue Service tax payer
19 identification number of such debtor; (iv) a
20 description of the farm products subject to the
21 security interest created by the debtor, including
22 the amount of such products where applicable, crop
23 year, county, and a reasonable description of the
24 property;
25 (B) must be amended in writing, within 3
26 months, similarly authenticated and transmitted, to
27 reflect material changes;
28 (C) will lapse on the earlier of the
29 expiration period of the statement or the
30 transmission of a notice signed by the secured party
31 that the statement has lapsed, whichever occurs
32 first; and
33 (D) sets forth any payment obligations imposed
34 on the buyer by the secured party as conditions for
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1 waiver or release of the security interest; and
2 (2) the commission merchant or selling agent has
3 failed to perform the payment obligations.
4 (b) For the purposes of this Section, a commission
5 merchant or selling agent buyer of farm products has received
6 notice from the secured party or seller when written notice
7 of the security interest is sent to the commission merchant
8 or selling agent by registered or certified mail or when
9 notice in an electronic record is sent to an information
10 processing system that the commission merchant or selling
11 agent has designated or uses for the purpose of receiving
12 electronic records to be retrieved by the buyer.
13 (810 ILCS 5/9-320.3 new)
14 Sec. 9-320.3 Notice to sellers of farm products. A
15 commission merchant or selling agent who sells farm products
16 for others, and any person buying farm products in the
17 ordinary course of business from a person engaged in farming
18 operations, shall post at each licensed location where the
19 merchant, agent, or person buying farm products in the
20 ordinary course of business does business a notice that shall
21 read as follows:
22 "NOTICE TO SELLERS OF FARM PRODUCTS
23 It is a criminal offense to sell farm products subject to
24 a security interest without making payment to the secured
25 party. You should notify the purchaser if there is a
26 security interest in the farm products you are selling.".
27 The notice shall be posted in a conspicuous manner and
28 shall be in contrasting type, large enough to be read from a
29 distance of 10 feet.
30 (810 ILCS 5/9-321 new)
31 Sec. 9-321. Licensee of general intangible and lessee of
32 goods in ordinary course of business.
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1 (a) "Licensee in ordinary course of business." In this
2 Section, "licensee in ordinary course of business" means a
3 person that becomes a licensee of a general intangible in
4 good faith, without knowledge that the license violates the
5 rights of another person in the general intangible, and in
6 the ordinary course from a person in the business of
7 licensing general intangibles of that kind. A person becomes
8 a licensee in the ordinary course if the license to the
9 person comports with the usual or customary practices in the
10 kind of business in which the licensor is engaged or with the
11 licensor's own usual or customary practices.
12 (b) Rights of licensee in ordinary course of business.
13 A licensee in ordinary course of business takes its rights
14 under a nonexclusive license free of a security interest in
15 the general intangible created by the licensor, even if the
16 security interest is perfected and the licensee knows of its
17 existence.
18 (c) Rights of lessee in ordinary course of business. A
19 lessee in ordinary course of business takes its leasehold
20 interest free of a security interest in the goods created by
21 the lessor, even if the security interest is perfected and
22 the lessee knows of its existence.
23 (810 ILCS 5/9-322 new)
24 Sec. 9-322. Priorities among conflicting security
25 interests in and agricultural liens on same collateral.
26 (a) General priority rules. Except as otherwise
27 provided in this Section, priority among conflicting security
28 interests and agricultural liens in the same collateral is
29 determined according to the following rules:
30 (1) Conflicting perfected security interests and
31 agricultural liens rank according to priority in time of
32 filing or perfection. Priority dates from the earlier of
33 the time a filing covering the collateral is first made
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1 or the security interest or agricultural lien is first
2 perfected, if there is no period thereafter when there is
3 neither filing nor perfection.
4 (2) A perfected security interest or agricultural
5 lien has priority over a conflicting unperfected security
6 interest or agricultural lien.
7 (3) The first security interest or agricultural
8 lien to attach or become effective has priority if
9 conflicting security interests and agricultural liens are
10 unperfected.
11 (b) Time of perfection: proceeds and supporting
12 obligations. For the purposes of subsection (a)(1):
13 (1) the time of filing or perfection as to a
14 security interest in collateral is also the time of
15 filing or perfection as to a security interest in
16 proceeds; and
17 (2) the time of filing or perfection as to a
18 security interest in collateral supported by a supporting
19 obligation is also the time of filing or perfection as to
20 a security interest in the supporting obligation.
21 (c) Special priority rules: proceeds and supporting
22 obligations. Except as otherwise provided in subsection (f),
23 a security interest in collateral which qualifies for
24 priority over a conflicting security interest under Section
25 9-327, 9-328, 9-329, 9-330, or 9-331 also has priority over a
26 conflicting security interest in:
27 (1) any supporting obligation for the collateral;
28 and
29 (2) proceeds of the collateral if:
30 (A) the security interest in proceeds is
31 perfected;
32 (B) the proceeds are cash proceeds or of the
33 same type as the collateral; and
34 (C) in the case of proceeds that are proceeds
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1 of proceeds, all intervening proceeds are cash
2 proceeds, proceeds of the same type as the
3 collateral, or an account relating to the
4 collateral.
5 (d) First-to-file priority rule for certain collateral.
6 Subject to subsection (e) and except as otherwise provided in
7 subsection (f), if a security interest in chattel paper,
8 deposit accounts, negotiable documents, instruments,
9 investment property, or letter-of-credit rights is perfected
10 by a method other than filing, conflicting perfected security
11 interests in proceeds of the collateral rank according to
12 priority in time of filing.
13 (e) Applicability of subsection (d). Subsection (d)
14 applies only if the proceeds of the collateral are not cash
15 proceeds, chattel paper, negotiable documents, instruments,
16 investment property, or letter-of-credit rights.
17 (f) Limitations on subsections (a) through (e).
18 Subsections (a) through (e) are subject to:
19 (1) subsection (g) and the other provisions of this
20 Part;
21 (2) Section 4-210 with respect to a security
22 interest of a collecting bank;
23 (3) Section 5-118 with respect to a security
24 interest of an issuer or nominated person; and
25 (4) Section 9-110 with respect to a security
26 interest arising under Article 2 or 2A.
27 (g) Priority under agricultural lien statute. A
28 perfected agricultural lien on collateral has priority over a
29 conflicting security interest in or agricultural lien on the
30 same collateral if the statute creating the agricultural lien
31 so provides.
32 (810 ILCS 5/9-323 new)
33 Sec. 9-323. Future advances.
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1 (a) When priority based on time of advance. Except as
2 otherwise provided in subsection (c), for purposes of
3 determining the priority of a perfected security interest
4 under Section 9-322(a)(1), perfection of the security
5 interest dates from the time an advance is made to the extent
6 that the security interest secures an advance that:
7 (1) is made while the security interest is
8 perfected only:
9 (A) under Section 9-309 when it attaches; or
10 (B) temporarily under Section 9-312(e), (f),
11 or (g); and
12 (2) is not made pursuant to a commitment entered
13 into before or while the security interest is perfected
14 by a method other than under Section 9-309 or 9-312(e),
15 (f), or (g).
16 (b) Lien creditor. Except as otherwise provided in
17 subsection (c), a security interest is subordinate to the
18 rights of a person that becomes a lien creditor to the extent
19 that the security interest secures an advance made more than
20 45 days after the person becomes a lien creditor unless the
21 advance is made:
22 (1) without knowledge of the lien; or
23 (2) pursuant to a commitment entered into without
24 knowledge of the lien.
25 (c) Buyer of receivables. Subsections (a) and (b) do
26 not apply to a security interest held by a secured party that
27 is a buyer of accounts, chattel paper, payment intangibles,
28 or promissory notes or a consignor.
29 (d) Buyer of goods. Except as otherwise provided in
30 subsection (e), a buyer of goods other than a buyer in
31 ordinary course of business takes free of a security interest
32 to the extent that it secures advances made after the earlier
33 of:
34 (1) the time the secured party acquires knowledge
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1 of the buyer's purchase; or
2 (2) 45 days after the purchase.
3 (e) Advances made pursuant to commitment: priority of
4 buyer of goods. Subsection (d) does not apply if the advance
5 is made pursuant to a commitment entered into without
6 knowledge of the buyer's purchase and before the expiration
7 of the 45-day period.
8 (f) Lessee of goods. Except as otherwise provided in
9 subsection (g), a lessee of goods, other than a lessee in
10 ordinary course of business, takes the leasehold interest
11 free of a security interest to the extent that it secures
12 advances made after the earlier of:
13 (1) the time the secured party acquires knowledge
14 of the lease; or
15 (2) 45 days after the lease contract becomes
16 enforceable.
17 (g) Advances made pursuant to commitment: priority of
18 lessee of goods. Subsection (f) does not apply if the
19 advance is made pursuant to a commitment entered into without
20 knowledge of the lease and before the expiration of the
21 45-day period.
22 (810 ILCS 5/9-324 new)
23 Sec. 9-324. Priority of purchase-money security
24 interests.
25 (a) General rule: purchase-money priority. Except as
26 otherwise provided in subsection (g), a perfected
27 purchase-money security interest in goods other than
28 inventory or livestock has priority over a conflicting
29 security interest in the same goods, and, except as otherwise
30 provided in Section 9-327, a perfected security interest in
31 its identifiable proceeds also has priority, if the
32 purchase-money security interest is perfected when the debtor
33 receives possession of the collateral or within 20 days
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1 thereafter.
2 (b) Inventory purchase-money priority. Subject to
3 subsection (c) and except as otherwise provided in subsection
4 (g), a perfected purchase-money security interest in
5 inventory has priority over a conflicting security interest
6 in the same inventory, has priority over a conflicting
7 security interest in chattel paper or an instrument
8 constituting proceeds of the inventory and in proceeds of the
9 chattel paper, if so provided in Section 9-330, and, except
10 as otherwise provided in Section 9-327, also has priority in
11 identifiable cash proceeds of the inventory to the extent the
12 identifiable cash proceeds are received on or before the
13 delivery of the inventory to a buyer, if:
14 (1) the purchase-money security interest is
15 perfected when the debtor receives possession of the
16 inventory;
17 (2) the purchase-money secured party sends an
18 authenticated notification to the holder of the
19 conflicting security interest;
20 (3) the holder of the conflicting security interest
21 receives the notification within five years before the
22 debtor receives possession of the inventory; and
23 (4) the notification states that the person sending
24 the notification has or expects to acquire a
25 purchase-money security interest in inventory of the
26 debtor and describes the inventory.
27 (c) Holders of conflicting inventory security interests
28 to be notified. Subsections (b)(2) through (4) apply only if
29 the holder of the conflicting security interest had filed a
30 financing statement covering the same types of inventory:
31 (1) if the purchase-money security interest is
32 perfected by filing, before the date of the filing; or
33 (2) if the purchase-money security interest is
34 temporarily perfected without filing or possession under
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1 Section 9-312(f), before the beginning of the 20-day
2 period thereunder.
3 (d) Livestock purchase-money priority. Subject to
4 subsection (e) and except as otherwise provided in subsection
5 (g), a perfected purchase-money security interest in
6 livestock that are farm products has priority over a
7 conflicting security interest in the same livestock, and,
8 except as otherwise provided in Section 9-327, a perfected
9 security interest in their identifiable proceeds and
10 identifiable products in their unmanufactured states also has
11 priority, if:
12 (1) the purchase-money security interest is
13 perfected when the debtor receives possession of the
14 livestock;
15 (2) the purchase-money secured party sends an
16 authenticated notification to the holder of the
17 conflicting security interest;
18 (3) the holder of the conflicting security interest
19 receives the notification within six months before the
20 debtor receives possession of the livestock; and
21 (4) the notification states that the person sending
22 the notification has or expects to acquire a
23 purchase-money security interest in livestock of the
24 debtor and describes the livestock.
25 (e) Holders of conflicting livestock security interests
26 to be notified. Subsections (d)(2) through (4) apply only if
27 the holder of the conflicting security interest had filed a
28 financing statement covering the same types of livestock:
29 (1) if the purchase-money security interest is
30 perfected by filing, before the date of the filing; or
31 (2) if the purchase-money security interest is
32 temporarily perfected without filing or possession under
33 Section 9-312(f), before the beginning of the 20-day
34 period thereunder.
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1 (f) Software purchase-money priority. Except as
2 otherwise provided in subsection (g), a perfected
3 purchase-money security interest in software has priority
4 over a conflicting security interest in the same collateral,
5 and, except as otherwise provided in Section 9-327, a
6 perfected security interest in its identifiable proceeds also
7 has priority, to the extent that the purchase-money security
8 interest in the goods in which the software was acquired for
9 use has priority in the goods and proceeds of the goods under
10 this Section.
11 (g) Conflicting purchase-money security interests. If
12 more than one security interest qualifies for priority in the
13 same collateral under subsection (a), (b), (d), or (f):
14 (1) a security interest securing an obligation
15 incurred as all or part of the price of the collateral
16 has priority over a security interest securing an
17 obligation incurred for value given to enable the debtor
18 to acquire rights in or the use of collateral; and
19 (2) in all other cases, Section 9-322(a) applies to
20 the qualifying security interests.
21 (810 ILCS 5/9-325 new)
22 Sec. 9-325. Priority of security interests in
23 transferred collateral.
24 (a) Subordination of security interest in transferred
25 collateral. Except as otherwise provided in subsection (b), a
26 security interest created by a debtor is subordinate to a
27 security interest in the same collateral created by another
28 person if:
29 (1) the debtor acquired the collateral subject to
30 the security interest created by the other person;
31 (2) the security interest created by the other
32 person was perfected when the debtor acquired the
33 collateral; and
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1 (3) there is no period thereafter when the security
2 interest is unperfected.
3 (b) Limitation of subsection (a) subordination.
4 Subsection (a) subordinates a security interest only if the
5 security interest:
6 (1) otherwise would have priority solely under
7 Section 9-322(a) or 9-324; or
8 (2) arose solely under Section 2-711(3) or
9 2A-508(5).
10 (810 ILCS 5/9-326 new)
11 Sec. 9-326. Priority of security interests created by
12 new debtor.
13 (a) Subordination of security interest created by new
14 debtor. Subject to subsection (b), a security interest
15 created by a new debtor which is perfected by a filed
16 financing statement that is effective solely under Section
17 9-508 in collateral in which a new debtor has or acquires
18 rights is subordinate to a security interest in the same
19 collateral which is perfected other than by a filed financing
20 statement that is effective solely under Section 9-508.
21 (b) Priority under other provisions; multiple original
22 debtors. The other provisions of this Part determine the
23 priority among conflicting security interests in the same
24 collateral perfected by filed financing statements that are
25 effective solely under Section 9-508. However, if the
26 security agreements to which a new debtor became bound as
27 debtor were not entered into by the same original debtor, the
28 conflicting security interests rank according to priority in
29 time of the new debtor's having become bound.
30 (810 ILCS 5/9-327 new)
31 Sec. 9-327. Priority of security interests in deposit
32 account. The following rules govern priority among
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1 conflicting security interests in the same deposit account:
2 (1) A security interest held by a secured party having
3 control of the deposit account under Section 9-104 has
4 priority over a conflicting security interest held by a
5 secured party that does not have control.
6 (2) Except as otherwise provided in paragraphs (3) and
7 (4), security interests perfected by control under Section
8 9-314 rank according to priority in time of obtaining
9 control.
10 (3) Except as otherwise provided in paragraph (4), a
11 security interest held by the bank with which the deposit
12 account is maintained has priority over a conflicting
13 security interest held by another secured party.
14 (4) A security interest perfected by control under
15 Section 9-104(a)(3) has priority over a security interest
16 held by the bank with which the deposit account is
17 maintained.
18 (810 ILCS 5/9-328 new)
19 Sec. 9-328. Priority of security interests in investment
20 property. The following rules govern priority among
21 conflicting security interests in the same investment
22 property:
23 (1) A security interest held by a secured party having
24 control of investment property under Section 9-106 has
25 priority over a security interest held by a secured party
26 that does not have control of the investment property.
27 (2) Except as otherwise provided in paragraphs (3) and
28 (4), conflicting security interests held by secured parties
29 each of which has control under Section 9-106 rank according
30 to priority in time of:
31 (A) if the collateral is a security, obtaining
32 control;
33 (B) if the collateral is a security entitlement
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1 carried in a securities account and:
2 (i) if the secured party obtained control
3 under Section 8-106(d)(1), the secured party's
4 becoming the person for which the securities account
5 is maintained;
6 (ii) if the secured party obtained control
7 under Section 8-106(d)(2), the securities
8 intermediary's agreement to comply with the secured
9 party's entitlement orders with respect to security
10 entitlements carried or to be carried in the
11 securities account; or
12 (iii) if the secured party obtained control
13 through another person under Section 8-106(d)(3),
14 the time on which priority would be based under this
15 paragraph if the other person were the secured
16 party; or
17 (C) if the collateral is a commodity contract
18 carried with a commodity intermediary, the satisfaction
19 of the requirement for control specified in Section
20 9-106(b)(2) with respect to commodity contracts carried
21 or to be carried with the commodity intermediary.
22 (3) A security interest held by a securities
23 intermediary in a security entitlement or a securities
24 account maintained with the securities intermediary has
25 priority over a conflicting security interest held by another
26 secured party.
27 (4) A security interest held by a commodity intermediary
28 in a commodity contract or a commodity account maintained
29 with the commodity intermediary has priority over a
30 conflicting security interest held by another secured party.
31 (5) A security interest in a certificated security in
32 registered form which is perfected by taking delivery under
33 Section 9-313(a) and not by control under Section 9-314 has
34 priority over a conflicting security interest perfected by a
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1 method other than control.
2 (6) Conflicting security interests created by a broker,
3 securities intermediary, or commodity intermediary which are
4 perfected without control under Section 9-106 rank equally.
5 (7) In all other cases, priority among conflicting
6 security interests in investment property is governed by
7 Sections 9-322 and 9-323.
8 (810 ILCS 5/9-329 new)
9 Sec. 9-329. Priority of security interests in
10 letter-of-credit right. The following rules govern priority
11 among conflicting security interests in the same
12 letter-of-credit right:
13 (1) A security interest held by a secured party
14 having control of the letter-of-credit right under
15 Section 9-107 has priority to the extent of its control
16 over a conflicting security interest held by a secured
17 party that does not have control.
18 (2) Security interests perfected by control under
19 Section 9-314 rank according to priority in time of
20 obtaining control.
21 (810 ILCS 5/9-330 new)
22 Sec. 9-330. Priority of purchaser of chattel paper or
23 instrument.
24 (a) Purchaser's priority: security interest claimed
25 merely as proceeds. A purchaser of chattel paper has
26 priority over a security interest in the chattel paper which
27 is claimed merely as proceeds of inventory subject to a
28 security interest if:
29 (1) in good faith and in the ordinary course of the
30 purchaser's business, the purchaser gives new value and
31 takes possession of the chattel paper or obtains control
32 of the chattel paper under Section 9-105; and
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1 (2) the chattel paper does not indicate that it has
2 been assigned to an identified assignee other than the
3 purchaser.
4 (b) Purchaser's priority: other security interests. A
5 purchaser of chattel paper has priority over a security
6 interest in the chattel paper which is claimed other than
7 merely as proceeds of inventory subject to a security
8 interest if the purchaser gives new value and takes
9 possession of the chattel paper or obtains control of the
10 chattel paper under Section 9-105 in good faith, in the
11 ordinary course of the purchaser's business, and without
12 knowledge that the purchase violates the rights of the
13 secured party.
14 (c) Chattel paper purchaser's priority in proceeds.
15 Except as otherwise provided in Section 9-327, a purchaser
16 having priority in chattel paper under subsection (a) or (b)
17 also has priority in proceeds of the chattel paper to the
18 extent that:
19 (1) Section 9-322 provides for priority in the
20 proceeds; or
21 (2) the proceeds consist of the specific goods
22 covered by the chattel paper or cash proceeds of the
23 specific goods, even if the purchaser's security interest
24 in the proceeds is unperfected.
25 (d) Instrument purchaser's priority. Except as
26 otherwise provided in Section 9-331(a), a purchaser of an
27 instrument has priority over a security interest in the
28 instrument perfected by a method other than possession if the
29 purchaser gives value and takes possession of the instrument
30 in good faith and without knowledge that the purchase
31 violates the rights of the secured party.
32 (e) Holder of purchase-money security interest gives new
33 value. For purposes of subsections (a) and (b), the holder of
34 a purchase-money security interest in inventory gives new
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1 value for chattel paper constituting proceeds of the
2 inventory.
3 (f) Indication of assignment gives knowledge. For
4 purposes of subsections (b) and (d), if chattel paper or an
5 instrument indicates that it has been assigned to an
6 identified secured party other than the purchaser, a
7 purchaser of the chattel paper or instrument has knowledge
8 that the purchase violates the rights of the secured party.
9 (810 ILCS 5/9-331 new)
10 Sec. 9-331. Priority of rights of purchasers of
11 instruments, documents, and securities under other Articles;
12 priority of interests in financial assets and security
13 entitlements under Article 8.
14 (a) Rights under Articles 3, 7, and 8 not limited. This
15 Article does not limit the rights of a holder in due course
16 of a negotiable instrument, a holder to which a negotiable
17 document of title has been duly negotiated, or a protected
18 purchaser of a security. These holders or purchasers take
19 priority over an earlier security interest, even if
20 perfected, to the extent provided in Articles 3, 7, and 8.
21 (b) Protection under Article 8. This Article does not
22 limit the rights of or impose liability on a person to the
23 extent that the person is protected against the assertion of
24 a claim under Article 8.
25 (c) Filing not notice. Filing under this Article does
26 not constitute notice of a claim or defense to the holders,
27 or purchasers, or persons described in subsections (a) and
28 (b).
29 (810 ILCS 5/9-332 new)
30 Sec. 9-332. Transfer of money; transfer of funds from
31 deposit account.
32 (a) Transferee of money. A transferee of money takes
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1 the money free of a security interest unless the transferee
2 acts in collusion with the debtor in violating the rights of
3 the secured party.
4 (b) Transferee of funds from deposit account. A
5 transferee of funds from a deposit account takes the funds
6 free of a security interest in the deposit account unless the
7 transferee acts in collusion with the debtor in violating the
8 rights of the secured party.
9 (810 ILCS 5/9-333 new)
10 Sec. 9-333. Priority of certain liens arising by
11 operation of law.
12 (a) "Possessory lien." In this Section, "possessory
13 lien" means an interest, other than a security interest or an
14 agricultural lien:
15 (1) which secures payment or performance of an
16 obligation for services or materials furnished with
17 respect to goods by a person in the ordinary course of
18 the person's business;
19 (2) which is created by statute or rule of law in
20 favor of the person; and
21 (3) whose effectiveness depends on the person's
22 possession of the goods.
23 (b) Priority of possessory lien. A possessory lien on
24 goods has priority over a security interest in the goods
25 unless the lien is created by a statute that expressly
26 provides otherwise.
27 (810 ILCS 5/9-334 new)
28 Sec. 9-334. Priority of security interests in fixtures
29 and crops.
30 (a) Security interest in fixtures under this Article. A
31 security interest under this Article may be created in goods
32 that are fixtures or may continue in goods that become
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1 fixtures. A security interest does not exist under this
2 Article in ordinary building materials incorporated into an
3 improvement on land.
4 (b) Security interest in fixtures under real-property
5 law. This Article does not prevent creation of an
6 encumbrance upon fixtures under real property law.
7 (c) General rule: subordination of security interest in
8 fixtures. In cases not governed by subsections (d) through
9 (h), a security interest in fixtures is subordinate to a
10 conflicting interest of an encumbrancer or owner of the
11 related real property other than the debtor.
12 (d) Fixtures purchase-money priority. Except as
13 otherwise provided in subsection (h), a perfected security
14 interest in fixtures has priority over a conflicting interest
15 of an encumbrancer or owner of the real property if the
16 debtor has an interest of record in or is in possession of
17 the real property and:
18 (1) the security interest is a purchase-money
19 security interest;
20 (2) the interest of the encumbrancer or owner
21 arises before the goods become fixtures; and
22 (3) the security interest is perfected by a fixture
23 filing before the goods become fixtures or within 20 days
24 thereafter.
25 (e) Priority of security interest in fixtures over
26 interests in real property. A perfected security interest in
27 fixtures has priority over a conflicting interest of an
28 encumbrancer or owner of the real property if:
29 (1) the debtor has an interest of record in the
30 real property or is in possession of the real property
31 and the security interest:
32 (A) is perfected by a fixture filing before
33 the interest of the encumbrancer or owner is of
34 record; and
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1 (B) has priority over any conflicting interest
2 of a predecessor in title of the encumbrancer or
3 owner;
4 (2) before the goods become fixtures, the security
5 interest is perfected by any method permitted by this
6 Article and the fixtures are readily removable:
7 (A) factory or office machines;
8 (B) equipment that is not primarily used or
9 leased for use in the operation of the real
10 property; or
11 (C) replacements of domestic appliances that
12 are consumer goods;
13 (3) the conflicting interest is a lien on the real
14 property obtained by legal or equitable proceedings after
15 the security interest was perfected by any method
16 permitted by this Article; or
17 (4) the security interest is:
18 (A) created in a manufactured home in a
19 manufactured-home transaction; and
20 (B) perfected pursuant to a statute described
21 in Section 9-311(a)(2).
22 (f) Priority based on consent, disclaimer, or right to
23 remove. A security interest in fixtures, whether or not
24 perfected, has priority over a conflicting interest of an
25 encumbrancer or owner of the real property if:
26 (1) the encumbrancer or owner has, in an
27 authenticated record, consented to the security interest
28 or disclaimed an interest in the goods as fixtures; or
29 (2) the debtor has a right to remove the goods as
30 against the encumbrancer or owner.
31 (g) Continuation of subsection (f)(2) priority. The
32 priority of the security interest under subsection (f)(2)
33 continues for a reasonable time if the debtor's right to
34 remove the goods as against the encumbrancer or owner
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1 terminates.
2 (h) Priority of construction mortgage. A mortgage is a
3 construction mortgage to the extent that it secures an
4 obligation incurred for the construction of an improvement on
5 land, including the acquisition cost of the land, if a
6 recorded record of the mortgage so indicates. Except as
7 otherwise provided in subsections (e) and (f), a security
8 interest in fixtures is subordinate to a construction
9 mortgage if a record of the mortgage is recorded before the
10 goods become fixtures and the goods become fixtures before
11 the completion of the construction. A mortgage has this
12 priority to the same extent as a construction mortgage to the
13 extent that it is given to refinance a construction mortgage.
14 (i) Priority of security interest in crops.
15 (1) A perfected security interest in crops growing
16 on real property has priority over a conflicting interest
17 of:
18 (A) an encumbrancer or owner of the real
19 property if the debtor has an interest of record in
20 or is in possession of the real property; and
21 (B) the rights of a holder of an obligation
22 secured by a collateral assignment of beneficial
23 interest in a land trust, including rights by virtue
24 of an equitable lien.
25 (2) For purposes of this subsection:
26 (A) "Collateral assignment of beneficial
27 interest" means any pledge or assignment of the
28 beneficial interest in a land trust to a person to
29 secure a debt or other obligation.
30 (B) "Land trust" means any trust arrangement
31 under which the legal and equitable title to real
32 estate is held by a trustee, the interest of the
33 beneficiary of the trust is personal property, and
34 the beneficiary or any person designated in writing
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1 by the beneficiary has (i) the exclusive power to
2 direct or control the trustee in dealing with the
3 title to the trust property, (ii) the exclusive
4 control of the management, operation, renting, and
5 selling of the trust property, and (iii) the
6 exclusive right to the earnings, avails, and
7 proceeds of the trust property.
8 (810 ILCS 5/9-335 new)
9 Sec. 9-335. Accessions.
10 (a) Creation of security interest in accession. A
11 security interest may be created in an accession and
12 continues in collateral that becomes an accession.
13 (b) Perfection of security interest. If a security
14 interest is perfected when the collateral becomes an
15 accession, the security interest remains perfected in the
16 collateral.
17 (c) Priority of security interest. Except as otherwise
18 provided in subsection (d), the other provisions of this Part
19 determine the priority of a security interest in an
20 accession.
21 (d) Compliance with certificate-of-title statute. A
22 security interest in an accession is subordinate to a
23 security interest in the whole which is perfected by
24 compliance with the requirements of a certificate-of-title
25 statute under Section 9-311(b).
26 (e) Removal of accession after default. After default,
27 subject to Part 6, a secured party may remove an accession
28 from other goods if the security interest in the accession
29 has priority over the claims of every person having an
30 interest in the whole.
31 (f) Reimbursement following removal. A secured party
32 that removes an accession from other goods under subsection
33 (e) shall promptly reimburse any holder of a security
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1 interest or other lien on, or owner of, the whole or of the
2 other goods, other than the debtor, for the cost of repair of
3 any physical injury to the whole or the other goods. The
4 secured party need not reimburse the holder or owner for any
5 diminution in value of the whole or the other goods caused by
6 the absence of the accession removed or by any necessity for
7 replacing it. A person entitled to reimbursement may refuse
8 permission to remove until the secured party gives adequate
9 assurance for the performance of the obligation to reimburse.
10 (810 ILCS 5/9-336 new)
11 Sec. 9-336. Commingled goods.
12 (a) "Commingled goods." In this Section, "commingled
13 goods" means goods that are physically united with other
14 goods in such a manner that their identity is lost in a
15 product or mass.
16 (b) No security interest in commingled goods as such. A
17 security interest does not exist in commingled goods as such.
18 However, a security interest may attach to a product or mass
19 that results when goods become commingled goods.
20 (c) Attachment of security interest to product or mass.
21 If collateral becomes commingled goods, a security interest
22 attaches to the product or mass.
23 (d) Perfection of security interest. If a security
24 interest in collateral is perfected before the collateral
25 becomes commingled goods, the security interest that attaches
26 to the product or mass under subsection (c) is perfected.
27 (e) Priority of security interest. Except as otherwise
28 provided in subsection (f), the other provisions of this Part
29 determine the priority of a security interest that attaches
30 to the product or mass under subsection (c).
31 (f) Conflicting security interests in product or mass
32 If more than one security interest attaches to the product or
33 mass under subsection (c), the following rules determine
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1 priority:
2 (1) A security interest that is perfected under
3 subsection (d) has priority over a security interest that
4 is unperfected at the time the collateral becomes
5 commingled goods.
6 (2) If more than one security interest is perfected
7 under subsection (d), the security interests rank equally
8 in proportion to the value of the collateral at the time
9 it became commingled goods.
10 (810 ILCS 5/9-337 new)
11 Sec. 9-337. Priority of security interests in goods
12 covered by certificate of title. If, while a security
13 interest in goods is perfected by any method under the law of
14 another jurisdiction, this State issues a certificate of
15 title that does not show that the goods are subject to the
16 security interest or contain a statement that they may be
17 subject to security interests not shown on the certificate:
18 (1) a buyer of the goods, other than a person in
19 the business of selling goods of that kind, takes free of
20 the security interest if the buyer gives value and
21 receives delivery of the goods after issuance of the
22 certificate and without knowledge of the security
23 interest; and
24 (2) the security interest is subordinate to a
25 conflicting security interest in the goods that attaches,
26 and is perfected under Section 9-311(b), after issuance
27 of the certificate and without the conflicting secured
28 party's knowledge of the security interest.
29 (810 ILCS 5/9-338 new)
30 Sec. 9-338. Priority of security interest or
31 agricultural lien perfected by filed financing statement
32 providing certain incorrect information. If a security
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1 interest or agricultural lien is perfected by a filed
2 financing statement providing information described in
3 Section 9-516(b)(5) which is incorrect at the time the
4 financing statement is filed:
5 (1) the security interest or agricultural lien is
6 subordinate to a conflicting perfected security interest
7 in the collateral to the extent that the holder of the
8 conflicting security interest gives value in reasonable
9 reliance upon the incorrect information; and
10 (2) a purchaser, other than a secured party, of the
11 collateral takes free of the security interest or
12 agricultural lien to the extent that, in reasonable
13 reliance upon the incorrect information, the purchaser
14 gives value and, in the case of chattel paper, documents,
15 goods, instruments, or a security certificate, receives
16 delivery of the collateral.
17 (810 ILCS 5/9-339 new)
18 Sec. 9-339. Priority subject to subordination. This
19 Article does not preclude subordination by agreement by a
20 person entitled to priority.
21 (810 ILCS 5/Art. 9, Part 3, Subpart 4 heading new)
22 SUBPART 4. RIGHTS OF BANK
23 (810 ILCS 5/9-340 new)
24 Sec. 9-340. Effectiveness of right of recoupment or
25 set-off against deposit account.
26 (a) Exercise of recoupment or set-off. Except as
27 otherwise provided in subsection (c), a bank with which a
28 deposit account is maintained may exercise any right of
29 recoupment or set-off against a secured party that holds a
30 security interest in the deposit account.
31 (b) Recoupment or set-off not affected by security
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1 interest. Except as otherwise provided in subsection (c), the
2 application of this Article to a security interest in a
3 deposit account does not affect a right of recoupment or
4 set-off of the secured party as to a deposit account
5 maintained with the secured party.
6 (c) When set-off ineffective. The exercise by a bank of
7 a set-off against a deposit account is ineffective against a
8 secured party that holds a security interest in the deposit
9 account which is perfected by control under Section
10 9-104(a)(3), if the set-off is based on a claim against the
11 debtor.
12 (810 ILCS 5/9-341 new)
13 Sec. 9-341. Bank's rights and duties with respect to
14 deposit account. Except as otherwise provided in Section
15 9-340(c), and unless the bank otherwise agrees in an
16 authenticated record, a bank's rights and duties with respect
17 to a deposit account maintained with the bank are not
18 terminated, suspended, or modified by:
19 (1) the creation, attachment, or perfection of a
20 security interest in the deposit account;
21 (2) the bank's knowledge of the security interest;
22 or
23 (3) the bank's receipt of instructions from the
24 secured party.
25 (810 ILCS 5/9-342 new)
26 Sec. 9-342. Bank's right to refuse to enter into or
27 disclose existence of control agreement. This Article does
28 not require a bank to enter into an agreement of the kind
29 described in Section 9-104(a)(2), even if its customer so
30 requests or directs. A bank that has entered into such an
31 agreement is not required to confirm the existence of the
32 agreement to another person unless requested to do so by its
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1 customer.
2 (810 ILCS 5/Art. 9, Part 4 heading)
3 PART 4. RIGHTS OF THIRD PARTIES FILING
4 (810 ILCS 5/9-401) (from Ch. 26, par. 9-401)
5 Sec. 9-401. Alienability of debtor's rights.
6 (a) Other law governs alienability; exceptions. Except
7 as otherwise provided in subsection (b) and Sections 9-406,
8 9-407, 9-408, and 9-409, whether a debtor's rights in
9 collateral may be voluntarily or involuntarily transferred is
10 governed by law other than this Article.
11 (b) Agreement does not prevent transfer. An agreement
12 between the debtor and secured party which prohibits a
13 transfer of the debtor's rights in collateral or makes the
14 transfer a default does not prevent the transfer from taking
15 effect. Place of Filing; Erroneous Filing; Removal of
16 Collateral.
17 (1) The proper place to file in order to perfect a
18 security interest is as follows:
19 (a) when the collateral is consumer goods, then in
20 the office of the recorder in the county of the debtor's
21 residence or if the debtor is not a resident of this
22 State then in the office of the Recorder of Deeds in the
23 county where the goods are kept;
24 (b) when the collateral is timber to be cut or is
25 minerals or the like (including oil and gas) or accounts
26 subject to subsection (5) of Section 9-103, or when the
27 financing statement is filed as a fixture filing (Section
28 9-313) and the collateral is goods which are or are to
29 become fixtures, then in the office where a mortgage on
30 the real estate would be filed or recorded;
31 (c) in all other cases, in the office of the
32 Secretary of State.
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1 (2) A filing which is made in good faith in an improper
2 place or not in all of the places required by this section is
3 nevertheless effective with regard to any collateral as to
4 which the filing complied with the requirements of this
5 Article and is also effective with regard to collateral
6 covered by the financing statement against any person who has
7 knowledge of the contents of such financing statement.
8 (3) A filing which is made in the proper place in this
9 State continues effective even though the debtor's residence
10 or place of business or the location of the collateral or its
11 use, whichever controlled the original filing, is thereafter
12 changed.
13 (4) The rules stated in Section 9-103 determine whether
14 filing is necessary in this State.
15 (5) Notwithstanding the preceding subsections, and
16 subject to subsection (3) of Section 9-302, the proper place
17 to file in order to perfect a security interest in
18 collateral, including fixtures, of a transmitting utility is
19 the office of the Secretary of State. This filing constitutes
20 a fixture filing (Section 9-313) as to the collateral
21 described therein which is or is to become fixtures.
22 (6) For the purposes of this Section, the residence of
23 an organization is its place of business if it has one or its
24 chief executive office if it has more than one place of
25 business.
26 (Source: P.A. 90-300, eff. 1-1-98.)
27 (810 ILCS 5/9-401A)
28 Sec. 9-401A. (Blank). Continuation of certain financing
29 statements filed before January 1, 1998. The following rules
30 apply to a financing statement or continuation statement that
31 was properly filed before January 1, 1998 in the office of a
32 county recorder, but which, if filed on or after January 1,
33 1998, is required by Section 9-401 to be filed in the office
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1 of the Secretary of State:
2 (1) The financing statement shall remain effective until
3 it lapses as provided in Section 9-403.
4 (2) The effectiveness of the financing statement may be
5 continued only by filing a continuation statement in the
6 office of the Secretary of State that provides the name and
7 address of the debtor and secured party, indicates the county
8 where the financing statement is filed, complies with the
9 requirements of Section 9-403, and either:
10 (A) indicates the types or describes the items of
11 collateral included in the original financing statement
12 as modified by any releases or amendments; or
13 (B) has attached a copy of the originally filed
14 financing statement together with amendments,
15 assignments, and releases affecting it.
16 A continuation statement filed as provided in this item
17 (2) may be further continued by a continuation statement that
18 complies with the requirements of Section 9-403.
19 (3) The financing statement may be terminated, assigned,
20 released, or amended only by an appropriate filing in the
21 office of the county recorder where it is filed, except that
22 if the financing statement has been continued as provided in
23 item (2) of this Section, it may thereafter be terminated,
24 assigned, released, or amended only by an appropriate filing
25 in the office of the Secretary of State.
26 (Source: P.A. 90-300, eff. 1-1-98.)
27 (810 ILCS 5/9-402) (from Ch. 26, par. 9-402)
28 Sec. 9-402. Secured party not obligated on contract of
29 debtor or in tort. The existence of a security interest,
30 agricultural lien, or authority given to a debtor to dispose
31 of or use collateral, without more, does not subject a
32 secured party to liability in contract or tort for the
33 debtor's acts or omissions. Formal requisites of financing
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1 statement; amendments; mortgage as financing statement.
2 (1) A financing statement is sufficient if it gives the
3 names of the debtor and the secured party, is signed by the
4 debtor, gives an address of the secured party from which
5 information concerning the security interest may be obtained,
6 gives a mailing address of the debtor and contains a
7 statement indicating the types, or describing the items, of
8 collateral. A financing statement may be filed before a
9 security agreement is made or a security interest otherwise
10 attaches. When a financing statement filed prior to January
11 1, 1996, covers crops growing or to be grown, the statement
12 must also contain a legal description of the real estate
13 concerned. If a financing statement covers crops growing or
14 to be grown and includes a description of the real estate
15 concerned, the description is sufficient if it includes the
16 quarter section, section, township and range, and the name of
17 a record owner if other than the debtor, of the real estate
18 concerned. When the financing statement covers timber to be
19 cut or covers minerals or the like (including oil and gas) or
20 accounts subject to subsection (5) of Section 9-103, or when
21 the financing statement is filed as a fixture filing (Section
22 9-313) and the collateral is goods which are or are to become
23 fixtures, the statement must also comply with subsection (5).
24 A copy of the security agreement is sufficient as a financing
25 statement if it contains the above information and is signed
26 by the debtor. A carbon, photographic or other reproduction
27 of a security agreement or a financing statement is
28 sufficient as a financing statement if the security agreement
29 so provides or if the original has been filed in this State.
30 (2) A financing statement which otherwise complies with
31 subsection (1) is sufficient when it is signed by the secured
32 party instead of the debtor if it is filed to perfect a
33 security interest in:
34 (a) collateral already subject to a security
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1 interest in another jurisdiction when it is brought into
2 this State, or when the debtor's location is changed to
3 this State. Such a financing statement must state that
4 the collateral was brought into this State or that the
5 debtor's location was changed to this State under such
6 circumstances; or
7 (b) proceeds under Section 9-306 if the security
8 interest in the original collateral was perfected. Such a
9 financing statement must describe the original
10 collateral; or
11 (c) collateral as to which the filing has lapsed;
12 or
13 (d) collateral acquired after a change of name,
14 identity or corporate structure of the debtor (subsection
15 (7)).
16 (3) A form substantially as follows is sufficient to
17 comply with subsection (1):
18 Name of debtor (or assignor) .......................
19 Address .......................................
20 Name of secured party (or assignee) ...........
21 Address .......................................
22 1. This financing statement covers the following
23 types (or items) of property:
24 (Describe) .........................................
25 2. (Blank).
26 3. (If applicable) The above goods are to become
27 fixtures on ........................................... *
28 *Where appropriate substitute either "The above
29 timber is standing on ...." or "The above minerals or the
30 like (including oil and gas) or accounts will be financed
31 at the wellhead or minehead of the well or mine located
32 on ...."
33 (Describe Real Estate) .............................
34 and this financing statement is to be filed in the real
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1 estate records. (If the debtor does not have an interest
2 of record) The name of a record owner is ................
3 4. (If products of collateral are claimed) Products
4 of the collateral are also covered.
5 Signature of Debtor (or Assignor) ..................
6 Signature of Secured Party (or Assignee) ...........
7 (use whichever is applicable)
8 (4) A financing statement may be amended by filing a
9 writing signed by both the debtor and the secured party. An
10 amendment does not extend the period of effectiveness of a
11 financing statement. If any amendment adds collateral, it is
12 effective as to the added collateral only from the filing
13 date of the amendment. In this Article, unless the context
14 otherwise requires, the term "financing statement" means the
15 original financing statement and any amendments.
16 (5) A financing statement covering timber to be cut or
17 covering minerals or the like (including oil and gas) or
18 accounts subject to subsection (5) of Section 9-103, or a
19 financing statement filed as a fixture filing (Section 9-313)
20 where the debtor is not a transmitting utility, must show
21 that it covers this type of collateral, must recite that it
22 is to be filed in the real estate records, and the financing
23 statement must contain a description of the real estate. If
24 the debtor does not have an interest of record in the real
25 estate, the financing statement must show the name of a
26 record owner.
27 (6) A mortgage is effective as a financing statement
28 filed as a fixture filing from the date of its recording if:
29 (a) the goods are described in the mortgage by item
30 or type,
31 (b) the goods are or are to become fixtures related
32 to the real estate described in the mortgage,
33 (c) the mortgage complies with the requirements for
34 a financing statement in this Section other than a
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1 recital that it is to be filed in the real estate
2 records, and
3 (d) the mortgage is duly recorded.
4 No fee with reference to the financing statement is
5 required other than the regular recording and satisfaction
6 fees with respect to the mortgage.
7 (7) A financing statement sufficiently shows the name of
8 the debtor if it gives the individual, partnership or
9 corporate name of the debtor, whether or not it adds other
10 trade names or names of partners. Where the debtor so changes
11 his name or in the case of an organization its name, identity
12 or corporate structure that a filed financing statement
13 becomes seriously misleading, the filing is not effective to
14 perfect a security interest in collateral acquired by the
15 debtor more than 4 months after the change, unless a new
16 appropriate financing statement is filed before the
17 expiration of that time. A filed financing statement remains
18 effective with respect to collateral transferred by the
19 debtor even though the secured party knows of or consents to
20 the transfer.
21 (8) A financing statement substantially complying with
22 the requirements of this Section is effective even though it
23 contains minor errors which are not seriously misleading.
24 (Source: P.A. 91-357, eff. 7-29-99.)
25 (810 ILCS 5/9-403) (from Ch. 26, par. 9-403)
26 Sec. 9-403. Agreement not to assert defenses against
27 assignee.
28 (a) "Value." In this Section, "value" has the meaning
29 provided in Section 3-303(a).
30 (b) Agreement not to assert claim or defense. Except as
31 otherwise provided in this Section, an agreement between an
32 account debtor and an assignor not to assert against an
33 assignee any claim or defense that the account debtor may
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1 have against the assignor is enforceable by an assignee that
2 takes an assignment:
3 (1) for value;
4 (2) in good faith;
5 (3) without notice of a claim of a property or
6 possessory right to the property assigned; and
7 (4) without notice of a defense or claim in
8 recoupment of the type that may be asserted against a
9 person entitled to enforce a negotiable instrument under
10 Section 3-305(a).
11 (c) When subsection (b) not applicable. Subsection (b)
12 does not apply to defenses of a type that may be asserted
13 against a holder in due course of a negotiable instrument
14 under Section 3-305(b).
15 (d) Omission of required statement in consumer
16 transaction. In a consumer transaction, if a record
17 evidences the account debtor's obligation, law other than
18 this Article requires that the record include a statement to
19 the effect that the rights of an assignee are subject to
20 claims or defenses that the account debtor could assert
21 against the original obligee, and the record does not include
22 such a statement:
23 (1) the record has the same effect as if the record
24 included such a statement; and
25 (2) the account debtor may assert against an
26 assignee those claims and defenses that would have been
27 available if the record included such a statement.
28 (e) Rule for individual under other law. This Section
29 is subject to law other than this Article which establishes a
30 different rule for an account debtor who is an individual and
31 who incurred the obligation primarily for personal, family,
32 or household purposes.
33 (f) Other law not displaced. Except as otherwise
34 provided in subsection (d), this Section does not displace
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1 law other than this Article which gives effect to an
2 agreement by an account debtor not to assert a claim or
3 defense against an assignee. What constitutes filing;
4 duration of filing; effect of lapsed filing; duties of filing
5 officer; fees.
6 (1) Presentation for filing of a financing statement and
7 tender of the filing fee or acceptance of the statement by
8 the filing officer constitutes filing under this Article.
9 (2) Except as provided in subsection (6) a filed
10 financing statement is effective for a period of 5 years from
11 the date of filing. The effectiveness of a filed financing
12 statement lapses on the expiration of the 5 year period
13 unless a continuation statement is filed prior to the lapse.
14 If a security interest perfected by filing exists at the time
15 insolvency proceedings are commenced by or against the
16 debtor, the security interest remains perfected until
17 termination of the insolvency proceedings and thereafter for
18 a period of 60 days or until expiration of the 5 year period,
19 whichever occurs later. Upon lapse the security interest
20 becomes unperfected, unless it is perfected without filing.
21 If the security interest becomes unperfected upon lapse, it
22 is deemed to have been unperfected as against a person who
23 became a purchaser or lien creditor before lapse.
24 (3) A continuation statement may be filed by the secured
25 party within 6 months prior to the expiration of the 5 year
26 period specified in subsection (2). Any such continuation
27 statement must be signed by the secured party, identify the
28 original statement by file number and state that the original
29 statement is still effective. A continuation statement signed
30 by a person other than the secured party of record must be
31 accompanied by a separate written statement of assignment
32 signed by the secured party of record and complying with
33 subsection (2) of Section 9-405, including payment of the
34 required fee. Upon timely filing of the continuation
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1 statement, the effectiveness of the original statement is
2 continued for 5 years after the last date to which the filing
3 was effective whereupon it lapses in the same manner as
4 provided in subsection (2) unless another continuation
5 statement is filed prior to such lapse. Succeeding
6 continuation statements may be filed in the same manner to
7 continue the effectiveness of the original statement. Unless
8 a statute on disposition of public records provides
9 otherwise, the filing officer may remove a lapsed statement
10 from the files and destroy it immediately if he has retained
11 a microfilm or other photographic record, or in other cases
12 after one year after the lapse. The filing officer shall so
13 arrange matters by physical annexation of financing
14 statements to continuation statements or other related
15 filings, or by other means, that if he physically destroys
16 the financing statements of a period more than 5 years past,
17 those which have been continued by a continuation statement
18 or which are still effective under subsection (6) shall be
19 retained.
20 (4) Except as provided in subsection (7) a filing
21 officer shall mark each statement with a file number and with
22 the date and hour of filing and shall hold the statement or a
23 microfilm or other photographic copy thereof for public
24 inspection. In addition the filing officer shall index the
25 statement according to the name of the debtor and shall note
26 in the index the file number and the address of the debtor
27 given in the statement.
28 (5) The uniform fee for filing and indexing and for
29 stamping a copy furnished by the secured party to show the
30 date and place of filing for an original financing statement,
31 amended statement, or for a continuation statement shall be
32 $20.
33 (6) If the debtor is a transmitting utility (subsection
34 (5) of Section 9-401) and a filed financing statement so
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1 states, it is effective until a termination statement is
2 filed. A real estate mortgage which is effective as a fixture
3 filing under subsection (6) of Section 9-402 remains
4 effective as a fixture filing until the mortgage is released
5 or satisfied of record or its effectiveness otherwise
6 terminates as to the real estate.
7 (7) When a financing statement covers timber to be cut
8 or covers minerals or the like (including oil and gas) or
9 accounts subject to subsection (5) of Section 9-103, or is
10 filed as a fixture filing, the filing officer shall index it
11 under the names of the debtor and any owner of record shown
12 on the financing statement in the same fashion as if they
13 were the mortgagors in a mortgage of the real estate
14 described, and, to the extent that the law of this State
15 provides for indexing of mortgages under the name of the
16 mortgagee, under the name of the secured party as if he were
17 the mortgagee thereunder, or where indexing is by description
18 in the same fashion as if the financing statement were a
19 mortgage of the real estate described.
20 (8) For financing statements filed on or after January
21 1, 1998 as to a debtor who is a resident of the State of
22 Illinois, if the collateral is equipment used in farming
23 operations, farm products, or accounts or general intangibles
24 arising from the sale of farm products by a farmer, the
25 secured party shall, within 30 days after filing with the
26 office of the Secretary of State, remit to the office of the
27 recorder in the county of the debtor's residence a fee of $10
28 together with a copy of the financing statement filed in the
29 office of the Secretary of State. This fee is in addition to
30 payment of the fee provided in subsection (5) of this Section
31 and is imposed to defray the cost of converting the county
32 recorder's document storage system to computers or
33 micrographics. The copy of the financing statement provided
34 to the office of the recorder shall be for informational
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1 purposes only and shall not be for filing with the office of
2 the recorder nor shall the provision of the informational
3 copy be subject to imposition of any filing fee under Section
4 3-5018 of the Counties Code or otherwise. The provisions of
5 this subsection (8) other than this sentence, are inoperative
6 after the earlier of (i) July 1, 1999 or (ii) the effective
7 date of a change to the Illinois Uniform Commercial Code
8 which adopts a recommendation by the National Conference of
9 Commissioners on Uniform State Laws to amend Section 9-401 of
10 this Code to make the office of the Secretary of State the
11 proper place to file a financing statement described in this
12 subsection (8).
13 (9) The failure to send an informational copy of a
14 financing statement to the appropriate office of the recorder
15 or to pay the fee as set forth in subsection (8) shall not in
16 any manner affect the existence, validity, perfection,
17 priority, or enforceability of the security interest of the
18 secured party.
19 (Source: P.A. 90-300, eff. 1-1-98; 91-357, eff. 7-29-99.)
20 (810 ILCS 5/9-404) (from Ch. 26, par. 9-404)
21 Sec. 9-404. Rights acquired by assignee; claims and
22 defenses against assignee.
23 (a) Assignee's rights subject to terms, claims, and
24 defenses; exceptions. Unless an account debtor has made an
25 enforceable agreement not to assert defenses or claims, and
26 subject to subsections (b) through (e), the rights of an
27 assignee are subject to:
28 (1) all terms of the agreement between the account
29 debtor and assignor and any defense or claim in
30 recoupment arising from the transaction that gave rise to
31 the contract; and
32 (2) any other defense or claim of the account
33 debtor against the assignor which accrues before the
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1 account debtor receives a notification of the assignment
2 authenticated by the assignor or the assignee.
3 (b) Account debtor's claim reduces amount owed to
4 assignee. Subject to subsection (c) and except as otherwise
5 provided in subsection (d), the claim of an account debtor
6 against an assignor may be asserted against an assignee under
7 subsection (a) only to reduce the amount the account debtor
8 owes.
9 (c) Rule for individual under other law. This Section
10 is subject to law other than this Article which establishes a
11 different rule for an account debtor who is an individual and
12 who incurred the obligation primarily for personal, family,
13 or household purposes.
14 (d) Omission of required statement in consumer
15 transaction. In a consumer transaction, if a record
16 evidences the account debtor's obligation, law other than
17 this Article requires that the record include a statement to
18 the effect that the account debtor's recovery against an
19 assignee with respect to claims and defenses against the
20 assignor may not exceed amounts paid by the account debtor
21 under the record, and the record does not include such a
22 statement, the extent to which a claim of an account debtor
23 against the assignor may be asserted against an assignee is
24 determined as if the record included such a statement.
25 (e) Inapplicability to health-care-insurance receivable.
26 This Section does not apply to an assignment of a
27 health-care-insurance receivable. Termination Statement;
28 Duties of Filing Officer.
29 (1) If a financing statement covering consumer goods is
30 filed on or after the effective date of this amendatory Act
31 of 1972, then within one month or within 10 days following
32 written demand by the debtor after there is no outstanding
33 secured obligation and no commitment to make advances, incur
34 obligations or otherwise give value, the secured party must
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1 file with each filing officer with whom the financing
2 statement was filed, a termination statement to the effect
3 that he no longer claims a security interest under the
4 financing statement, which shall be identified by file
5 number. In other cases whenever there is no outstanding
6 secured obligation and no commitment to make advances, incur
7 obligations or otherwise give value, the secured party must
8 on written demand by the debtor send the debtor, for each
9 filing officer with whom the financing statement was filed, a
10 termination statement to the effect that he no longer claims
11 a security interest under the financing statement, which
12 shall be identified by file number. A termination statement
13 signed by a person other than the secured party of record
14 must be accompanied by a separate written statement of
15 assignment signed by the secured party of record and
16 complying with subsection (2) of Section 9-405, including
17 payment of the required fee. If the affected secured party
18 fails to file such a termination statement as required by
19 this subsection, or to send such a termination statement
20 within 10 days after proper demand therefor, he shall be
21 liable to the debtor for $100 and in addition for any loss
22 caused to the debtor by such failure.
23 (2) On presentation to the filing officer of such a
24 termination statement he must note it in the index. If he has
25 received the termination statement in duplicate, he shall
26 return one copy of the termination statement to the secured
27 party stamped to show the time of receipt thereof. If the
28 filing officer has a microfilm or other photographic record
29 of the financing statement, and of any related continuation
30 statement, statement of assignment and statement of release,
31 he may remove the originals from the files at any time after
32 receipt of the termination statement, or if he has no such
33 record, he may remove them from the files at any time after
34 one year after receipt of the termination statement.
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1 (Source: P.A. 89-503, eff. 1-1-97.)
2 (810 ILCS 5/9-405) (from Ch. 26, par. 9-405)
3 Sec. 9-405. Modification of assigned contract.
4 (a) Effect of modification on assignee. A modification
5 of or substitution for an assigned contract is effective
6 against an assignee if made in good faith. The assignee
7 acquires corresponding rights under the modified or
8 substituted contract. The assignment may provide that the
9 modification or substitution is a breach of contract by the
10 assignor. This subsection is subject to subsections (b)
11 through (d).
12 (b) Applicability of subsection (a). Subsection (a)
13 applies to the extent that:
14 (1) the right to payment or a part thereof under an
15 assigned contract has not been fully earned by
16 performance; or
17 (2) the right to payment or a part thereof has been
18 fully earned by performance and the account debtor has
19 not received notification of the assignment under Section
20 9-406(a).
21 (c) Rule for individual under other law. This Section
22 is subject to law other than this Article which establishes a
23 different rule for an account debtor who is an individual and
24 who incurred the obligation primarily for personal, family,
25 or household purposes.
26 (d) Inapplicability to health-care-insurance receivable.
27 This Section does not apply to an assignment of a
28 health-care-insurance receivable. Assignment of Security
29 Interest; Duties of Filing Officer; Fees.
30 (1) A financing statement may disclose an assignment of
31 a security interest in the collateral described in the
32 financing statement by indication in the financing statement
33 of the name and address of the assignee or by an assignment
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1 itself or a copy thereof on the face or back of the
2 statement. On presentation to the filing officer of such a
3 financing statement the filing officer shall mark the same as
4 provided in Section 9-403 (4). The uniform fee for filing,
5 indexing and furnishing filing data for a financing statement
6 so indicating an assignment shall be $20.
7 (2) A secured party may assign of record all or a part
8 of his rights under a financing statement by the filing in
9 the place where the original financing statement was filed of
10 a separate written statement of assignment signed by the
11 secured party of record and setting forth the name of the
12 secured party of record and the debtor, the file number and
13 the date of filing of the financing statement and the name
14 and address of the assignee and containing a description of
15 the collateral assigned. A copy of the assignment is
16 sufficient as a separate statement if it complies with the
17 preceding sentence. On presentation to the filing officer of
18 such a separate statement, the filing officer shall mark such
19 separate statement with the date and hour of the filing. He
20 shall note the assignment on the index of the financing
21 statement, or in the case of a fixture filing, or a filing
22 covering timber to be cut, or covering minerals or the like
23 (including oil and gas) or accounts subject to subsection (5)
24 of Section 9-103, he shall index the assignment under the
25 name of the assignor as grantor and, to the extent that the
26 law of this State provides for indexing the assignment of a
27 mortgage under the name of the assignee, he shall index the
28 assignment of the financing statement under the name of the
29 assignee. The uniform fee for filing, indexing and furnishing
30 filing data about such a separate statement of assignment
31 shall be $20. Notwithstanding the provisions of this
32 subsection, an assignment of record of a security interest in
33 a fixture contained in a mortgage effective as a fixture
34 filing (subsection (6) of Section 9-402 may be made only by
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1 an assignment of the mortgage in the manner provided by the
2 law of this State other than this Act.
3 (3) After the disclosure or filing of an assignment
4 under this Section, the assignee is the secured party of
5 record.
6 (Source: P.A. 89-503, eff. 1-1-97.)
7 (810 ILCS 5/9-406) (from Ch. 26, par. 9-406)
8 Sec. 9-406. Discharge of account debtor; notification of
9 assignment; identification and proof of assignment;
10 restrictions on assignment of accounts, chattel paper,
11 payment intangibles, and promissory notes ineffective.
12 (a) Discharge of account debtor; effect of notification.
13 Subject to subsections (b) through (i), an account debtor on
14 an account, chattel paper, or a payment intangible may
15 discharge its obligation by paying the assignor until, but
16 not after, the account debtor receives a notification,
17 authenticated by the assignor or the assignee, that the
18 amount due or to become due has been assigned and that
19 payment is to be made to the assignee. After receipt of the
20 notification, the account debtor may discharge its obligation
21 by paying the assignee and may not discharge the obligation
22 by paying the assignor.
23 (b) When notification ineffective. Subject to
24 subsection (h), notification is ineffective under subsection
25 (a):
26 (1) if it does not reasonably identify the rights
27 assigned;
28 (2) to the extent that an agreement between an
29 account debtor and a seller of a payment intangible
30 limits the account debtor's duty to pay a person other
31 than the seller and the limitation is effective under law
32 other than this Article; or
33 (3) at the option of an account debtor, if the
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1 notification notifies the account debtor to make less
2 than the full amount of any installment or other periodic
3 payment to the assignee, even if:
4 (A) only a portion of the account, chattel
5 paper, or general intangible has been assigned to
6 that assignee;
7 (B) a portion has been assigned to another
8 assignee; or
9 (C) the account debtor knows that the
10 assignment to that assignee is limited.
11 (c) Proof of assignment. Subject to subsection (h), if
12 requested by the account debtor, an assignee shall seasonably
13 furnish reasonable proof that the assignment has been made.
14 Unless the assignee complies, the account debtor may
15 discharge its obligation by paying the assignor, even if the
16 account debtor has received a notification under subsection
17 (a).
18 (d) Term restricting assignment generally ineffective.
19 Except as otherwise provided in subsection (e) and Sections
20 2A-303 and 9-407, and subject to subsection (h), a term in an
21 agreement between an account debtor and an assignor or in a
22 promissory note is ineffective to the extent that it:
23 (1) prohibits, restricts, or requires the consent
24 of the account debtor or person obligated on the
25 promissory note to the assignment or transfer of, or the
26 creation, attachment, perfection, or enforcement of a
27 security interest in, the account, chattel paper, payment
28 intangible, or promissory note; or
29 (2) provides that the assignment or transfer or the
30 creation, attachment, perfection, or enforcement of the
31 security interest may give rise to a default, breach,
32 right of recoupment, claim, defense, termination, right
33 of termination, or remedy under the account, chattel
34 paper, payment intangible, or promissory note.
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1 (e) Inapplicability of subsection (d) to certain sales.
2 Subsection (d) does not apply to the sale of a payment
3 intangible or promissory note.
4 (f) Legal restrictions on assignment generally
5 ineffective. Except as otherwise provided in Sections 2A-303
6 and 9-407 and subject to subsections (h) and (i), a rule of
7 law, statute, or regulation that prohibits, restricts, or
8 requires the consent of a government, governmental body or
9 official, or account debtor to the assignment or transfer of,
10 or creation of a security interest in, an account or chattel
11 paper is ineffective to the extent that the rule of law,
12 statute, or regulation:
13 (1) prohibits, restricts, or requires the consent
14 of the government, governmental body or official, or
15 account debtor to the assignment or transfer of, or the
16 creation, attachment, perfection, or enforcement of a
17 security interest in the account or chattel paper; or
18 (2) provides that the assignment or transfer or the
19 creation, attachment, perfection, or enforcement of the
20 security interest may give rise to a default, breach,
21 right of recoupment, claim, defense, termination, right
22 of termination, or remedy under the account or chattel
23 paper.
24 (g) Subsection (b)(3) not waivable. Subject to
25 subsection (h), an account debtor may not waive or vary its
26 option under subsection (b)(3).
27 (h) Rule for individual under other law. This Section
28 is subject to law other than this Article which establishes a
29 different rule for an account debtor who is an individual and
30 who incurred the obligation primarily for personal, family,
31 or household purposes.
32 (i) Inapplicability to health-care-insurance receivable.
33 This Section does not apply to an assignment of a
34 health-care-insurance receivable.
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1 (j) Section prevails over specified inconsistent law.
2 This Section prevails over any inconsistent provision of an
3 existing or future statute, rule, or regulation of this State
4 unless the provision is contained in a statute of this State,
5 refers expressly to this Section, and states that the
6 provision prevails over this Section.
7 Release of Collateral; Duties of Filing Officer; Fees. A
8 secured party of record may by his signed statement release
9 all or a part of any collateral described in a filed
10 financing statement. The statement of release is sufficient
11 if it contains a description of the collateral being
12 released, the name and address of the debtor, the name and
13 address of the secured party, and the file number of the
14 financing statement. A statement of release signed by a
15 person other than the secured party of record must be
16 accompanied by a separate written statement of assignment
17 signed by the secured party of record and complying with
18 subsection (2) of Section 9-405, including payment of the
19 required fee. Upon presentation of such a statement of
20 release to the filing officer he shall mark the statement
21 with the hour and date of filing and shall note the same upon
22 the margin of the index of the filing of the financing
23 statement. The uniform fee for filing and noting such a
24 statement of release shall be $20.
25 (Source: P.A. 89-503, eff. 1-1-97.)
26 (810 ILCS 5/9-407) (from Ch. 26, par. 9-407)
27 Sec. 9-407. Restrictions on creation or enforcement of
28 security interest in leasehold interest or in lessor's
29 residual interest.
30 (a) Term restricting assignment generally ineffective.
31 Except as otherwise provided in subsection (b), a term in a
32 lease agreement is ineffective to the extent that it:
33 (1) prohibits, restricts, or requires the consent
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1 of a party to the lease to the assignment or transfer of,
2 or the creation, attachment, perfection, or enforcement
3 of a security interest in an interest of a party under
4 the lease contract or in the lessor's residual interest
5 in the goods; or
6 (2) provides that the assignment or transfer or the
7 creation, attachment, perfection, or enforcement of the
8 security interest may give rise to a default, breach,
9 right of recoupment, claim, defense, termination, right
10 of termination, or remedy under the lease.
11 (b) Effectiveness of certain terms. Except as otherwise
12 provided in Section 2A-303(7), a term described in subsection
13 (a)(2) is effective to the extent that there is:
14 (1) a transfer by the lessee of the lessee's right
15 of possession or use of the goods in violation of the
16 term; or
17 (2) a delegation of a material performance of
18 either party to the lease contract in violation of the
19 term.
20 (c) Security interest not material impairment. The
21 creation, attachment, perfection, or enforcement of a
22 security interest in the lessor's interest under the lease
23 contract or the lessor's residual interest in the goods is
24 not a transfer that materially impairs the lessee's prospect
25 of obtaining return performance or materially changes the
26 duty of or materially increases the burden or risk imposed on
27 the lessee within the purview of Section 2A-303(4) unless,
28 and then only to the extent that, enforcement actually
29 results in a delegation of material performance of the
30 lessor. Information from Filing Officer; Fees.
31 (1) If the person filing any financing statement,
32 termination statement, statement of assignment, or statement
33 of release, furnishes the filing officer a copy thereof, the
34 filing officer shall upon request note upon the copy the file
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1 number and date and hour of the filing of the original and
2 deliver or send the copy to such person.
3 (2) Upon request of any person, the filing officer shall
4 issue his certificate showing whether there is on file on the
5 date and hour stated therein, any presently effective
6 financing statement naming a particular debtor and any
7 statement of assignment thereof and if there is, giving the
8 date and hour of filing of each such statement and the names
9 and addresses of each secured party therein. The uniform fee
10 for such a certificate shall be $10 per name searched. Upon
11 request the filing officer shall furnish a copy of any filed
12 financing statement or statement of assignment for a uniform
13 fee of $1.00 per page.
14 (Source: P.A. 86-343.)
15 (810 ILCS 5/9-408) (from Ch. 26, par. 9-408)
16 Sec. 9-408. Restrictions on assignment of promissory
17 notes, health-care-insurance receivables, and certain general
18 intangibles ineffective.
19 (a) Term restricting assignment generally ineffective.
20 Except as otherwise provided in subsection (b), a term in a
21 promissory note or in an agreement between an account debtor
22 and a debtor which relates to a health-care-insurance
23 receivable or a general intangible, including a contract,
24 permit, license, or franchise, and which term prohibits,
25 restricts, or requires the consent of the person obligated on
26 the promissory note or the account debtor to, the assignment
27 or transfer of, or creation, attachment, or perfection of a
28 security interest in, the promissory note,
29 health-care-insurance receivable, or general intangible, is
30 ineffective to the extent that the term:
31 (1) would impair the creation, attachment, or
32 perfection of a security interest; or
33 (2) provides that the assignment or transfer or the
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1 creation, attachment, or perfection of the security
2 interest may give rise to a default, breach, right of
3 recoupment, claim, defense, termination, right of
4 termination, or remedy under the promissory note,
5 health-care-insurance receivable, or general intangible.
6 (b) Applicability of subsection (a) to sales of certain
7 rights to payment. Subsection (a) applies to a security
8 interest in a payment intangible or promissory note only if
9 the security interest arises out of a sale of the payment
10 intangible or promissory note.
11 (c) Legal restrictions on assignment generally
12 ineffective. A rule of law, statute, or regulation that
13 prohibits, restricts, or requires the consent of a
14 government, governmental body or official, person obligated
15 on a promissory note, or account debtor to the assignment or
16 transfer of, or creation of a security interest in, a
17 promissory note, health-care-insurance receivable, or general
18 intangible, including a contract, permit, license, or
19 franchise between an account debtor and a debtor, is
20 ineffective to the extent that the rule of law, statute, or
21 regulation:
22 (1) would impair the creation, attachment, or
23 perfection of a security interest; or
24 (2) provides that the assignment or transfer or the
25 creation, attachment, or perfection of the security
26 interest may give rise to a default, breach, right of
27 recoupment, claim, defense, termination, right of
28 termination, or remedy under the promissory note,
29 health-care-insurance receivable, or general intangible.
30 (d) Limitation on ineffectiveness under subsections (a)
31 and (c). To the extent that a term in a promissory note or in
32 an agreement between an account debtor and a debtor which
33 relates to a health-care-insurance receivable or general
34 intangible or a rule of law, statute, or regulation described
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1 in subsection (c) would be effective under law other than
2 this Article but is ineffective under subsection (a) or (c),
3 the creation, attachment, or perfection of a security
4 interest in the promissory note, health-care-insurance
5 receivable, or general intangible:
6 (1) is not enforceable against the person obligated
7 on the promissory note or the account debtor;
8 (2) does not impose a duty or obligation on the
9 person obligated on the promissory note or the account
10 debtor;
11 (3) does not require the person obligated on the
12 promissory note or the account debtor to recognize the
13 security interest, pay or render performance to the
14 secured party, or accept payment or performance from the
15 secured party;
16 (4) does not entitle the secured party to use or
17 assign the debtor's rights under the promissory note,
18 health-care-insurance receivable, or general intangible,
19 including any related information or materials furnished
20 to the debtor in the transaction giving rise to the
21 promissory note, health-care-insurance receivable, or
22 general intangible;
23 (5) does not entitle the secured party to use,
24 assign, possess, or have access to any trade secrets or
25 confidential information of the person obligated on the
26 promissory note or the account debtor; and
27 (6) does not entitle the secured party to enforce
28 the security interest in the promissory note,
29 health-care-insurance receivable, or general intangible.
30 (e) Section prevails over specified inconsistent law.
31 This Section prevails over any inconsistent provision of an
32 existing or future statute, rule, or regulation of this State
33 unless the provision is contained in a statute of this State,
34 refers expressly to this Section, and states that the
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1 provision prevails over this Section.
2 Financing Statements Covering Consigned or Leased Goods.
3 A consignor or lessor of goods may file a financing
4 statement using the terms "consignor," "consignee," "lessor,"
5 "lessee" or the like instead of the terms specified in
6 Section 9-402. The provisions of this part shall apply as
7 appropriate to such a financing statement but its filing
8 shall not of itself be a factor in determining whether or not
9 the consignment or lease is intended as security (Section
10 1-201 (37). However, if it is determined for other reasons
11 that the consignment or lease is so intended, a security
12 interest of the consignor or lessor which attaches to the
13 consigned or leased goods is perfected by such filing.
14 (Source: P.A. 78-238.)
15 (810 ILCS 5/9-409 new)
16 Sec. 9-409. Restrictions on assignment of
17 letter-of-credit rights ineffective.
18 (a) Term or law restricting assignment generally
19 ineffective. A term in a letter of credit or a rule of law,
20 statute, regulation, custom, or practice applicable to the
21 letter of credit which prohibits, restricts, or requires the
22 consent of an applicant, issuer, or nominated person to a
23 beneficiary's assignment of or creation of a security
24 interest in a letter-of-credit right is ineffective to the
25 extent that the term or rule of law, statute, regulation,
26 custom, or practice:
27 (1) would impair the creation, attachment, or
28 perfection of a security interest in the letter-of-credit
29 right; or
30 (2) provides that the assignment or the creation,
31 attachment, or perfection of the security interest may
32 give rise to a default, breach, right of recoupment,
33 claim, defense, termination, right of termination, or
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1 remedy under the letter-of-credit right.
2 (b) Limitation on ineffectiveness under subsection (a).
3 To the extent that a term in a letter of credit is
4 ineffective under subsection (a) but would be effective under
5 law other than this Article or a custom or practice
6 applicable to the letter of credit, to the transfer of a
7 right to draw or otherwise demand performance under the
8 letter of credit, or to the assignment of a right to proceeds
9 of the letter of credit, the creation, attachment, or
10 perfection of a security interest in the letter-of-credit
11 right:
12 (1) is not enforceable against the applicant,
13 issuer, nominated person, or transferee beneficiary;
14 (2) imposes no duties or obligations on the
15 applicant, issuer, nominated person, or transferee
16 beneficiary; and
17 (3) does not require the applicant, issuer,
18 nominated person, or transferee beneficiary to recognize
19 the security interest, pay or render performance to the
20 secured party, or accept payment or other performance
21 from the secured party.
22 (810 ILCS 5/9-410)
23 Sec. 9-410. (Blank). Disposition of fees. Of the total
24 money collected for each filing with the Secretary of State
25 of an original financing statement, amended statement,
26 continuation, assignment, or for a release of collateral, $12
27 of the filing fee shall be paid into the Secretary of State
28 Special Services Fund. The remaining $8 shall be deposited
29 into the General Revenue Fund in the State Treasury.
30 (Source: P.A. 89-503, eff. 1-1-97; 89-697, eff. 1-6-97.)
31 (810 ILCS 5/Art. 9, Part 5 heading)
32 PART 5. FILING DEFAULT
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1 (810 ILCS 5/Art. 9, Part 5, Subpart 1 heading new)
2 SUBPART 1. FILING OFFICE; CONTENTS AND
3 EFFECTIVENESS OF FINANCING STATEMENT
4 (810 ILCS 5/9-501) (from Ch. 26, par. 9-501)
5 Sec. 9-501. Filing office.
6 (a) Filing offices. Except as otherwise provided in
7 subsection (b), if the local law of this State governs
8 perfection of a security interest or agricultural lien, the
9 office in which to file a financing statement to perfect the
10 security interest or agricultural lien is:
11 (1) the office designated for the filing or
12 recording of a record of a mortgage on the related real
13 property, if:
14 (A) the collateral is as-extracted collateral
15 or timber to be cut; or
16 (B) the financing statement is filed as a
17 fixture filing and the collateral is goods that are
18 or are to become fixtures; or
19 (2) the office of the Secretary of State in all
20 other cases, including a case in which the collateral is
21 goods that are or are to become fixtures and the
22 financing statement is not filed as a fixture filing.
23 (b) Filing office for transmitting utilities. The
24 office in which to file a financing statement to perfect a
25 security interest in collateral, including fixtures, of a
26 transmitting utility is the office of the Secretary of State.
27 The financing statement also constitutes a fixture filing as
28 to the collateral indicated in the financing statement which
29 is or is to become fixtures. Default; procedure when security
30 agreement covers both real and personal property.
31 (1) When a debtor is in default under a security
32 agreement, a secured party has the rights and remedies
33 provided in this Part and except as limited by subsection (3)
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1 those provided in the security agreement. He may reduce his
2 claim to judgment, foreclose or otherwise enforce the
3 security interest by any available judicial procedure. If the
4 collateral is documents the secured party may proceed either
5 as to the documents or as to the goods covered thereby. A
6 secured party in possession has the rights, remedies and
7 duties provided in Section 9-207. The rights and remedies
8 referred to in this subsection are cumulative.
9 (2) After default, the debtor has the rights and
10 remedies provided in this Part, those provided in the
11 security agreement and those provided in Section 9-207.
12 (3) To the extent that they give rights to the debtor
13 and impose duties on the secured party, the rules stated in
14 the subsections referred to below may not be waived or varied
15 except as provided with respect to compulsory disposition of
16 collateral (subsection (3) of Section 9-504 and Section
17 9-505) and with respect to redemption of collateral (Section
18 9-506) but the parties may by agreement determine the
19 standards by which the fulfillment of these rights and duties
20 is to be measured if such standards are not manifestly
21 unreasonable:
22 (a) subsection (2) of Section 9-502 and subsection
23 (2) of Section 9-504 insofar as they require accounting
24 for surplus proceeds of collateral;
25 (b) subsection (3) of Section 9-504 and subsection
26 (1) of Section 9-505 which deal with disposition of
27 collateral;
28 (c) subsection (2) of Section 9-505 which deals
29 with acceptance of collateral as discharge of obligation;
30 (d) Section 9-506 which deals with redemption of
31 collateral; and
32 (e) subsection (1) of Section 9-507 which deals
33 with the secured party's liability for failure to comply
34 with this Part.
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1 (4) If the security agreement covers both real and
2 personal property, the secured party may proceed under this
3 Part as to the personal property or he may proceed as to both
4 the real and the personal property in accordance with his
5 rights and remedies in respect to the real property in which
6 case the provisions of this Part do not apply.
7 (5) When a secured party has reduced his claim to
8 judgment the lien of any levy which may be made upon his
9 collateral by virtue of such judgment shall relate back to
10 the date of the perfection of the security interest in such
11 collateral. A judicial sale, pursuant to such judgment, is a
12 foreclosure of the security interest by judicial procedure
13 within the meaning of this Section, and the secured party may
14 purchase at the sale and thereafter hold the collateral free
15 of any other requirements of this Article.
16 (Source: P.A. 91-357, eff. 7-29-99.)
17 (810 ILCS 5/9-501.5 new)
18 Sec. 9-501.5 Local filing and searching after effective
19 date of revised Article 9.
20 (a) In this Section:
21 (1) "Local-filing office" means a filing office,
22 other than the office of the Secretary of State, that is
23 designated as the proper place to file a financing
24 statement under Section 9-401(1) of the Uniform
25 Commercial Code as in effect immediately before the
26 effective date of this amendatory Act of the 91st General
27 Assembly. The term applies only with respect to a record
28 that covers a type of collateral as to which the filing
29 office is designated in that section as the proper place
30 to file.
31 (2) "Former-Article-9 records" means:
32 (A) financing statements and other records
33 that have been filed in a local-filing office before
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1 July 1, 2001, and that are, or upon processing and
2 indexing will be, reflected in the index maintained,
3 as of June 30, 2001, by the local-filing office for
4 financing statements and other records filed in the
5 local-filing office before July 1, 2001, and
6 (B) the index as of June 30, 2001. The term
7 does not include records presented to a local-filing
8 office for filing after June 30, 2001, whether or
9 not the records relate to financing statements filed
10 in the local-filing office before July 1, 2001.
11 (3) "Mortgage", "as-extracted collateral", "fixture
12 filing", "goods" and "fixtures" have the meanings set
13 forth in this amendatory Act of the 91st General Assembly
14 for those terms.
15 (b) Except for a record terminating a
16 Former-Article-9-record, a local-filing office must not
17 accept for filing a record presented after June 30, 2001,
18 whether or not the record relates to a financing statement
19 filed in the local-filing office before July 1, 2001. If the
20 record terminating such Former-Article-9-record statement is
21 in the standard form prescribed by the Secretary of State,
22 the uniform fee for filing and indexing the termination
23 statement in the office of a county recorder shall be $5 and
24 otherwise shall be $10, plus in each case an additional fee
25 of $5 for each name more than one at each address listed
26 against which the record is required to be indexed.
27 (c) Until July 1, 2008, each local-filing office must
28 maintain all former-Article-9 records in accordance with the
29 Uniform Commercial Code as in effect immediately before the
30 effective date of this amendatory Act of the 91st General
31 Assembly. A former-Article-9 record that is not reflected on
32 the index maintained at June 30, 2001, by the local-filing
33 office must be processed and indexed, and reflected on the
34 index as of June 30, 2001, as soon as practicable but in any
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1 event no later than July 30, 2001.
2 (d) Until at least June 30, 2008, each local-filing
3 office must respond to requests for information with respect
4 to former-Article-9 records relating to a debtor and issue
5 certificates, in accordance with the Uniform Commercial Code
6 as in effect immediately before the effective date of this
7 amendatory Act of the 91st General Assembly. The fees
8 charged for responding to requests for information relating
9 to a debtor and issuing certificates with respect to
10 former-Article-9 records must be the fees in effect under the
11 Uniform Commercial Code as in effect immediately before the
12 effective date of this amendatory Act of the 91st General
13 Assembly on June 30, 2001, unless a different fee is later
14 set by the local-filing office. However, the different fee
15 must not exceed $10 for responding to a request for
16 information relating to a debtor or $10 for issuing a
17 certificate.
18 (e) After June 30, 2008, each local-filing office may
19 remove and destroy, in accordance with any then applicable
20 record retention law of this State, all former-Article-9
21 records, including the related index.
22 (f) This Section does not apply, with respect to
23 financing statements and other records, to a filing office in
24 which mortgages or records of mortgages on real property are
25 required to be filed or recorded, if:
26 (1) the collateral is timber to be cut or
27 as-extracted collateral, or
28 (2) the record is or relates to a financing
29 statement filed as a fixture filing and the collateral is
30 goods that are or are to become fixtures.
31 (810 ILCS 5/9-502) (from Ch. 26, par. 9-502)
32 Sec. 9-502. Contents of financing statement; record of
33 mortgage as financing statement; time of filing financing
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1 statement.
2 (a) Sufficiency of financing statement. Subject to
3 subsection (b), a financing statement is sufficient only if
4 it:
5 (1) provides the name of the debtor;
6 (2) provides the name of the secured party or a
7 representative of the secured party; and
8 (3) indicates the collateral covered by the
9 financing statement.
10 (b) Real-property-related financing statements. Except
11 as otherwise provided in Section 9-501(b), to be sufficient,
12 a financing statement that covers as-extracted collateral or
13 timber to be cut, or which is filed as a fixture filing and
14 covers goods that are or are to become fixtures, must satisfy
15 subsection (a) and also:
16 (1) indicate that it covers this type of
17 collateral;
18 (2) indicate that it is to be filed in the real
19 property records;
20 (3) provide a description of the real property to
21 which the collateral is related sufficient to give
22 constructive notice of a mortgage under the law of this
23 State if the description were contained in a record of
24 the mortgage of the real property; and
25 (4) if the debtor does not have an interest of
26 record in the real property, provide the name of a record
27 owner.
28 (c) Record of mortgage as financing statement. A record
29 of a mortgage is effective, from the date of recording, as a
30 financing statement filed as a fixture filing or as a
31 financing statement covering as-extracted collateral or
32 timber to be cut only if:
33 (1) the record indicates the goods or accounts that
34 it covers;
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1 (2) the goods are or are to become fixtures related
2 to the real property described in the record or the
3 collateral is related to the real property described in
4 the record and is as-extracted collateral or timber to be
5 cut;
6 (3) the record satisfies the requirements for a
7 financing statement in this Section other than an
8 indication that it is to be filed in the real property
9 records; and
10 (4) the record is recorded.
11 (d) Filing before security agreement or attachment. A
12 financing statement may be filed before a security agreement
13 is made or a security interest otherwise attaches. Collection
14 Rights of Secured Party.
15 (1) When so agreed and in any event on default the
16 secured party is entitled to notify an account debtor or the
17 obligor on an instrument to make payment to him whether or
18 not the assignor was theretofore making collections on the
19 collateral, and also to take control of any proceeds to which
20 he is entitled under Section 9-306.
21 (2) A secured party who by agreement is entitled to
22 charge back uncollected collateral or otherwise to full or
23 limited recourse against the debtor and who undertakes to
24 collect from the account debtors or obligors must proceed in
25 a commercially reasonable manner and may deduct his
26 reasonable expenses of realization from the collections. If
27 the security agreement secures an indebtedness, the secured
28 party must account to the debtor for any surplus, and unless
29 otherwise agreed, the debtor is liable for any deficiency.
30 But, if the underlying transaction was a sale of accounts or
31 chattel paper, the debtor is entitled to any surplus or is
32 liable for any deficiency only if the security agreement so
33 provides.
34 (Source: P.A. 77-2810.)
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1 (810 ILCS 5/9-503) (from Ch. 26, par. 9-503)
2 Sec. 9-503. Name of debtor and secured party.
3 (a) Sufficiency of debtor's name. A financing statement
4 sufficiently provides the name of the debtor:
5 (1) if the debtor is a registered organization,
6 only if the financing statement provides the name of the
7 debtor indicated on the public record of the debtor's
8 jurisdiction of organization which shows the debtor to
9 have been organized;
10 (2) if the debtor is a decedent's estate, only if
11 the financing statement provides the name of the decedent
12 and indicates that the debtor is an estate;
13 (3) if the debtor is a trust or a trustee acting
14 with respect to property held in trust, only if the
15 financing statement:
16 (A) provides the name specified for the trust
17 in its organic documents or, if no name is
18 specified, provides the name of the settlor and
19 additional information sufficient to distinguish the
20 debtor from other trusts having one or more of the
21 same settlors; and
22 (B) indicates, in the debtor's name or
23 otherwise, that the debtor is a trust or is a
24 trustee acting with respect to property held in
25 trust; and
26 (4) in other cases:
27 (A) if the debtor has a name, only if it
28 provides the individual or organizational name of
29 the debtor; and
30 (B) if the debtor does not have a name, only
31 if it provides the names of the partners, members,
32 associates, or other persons comprising the debtor.
33 (b) Additional debtor-related information. A financing
34 statement that provides the name of the debtor in accordance
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1 with subsection (a) is not rendered ineffective by the
2 absence of:
3 (1) a trade name or other name of the debtor; or
4 (2) unless required under subsection (a)(4)(B),
5 names of partners, members, associates, or other persons
6 comprising the debtor.
7 (c) Debtor's trade name insufficient. A financing
8 statement that provides only the debtor's trade name does not
9 sufficiently provide the name of the debtor.
10 (d) Representative capacity. Failure to indicate the
11 representative capacity of a secured party or representative
12 of a secured party does not affect the sufficiency of a
13 financing statement.
14 (e) Multiple debtors and secured parties. A financing
15 statement may provide the name of more than one debtor and
16 the name of more than one secured party. Secured party's
17 right to take possession after default.
18 Unless otherwise agreed a secured party has on default
19 the right to take possession of the collateral. In taking
20 possession a secured party may proceed without judicial
21 process if this can be done without breach of the peace or
22 may proceed by action.
23 If the security agreement so provides the secured party
24 may require the debtor to assemble the collateral and make it
25 available to the secured party at a place to be designated by
26 the secured party which is reasonably convenient to both
27 parties. Without removal a secured party may render equipment
28 unusable, and may dispose of collateral on the debtor's
29 premises under Section 9--504.
30 (Source: Laws 1961, p. 2101.)
31 (810 ILCS 5/9-504) (from Ch. 26, par. 9-504)
32 Sec. 9-504. Indication of collateral. A financing
33 statement sufficiently indicates the collateral that it
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1 covers if the financing statement provides:
2 (1) a description of the collateral pursuant to
3 Section 9-108; or
4 (2) an indication that the financing statement
5 covers all assets or all personal property.
6 Secured Party's Right to Dispose of Collateral After
7 Default; Effect of Disposition.
8 (1) A secured party after default may sell, lease or
9 otherwise dispose of any or all of the collateral in its then
10 condition or following any commercially reasonable
11 preparation or processing. Any sale of goods is subject to
12 the Article on Sales (Article 2). The proceeds of disposition
13 shall be applied in the order following to
14 (a) the reasonable expenses of retaking, holding,
15 preparing for sale or lease, selling, leasing and the like
16 and, to the extent provided for in the agreement and not
17 prohibited by law, the reasonable attorneys' fees and legal
18 expenses incurred by the secured party;
19 (b) the satisfaction of indebtedness secured by the
20 security interest under which the disposition is made;
21 (c) the satisfaction of indebtedness secured by any
22 subordinate security interest in the collateral if written
23 notification of demand therefor is received before
24 distribution of the proceeds is completed. If requested by
25 the secured party, the holder of a subordinate security
26 interest must seasonably furnish reasonable proof of his
27 interest, and unless he does so, the secured party need not
28 comply with his demand.
29 (2) If the security interest secures an indebtedness,
30 the secured party must account to the debtor for any surplus,
31 and, unless otherwise agreed, the debtor is liable for any
32 deficiency. But if the underlying transaction was a sale of
33 accounts or chattel paper, the debtor is entitled to any
34 surplus or is liable for any deficiency only if the security
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1 agreement so provides.
2 (3) Disposition of the collateral may be by public or
3 private proceedings and may be made by way of one or more
4 contracts. Sale or other disposition may be as a unit or in
5 parcels and at any time and place and on any terms but every
6 aspect of the disposition including the method, manner, time,
7 place and terms must be commercially reasonable. Unless
8 collateral is perishable or threatens to decline speedily in
9 value or is of a type customarily sold on a recognized
10 market, reasonable notification of the time and place of any
11 public sale or reasonable notification of the time after
12 which any private sale or other intended disposition is to be
13 made shall be sent by the secured party to the debtor, if he
14 has not signed after default a statement renouncing or
15 modifying his right to notification of sale. In the case of
16 consumer goods no other notification need be sent. In other
17 cases notification shall be sent to any other secured party
18 from whom the secured party has received (before sending his
19 notification to the debtor or before the debtor's
20 renunciation of his rights) written notice of a claim of an
21 interest in the collateral. The secured party may buy at any
22 public sale and if the collateral is of a type customarily
23 sold in a recognized market or is of a type which is the
24 subject of widely distributed standard price quotations he
25 may buy at private sale.
26 (4) When collateral is disposed of by a secured party
27 after default, the disposition transfers to a purchaser for
28 value all of the debtor's rights therein, discharges the
29 security interest under which it is made and any security
30 interest or lien subordinate thereto. The purchaser takes
31 free of all such rights and interests even though the secured
32 party fails to comply with the requirements of this Part or
33 of any judicial proceedings
34 (a) in the case of a public sale, if the purchaser
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1 has no knowledge of any defects in the sale and if he does
2 not buy in collusion with the secured party, other bidders or
3 the person conducting the sale; or
4 (b) in any other case, if the purchaser acts in
5 good faith.
6 (5) A person who is liable to a secured party under a
7 guaranty, indorsement, repurchase agreement or the like and
8 who receives a transfer of collateral from the secured party
9 or is subrogated to his rights has thereafter the rights and
10 duties of the secured party. Such a transfer of collateral is
11 not a sale or disposition of the collateral under this
12 Article.
13 (Source: P.A. 78-238.)
14 (810 ILCS 5/9-505) (from Ch. 26, par. 9-505)
15 Sec. 9-505. Filing and compliance with other statutes and
16 treaties for consignments, leases, other bailments, and other
17 transactions.
18 (a) Use of terms other than "debtor" and "secured
19 party." A consignor, lessor, or other bailor of goods, a
20 licensor, or a buyer of a payment intangible or promissory
21 note may file a financing statement, or may comply with a
22 statute or treaty described in Section 9-311(a), using the
23 terms "consignor", "consignee", "lessor", "lessee", "bailor",
24 "bailee", "licensor", "licensee", "owner", "registered
25 owner", "buyer", "seller", or words of similar import,
26 instead of the terms "secured party" and "debtor".
27 (b) Effect of financing statement under subsection (a).
28 This part applies to the filing of a financing statement
29 under subsection (a) and, as appropriate, to compliance that
30 is equivalent to filing a financing statement under Section
31 9-311(b), but the filing or compliance is not of itself a
32 factor in determining whether the collateral secures an
33 obligation. If it is determined for another reason that the
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1 collateral secures an obligation, a security interest held by
2 the consignor, lessor, bailor, licensor, owner, or buyer
3 which attaches to the collateral is perfected by the filing
4 or compliance. Compulsory Disposition of Collateral;
5 Acceptance of the Collateral as Discharge of Obligation.
6 (1) If the debtor has paid 60% of the cash price in the
7 case of a purchase money security interest in consumer goods
8 or 60% of the loan in the case of another security interest
9 in consumer goods, and has not signed after default a
10 statement renouncing or modifying his rights under this Part
11 a secured party who has taken possession of collateral must
12 dispose of it under Section 9--504 and if he fails to do so
13 within 90 days after he takes possession the debtor at his
14 option may recover in conversion or under Section 9--507(1)
15 on secured party's liability.
16 (2) In any other case involving consumer goods or any
17 other collateral a secured party in possession may, after
18 default, propose to retain the collateral in satisfaction of
19 the obligation. Written notice of such proposal shall be sent
20 to the debtor if he has not signed after default a statement
21 renouncing or modifying his rights under this subsection. In
22 the case of consumer goods no other notice need be given. In
23 other cases notice shall be sent to any other secured party
24 from whom the secured party has received (before sending his
25 notice to the debtor or before the debtor's renunciation of
26 his rights) written notice of a claim of an interest in the
27 collateral. If the secured party receives objection in
28 writing from a person entitled to receive notification within
29 twenty-one days after the notice was sent, the secured party
30 must dispose of the collateral under Section 9-504. In the
31 absence of such written objection the secured party may
32 retain the collateral in satisfaction of the debtor's
33 obligation.
34 (Source: P.A. 77-2810.)
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1 (810 ILCS 5/9-506) (from Ch. 26, par. 9-506)
2 Sec. 9-506. Effect of errors or omissions.
3 (a) Minor errors and omissions. A financing statement
4 substantially satisfying the requirements of this Part is
5 effective, even if it has minor errors or omissions, unless
6 the errors or omissions make the financing statement
7 seriously misleading.
8 (b) Financing statement seriously misleading. Except as
9 otherwise provided in subsection (c), a financing statement
10 that fails sufficiently to provide the name of the debtor in
11 accordance with Section 9-503(a) is seriously misleading.
12 (c) Financing statement not seriously misleading. If a
13 search of the records of the filing office under the debtor's
14 correct name, using the filing office's standard search
15 logic, if any, would disclose a financing statement that
16 fails sufficiently to provide the name of the debtor in
17 accordance with Section 9-503(a), the name provided does not
18 make the financing statement seriously misleading.
19 (d) "Debtor's correct name." For purposes of Section
20 9-508(b), the "debtor's correct name" in subsection (c) means
21 the correct name of the new debtor. Debtor's right to redeem
22 collateral.
23 At any time before the secured party has disposed of
24 collateral or entered into a contract for its disposition
25 under Section 9--504 or before the obligation has been
26 discharged under Section 9--505(2) the debtor or any other
27 secured party may unless otherwise agreed in writing after
28 default redeem the collateral by tendering fulfillment of all
29 obligations secured by the collateral as well as the expenses
30 reasonably incurred by the secured party in retaking, holding
31 and preparing the collateral for disposition, in arranging
32 for the sale, and to the extent provided in the agreement and
33 not prohibited by law, his reasonable attorneys' fees and
34 legal expenses.
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1 (Source: Laws 1961, p. 2101.)
2 (810 ILCS 5/9-507) (from Ch. 26, par. 9-507)
3 Sec. 9-507. Effect of certain events on effectiveness of
4 financing statement.
5 (a) Disposition. A filed financing statement remains
6 effective with respect to collateral that is sold, exchanged,
7 leased, licensed, or otherwise disposed of and in which a
8 security interest or agricultural lien continues, even if the
9 secured party knows of or consents to the disposition.
10 (b) Information becoming seriously misleading. Except
11 as otherwise provided in subsection (c) and Section 9-508, a
12 financing statement is not rendered ineffective if, after the
13 financing statement is filed, the information provided in the
14 financing statement becomes seriously misleading under
15 Section 9-506.
16 (c) Change in debtor's name. If a debtor so changes its
17 name that a filed financing statement becomes seriously
18 misleading under Section 9-506:
19 (1) the financing statement is effective to perfect
20 a security interest in collateral acquired by the debtor
21 before, or within four months after, the change; and
22 (2) the financing statement is not effective to
23 perfect a security interest in collateral acquired by the
24 debtor more than four months after the change, unless an
25 amendment to the financing statement which renders the
26 financing statement not seriously misleading is filed
27 within four months after the change. Secured party's
28 liability for failure to comply with this part.
29 (1) If it is established that the secured party is not
30 proceeding in accordance with the provisions of this Part
31 disposition may be ordered or restrained on appropriate terms
32 and conditions. If the disposition has occurred the debtor or
33 any person entitled to notification or whose security
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1 interest has been made known to the secured party prior to
2 the disposition has a right to recover from the secured party
3 any loss caused by a failure to comply with the provisions of
4 this Part. If the collateral is consumer goods, the debtor in
5 an individual action has a right to recover in any event an
6 amount not less than the credit service charge plus 10% of
7 the principal amount of the debt or the time price
8 differential plus 10% of the cash price.
9 (2) The fact that a better price could have been
10 obtained by a sale at a different time or in a different
11 method from that selected by the secured party is not of
12 itself sufficient to establish that the sale was not made in
13 a commercially reasonable manner. If the secured party either
14 sells the collateral in the usual manner in any recognized
15 market therefor or if he sells at the price current in such
16 market at the time of his sale or if he has otherwise sold in
17 conformity with reasonable commercial practices among dealers
18 in the type of property sold he has sold in a commercially
19 reasonable manner. The principles stated in the two preceding
20 sentences with respect to sales also apply as may be
21 appropriate to other types of disposition. A disposition
22 which has been approved in any judicial proceeding or by any
23 bona fide creditors' committee or representative of creditors
24 shall conclusively be deemed to be commercially reasonable,
25 but this sentence does not indicate that any such approval
26 must be obtained in any case nor does it indicate that any
27 disposition not so approved is not commercially reasonable.
28 (Source: P.A. 90-214, eff. 7-25-97.)
29 (810 ILCS 5/9-508 new)
30 Sec. 9-508. Effectiveness of financing statement if new
31 debtor becomes bound by security agreement.
32 (a) Financing statement naming original debtor. Except
33 as otherwise provided in this Section, a filed financing
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1 statement naming an original debtor is effective to perfect a
2 security interest in collateral in which a new debtor has or
3 acquires rights to the extent that the financing statement
4 would have been effective had the original debtor acquired
5 rights in the collateral.
6 (b) Financing statement becoming seriously misleading.
7 If the difference between the name of the original debtor and
8 that of the new debtor causes a filed financing statement
9 that is effective under subsection (a) to be seriously
10 misleading under Section 9-506:
11 (1) the financing statement is effective to perfect
12 a security interest in collateral acquired by the new
13 debtor before, and within four months after, the new
14 debtor becomes bound under Section 9-203(d); and
15 (2) the financing statement is not effective to
16 perfect a security interest in collateral acquired by the
17 new debtor more than four months after the new debtor
18 becomes bound under Section 9-203(d) unless an initial
19 financing statement providing the name of the new debtor
20 is filed before the expiration of that time.
21 (c) When Section not applicable. This Section does not
22 apply to collateral as to which a filed financing statement
23 remains effective against the new debtor under Section
24 9-507(a).
25 (810 ILCS 5/9-509 new)
26 Sec. 9-509. Persons entitled to file a record.
27 (a) Person entitled to file record. A person may file
28 an initial financing statement, amendment that adds
29 collateral covered by a financing statement, or amendment
30 that adds a debtor to a financing statement only if:
31 (1) the debtor authorizes the filing in an
32 authenticated record; or
33 (2) the person holds an agricultural lien that has
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1 become effective at the time of filing and the financing
2 statement covers only collateral in which the person
3 holds an agricultural lien.
4 (b) Security agreement as authorization. By
5 authenticating or becoming bound as debtor by a security
6 agreement, a debtor or new debtor authorizes the filing of an
7 initial financing statement, and an amendment, covering:
8 (1) the collateral described in the security
9 agreement; and
10 (2) property that becomes collateral under Section
11 9-315(a)(2), whether or not the security agreement
12 expressly covers proceeds.
13 (c) Acquisition of collateral as authorization. By
14 acquiring collateral in which a security interest or
15 agricultural lien continues under Section 9-315(a)(1), a
16 debtor authorizes the filing of an initial financing
17 statement, and an amendment, covering the collateral and
18 property that becomes collateral under Section 9-315(a)(2).
19 (d) Person entitled to file certain amendments. A
20 person may file an amendment other than an amendment that
21 adds collateral covered by a financing statement or an
22 amendment that adds a debtor to a financing statement only
23 if:
24 (1) the secured party of record authorizes the
25 filing; or
26 (2) the amendment is a termination statement for a
27 financing statement as to which the secured party of
28 record has failed to file or send a termination statement
29 as required by Section 9-513(a) or (c), the debtor
30 authorizes the filing, and the termination statement
31 indicates that the debtor authorized it to be filed.
32 (e) Multiple secured parties of record. If there is
33 more than one secured party of record for a financing
34 statement, each secured party of record may authorize the
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1 filing of an amendment under subsection (d).
2 (810 ILCS 5/9-510 new)
3 Sec. 9-510. Effectiveness of filed record.
4 (a) Filed record effective if authorized. A filed
5 record is effective only to the extent that it was filed by a
6 person that may file it under Section 9-509.
7 (b) Authorization by one secured party of record. A
8 record authorized by one secured party of record does not
9 affect the financing statement with respect to another
10 secured party of record.
11 (c) Continuation statement not timely filed. A
12 continuation statement that is not filed within the six-month
13 period prescribed by Section 9-515(d) is ineffective.
14 (810 ILCS 5/9-511 new)
15 Sec. 9-511. Secured party of record.
16 (a) Secured party of record. A secured party of record
17 with respect to a financing statement is a person whose name
18 is provided as the name of the secured party or a
19 representative of the secured party in an initial financing
20 statement that has been filed. If an initial financing
21 statement is filed under Section 9-514(a), the assignee named
22 in the initial financing statement is the secured party of
23 record with respect to the financing statement.
24 (b) Amendment naming secured party of record. If an
25 amendment of a financing statement which provides the name of
26 a person as a secured party or a representative of a secured
27 party is filed, the person named in the amendment is a
28 secured party of record. If an amendment is filed under
29 Section 9-514(b), the assignee named in the amendment is a
30 secured party of record.
31 (c) Amendment deleting secured party of record. A
32 person remains a secured party of record until the filing of
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1 an amendment of the financing statement which deletes the
2 person.
3 (810 ILCS 5/9-512 new)
4 Sec. 9-512. Amendment of information in financing
5 statement.
6 (a) Amendment of information in financing statement.
7 Subject to Section 9-509, a person may add or delete
8 collateral covered by, continue or terminate the
9 effectiveness of, or, subject to subsection (e), otherwise
10 amend the information provided in, a financing statement by
11 filing an amendment that:
12 (1) identifies, by its file number, the initial
13 financing statement to which the amendment relates; and
14 (2) if the amendment relates to an initial
15 financing statement filed in a filing office described in
16 Section 9-501(a)(1), provides the date and time that the
17 initial financing statement was filed and the information
18 specified in Section 9-502(b).
19 (b) Period of effectiveness not affected. Except as
20 otherwise provided in Section 9-515, the filing of an
21 amendment does not extend the period of effectiveness of the
22 financing statement.
23 (c) Effectiveness of amendment adding collateral. A
24 financing statement that is amended by an amendment that adds
25 collateral is effective as to the added collateral only from
26 the date of the filing of the amendment.
27 (d) Effectiveness of amendment adding debtor. A
28 financing statement that is amended by an amendment that adds
29 a debtor is effective as to the added debtor only from the
30 date of the filing of the amendment.
31 (e) Certain amendments ineffective. An amendment is
32 ineffective to the extent it:
33 (1) purports to delete all debtors and fails to
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1 provide the name of a debtor to be covered by the
2 financing statement; or
3 (2) purports to delete all secured parties of
4 record and fails to provide the name of a new secured
5 party of record.
6 (810 ILCS 5/9-513 new)
7 Sec. 9-513. Termination statement.
8 (a) Consumer goods. A secured party shall cause the
9 secured party of record for a financing statement to file a
10 termination statement for the financing statement if the
11 financing statement covers consumer goods and:
12 (1) there is no obligation secured by the
13 collateral covered by the financing statement and no
14 commitment to make an advance, incur an obligation, or
15 otherwise give value; or
16 (2) the debtor did not authorize the filing of the
17 initial financing statement.
18 (b) Time for compliance with subsection (a). To comply
19 with subsection (a), a secured party shall cause the secured
20 party of record to file the termination statement:
21 (1) within one month after there is no obligation
22 secured by the collateral covered by the financing
23 statement and no commitment to make an advance, incur an
24 obligation, or otherwise give value; or
25 (2) if earlier, within 20 days after the secured
26 party receives an authenticated demand from a debtor.
27 (c) Other collateral. In cases not governed by
28 subsection (a), within 20 days after a secured party receives
29 an authenticated demand from a debtor, the secured party
30 shall cause the secured party of record for a financing
31 statement to send to the debtor a termination statement for
32 the financing statement or file the termination statement in
33 the filing office if:
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1 (1) except in the case of a financing statement
2 covering accounts or chattel paper that has been sold or
3 goods that are the subject of a consignment, there is no
4 obligation secured by the collateral covered by the
5 financing statement and no commitment to make an advance,
6 incur an obligation, or otherwise give value;
7 (2) the financing statement covers accounts or
8 chattel paper that has been sold but as to which the
9 account debtor or other person obligated has discharged
10 its obligation;
11 (3) the financing statement covers goods that were
12 the subject of a consignment to the debtor but are not in
13 the debtor's possession; or
14 (4) the debtor did not authorize the filing of the
15 initial financing statement.
16 (d) Effect of filing termination statement. Except as
17 otherwise provided in Section 9-510, upon the filing of a
18 termination statement with the filing office, the financing
19 statement to which the termination statement relates ceases
20 to be effective.
21 (810 ILCS 5/9-514 new)
22 Sec. 9-514. Assignment of powers of secured party of
23 record.
24 (a) Assignment reflected on initial financing statement.
25 Except as otherwise provided in subsection (c), an initial
26 financing statement may reflect an assignment of all of the
27 secured party's power to authorize an amendment to the
28 financing statement by providing the name and mailing address
29 of the assignee as the name and address of the secured party.
30 (b) Assignment of filed financing statement. Except as
31 otherwise provided in subsection (c), a secured party of
32 record may assign of record all or part of its power to
33 authorize an amendment to a financing statement by filing in
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1 the filing office an amendment of the financing statement
2 which:
3 (1) identifies, by its file number, the initial
4 financing statement to which it relates;
5 (2) provides the name of the assignor; and
6 (3) provides the name and mailing address of the
7 assignee.
8 (c) Assignment of record of mortgage. An assignment of
9 record of a security interest in a fixture covered by a
10 record of a mortgage which is effective as a financing
11 statement filed as a fixture filing under Section 9-502(c)
12 may be made only by an assignment of record of the mortgage
13 in the manner provided by law of this State other than the
14 Uniform Commercial Code.
15 (810 ILCS 5/9-515 new)
16 Sec. 9-515. Duration and effectiveness of financing
17 statement; effect of lapsed financing statement.
18 (a) Five-year effectiveness. Except as otherwise
19 provided in subsections (b), (e), (f), and (g), a filed
20 financing statement is effective for a period of five years
21 after the date of filing.
22 (b) Public-finance or manufactured-home transaction.
23 Except as otherwise provided in subsections (e), (f), and
24 (g), an initial financing statement filed in connection with
25 a public-finance transaction or manufactured-home transaction
26 is effective for a period of 30 years after the date of
27 filing if it indicates that it is filed in connection with a
28 public-finance transaction or manufactured-home transaction.
29 (c) Lapse and continuation of financing statement. The
30 effectiveness of a filed financing statement lapses on the
31 expiration of the period of its effectiveness unless before
32 the lapse a continuation statement is filed pursuant to
33 subsection (d). Upon lapse, a financing statement ceases to
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1 be effective and any security interest or agricultural lien
2 that was perfected by the financing statement becomes
3 unperfected, unless the security interest is perfected
4 otherwise. If the security interest or agricultural lien
5 becomes unperfected upon lapse, it is deemed never to have
6 been perfected as against a purchaser of the collateral for
7 value.
8 (d) When continuation statement may be filed. A
9 continuation statement may be filed only within six months
10 before the expiration of the five-year period specified in
11 subsection (a) or the 30-year period specified in subsection
12 (b), whichever is applicable.
13 (e) Effect of filing continuation statement. Except as
14 otherwise provided in Section 9-510, upon timely filing of a
15 continuation statement, the effectiveness of the initial
16 financing statement continues for a period of five years
17 commencing on the day on which the financing statement would
18 have become ineffective in the absence of the filing. Upon
19 the expiration of the five-year period, the financing
20 statement lapses in the same manner as provided in subsection
21 (c), unless, before the lapse, another continuation statement
22 is filed pursuant to subsection (d). Succeeding continuation
23 statements may be filed in the same manner to continue the
24 effectiveness of the initial financing statement.
25 (f) Transmitting utility financing statement. If a
26 debtor is a transmitting utility and a filed financing
27 statement so indicates, the financing statement is effective
28 until a termination statement is filed.
29 (g) Record of mortgage as financing statement. A record
30 of a mortgage that is effective as a financing statement
31 filed as a fixture filing under Section 9-502(c) remains
32 effective as a financing statement filed as a fixture filing
33 until the mortgage is released or satisfied of record or its
34 effectiveness otherwise terminates as to the real property.
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1 (810 ILCS 5/9-516 new)
2 Sec. 9-516. What constitutes filing; effectiveness of
3 filing.
4 (a) What constitutes filing. Except as otherwise
5 provided in subsection (b), communication of a record to a
6 filing office and tender of the filing fee or acceptance of
7 the record by the filing office constitutes filing.
8 (b) Refusal to accept record; filing does not occur.
9 Filing does not occur with respect to a record that a filing
10 office refuses to accept because:
11 (1) the record is not communicated by a method or
12 medium of communication authorized by the filing office;
13 (2) an amount equal to or greater than the
14 applicable filing fee is not tendered;
15 (3) the filing office is unable to index the record
16 because:
17 (A) in the case of an initial financing
18 statement, the record does not provide a name for
19 the debtor;
20 (B) in the case of an amendment or correction
21 statement, the record:
22 (i) does not identify the initial
23 financing statement as required by Section
24 9-512 or 9-518, as applicable; or
25 (ii) identifies an initial financing
26 statement whose effectiveness has lapsed under
27 Section 9-515;
28 (C) in the case of an initial financing
29 statement that provides the name of a debtor
30 identified as an individual or an amendment that
31 provides a name of a debtor identified as an
32 individual which was not previously provided in the
33 financing statement to which the record relates, the
34 record does not identify the debtor's last name; or
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1 (D) in the case of a record filed or recorded
2 in the filing office described in Section
3 9-501(a)(1), the record does not provide a
4 sufficient description of the real property to which
5 it relates;
6 (4) in the case of an initial financing statement
7 or an amendment that adds a secured party of record, the
8 record does not provide a name and mailing address for
9 the secured party of record;
10 (5) in the case of an initial financing statement
11 or an amendment that provides a name of a debtor which
12 was not previously provided in the financing statement to
13 which the amendment relates, the record does not:
14 (A) provide a mailing address for the debtor;
15 (B) indicate whether the debtor is an
16 individual or an organization; or
17 (C) if the financing statement indicates that
18 the debtor is an organization, provide:
19 (i) a type of organization for the
20 debtor;
21 (ii) a jurisdiction of organization for
22 the debtor; or
23 (iii) an organizational identification
24 number for the debtor or indicate that the
25 debtor has none;
26 (6) in the case of an assignment reflected in an
27 initial financing statement under Section 9-514(a) or an
28 amendment filed under Section 9-514(b), the record does
29 not provide a name and mailing address for the assignee;
30 or
31 (7) in the case of a continuation statement, the
32 record is not filed within the six-month period
33 prescribed by Section 9-515(d).
34 (c) Rules applicable to subsection (b). For purposes of
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1 subsection (b):
2 (1) a record does not provide information if the
3 filing office is unable to read or decipher the
4 information; and
5 (2) a record that does not indicate that it is an
6 amendment or identify an initial financing statement to
7 which it relates, as required by Section 9-512, 9-514, or
8 9-518, is an initial financing statement.
9 (d) Refusal to accept record; record effective as filed
10 record. A record that is communicated to the filing office
11 with tender of the filing fee, but which the filing office
12 refuses to accept for a reason other than one set forth in
13 subsection (b), is effective as a filed record except as
14 against a purchaser of the collateral which gives value in
15 reasonable reliance upon the absence of the record from the
16 files.
17 (810 ILCS 5/9-517 new)
18 Sec. 9-517. Effect of indexing errors. The failure of
19 the filing office to index a record correctly does not affect
20 the effectiveness of the filed record.
21 (810 ILCS 5/9-518 new)
22 Sec. 9-518. Claim concerning inaccurate or wrongfully
23 filed record.
24 (a) Correction statement. A person may file in the
25 filing office a correction statement with respect to a record
26 indexed there under the person's name if the person believes
27 that the record is inaccurate or was wrongfully filed.
28 (b) Sufficiency of correction statement. A correction
29 statement must:
30 (1) identify the record to which it relates by:
31 (A) the file number assigned to the initial
32 financing statement to which the record relates; and
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1 (B) if the correction statement relates to a
2 record filed or recorded in a filing office
3 described in Section 9-501(a)(1), the date and time
4 that the initial financing statement was filed and
5 the information specified in Section 9-502(b);
6 (2) indicate that it is a correction statement; and
7 (3) provide the basis for the person's belief that
8 the record is inaccurate and indicate the manner in which
9 the person believes the record should be amended to cure
10 any inaccuracy or provide the basis for the person's
11 belief that the record was wrongfully filed.
12 (c) Record not affected by correction statement. The
13 filing of a correction statement does not affect the
14 effectiveness of an initial financing statement or other
15 filed record.
16 (810 ILCS 5/Art. 9, Part 5, Subpart 2 heading new)
17 SUBPART 2. DUTIES AND OPERATION OF FILING OFFICE
18 (810 ILCS 5/9-519 new)
19 Sec. 9-519. Numbering, maintaining, and indexing
20 records; communicating information provided in records.
21 (a) Filing office duties. For each record filed in a
22 filing office, the filing office shall:
23 (1) assign a unique number to the filed record;
24 (2) create a record that bears the number assigned
25 to the filed record and the date and time of filing;
26 (3) maintain the filed record for public
27 inspection; and
28 (4) index the filed record in accordance with
29 subsections (c), (d), and (e).
30 (b) File number. A file number assigned after January
31 1, 2002, must include a digit that:
32 (1) is mathematically derived from or related to
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1 the other digits of the file number; and
2 (2) aids the filing office in determining whether a
3 number communicated as the file number includes a
4 single-digit or transpositional error.
5 (c) Indexing: general. Except as otherwise provided in
6 subsections (d) and (e), the filing office shall:
7 (1) index an initial financing statement according
8 to the name of the debtor and index all filed records
9 relating to the initial financing statement in a manner
10 that associates with one another an initial financing
11 statement and all filed records relating to the initial
12 financing statement; and
13 (2) index a record that provides a name of a debtor
14 which was not previously provided in the financing
15 statement to which the record relates also according to
16 the name that was not previously provided.
17 (d) Indexing: real-property-related financing
18 statement. If a financing statement is filed as a fixture
19 filing or covers as-extracted collateral or timber to be cut,
20 it must be filed for record and the filing office shall index
21 it:
22 (1) under the names of the debtor and of each owner
23 of record shown on the financing statement as if they
24 were the mortgagors under a mortgage of the real property
25 described; and
26 (2) to the extent that the law of this State
27 provides for indexing of records of mortgages under the
28 name of the mortgagee, under the name of the secured
29 party as if the secured party were the mortgagee
30 thereunder, or, if indexing is by description, as if the
31 financing statement were a record of a mortgage of the
32 real property described.
33 (e) Indexing: real-property-related assignment. If a
34 financing statement is filed as a fixture filing or covers
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1 as-extracted collateral or timber to be cut, the filing
2 office shall index an assignment filed under Section 9-514(a)
3 or an amendment filed under Section 9-514(b):
4 (1) under the name of the assignor as grantor; and
5 (2) to the extent that the law of this State
6 provides for indexing a record of the assignment of a
7 mortgage under the name of the assignee, under the name
8 of the assignee.
9 (f) Retrieval and association capability. The filing
10 office shall maintain a capability:
11 (1) to retrieve a record by the name of the debtor
12 and by the file number assigned to the initial financing
13 statement to which the record relates; and
14 (2) to associate and retrieve with one another an
15 initial financing statement and each filed record
16 relating to the initial financing statement.
17 (g) Removal of debtor's name. The filing office may not
18 remove a debtor's name from the index until one year after
19 the effectiveness of a financing statement naming the debtor
20 lapses under Section 9-515 with respect to all secured
21 parties of record.
22 (h) Timeliness of filing office performance. The filing
23 office shall perform the acts required by subsections (a)
24 through (e) at the time and in the manner prescribed by
25 filing-office rule, but not later than two business days
26 after the filing office receives the record in question.
27 (i) Inapplicability to real-property-related filing
28 office. Subsections (b) and (h) do not apply to a filing
29 office described in Section 9-501(a)(1).
30 (810 ILCS 5/9-520 new)
31 Sec. 9-520. Acceptance and refusal to accept record.
32 (a) Mandatory refusal to accept record. A filing office
33 shall refuse to accept a record for filing for a reason set
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1 forth in Section 9-516(b) and may refuse to accept a record
2 for filing only for a reason set forth in Section 9-516(b).
3 (b) Communication concerning refusal. If a filing
4 office refuses to accept a record for filing, it shall
5 communicate to the person that presented the record the fact
6 of and reason for the refusal and the date and time the
7 record would have been filed had the filing office accepted
8 it. The communication must be made at the time and in the
9 manner prescribed by filing-office rule, but in the case of a
10 filing office described in Section 9-501(a)(2), in no event
11 more than two business days after the filing office receives
12 the record.
13 (c) When filed financing statement effective. A filed
14 financing statement satisfying Section 9-502(a) and (b) is
15 effective, even if the filing office is required to refuse to
16 accept it for filing under subsection (a). However, Section
17 9-338 applies to a filed financing statement providing
18 information described in Section 9-516(b)(5) which is
19 incorrect at the time the financing statement is filed.
20 (d) Separate application to multiple debtors. If a
21 record communicated to a filing office provides information
22 that relates to more than one debtor, this Part applies as to
23 each debtor separately.
24 (810 ILCS 5/9-521 new)
25 Sec. 9-521. Uniform form of written financing statement
26 and amendment.
27 (a) Initial financing statement form. A filing office
28 that accepts written records may not refuse to accept a
29 written initial financing statement in the form and format
30 set forth in the final official text of the 1999 revisions to
31 Article 9 of the Uniform Commercial Code promulgated by the
32 American Law Institute and the National Conference of
33 Commissioners on Uniform State Laws, except for a reason set
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1 forth in Section 9-516(b).
2 (b) Amendment form. A filing office that accepts
3 written records may not refuse to accept a written record in
4 the form and format set forth in the final official text of
5 the 1999 revisions to Article 9 of the Uniform Commercial
6 Code promulgated by the American Law Institute and the
7 National Conference of Commissioners on Uniform State Laws,
8 except for a reason set forth in Section 9-516(b).
9 (810 ILCS 5/9-522 new)
10 Sec. 9-522. Maintenance and destruction of records.
11 (a) Post-lapse maintenance and retrieval of information.
12 The filing office shall maintain a record of the information
13 provided in a filed financing statement for at least one year
14 after the effectiveness of the financing statement has lapsed
15 under Section 9-515 with respect to all secured parties of
16 record. The record must be retrievable by using the name of
17 the debtor and:
18 (1) if the record was filed or recorded in the
19 filing office described in Section 9-501(a)(1), by using
20 the file number assigned to the initial financing
21 statement to which the record relates and the date and
22 time that the record was filed or recorded; or
23 (2) if the record was filed in the filing office
24 described in Section 9-501(a)(2), by using the file
25 number assigned to the initial financing statement to
26 which the record relates.
27 (b) Destruction of written records. Except to the
28 extent that a statute governing disposition of public records
29 provides otherwise, the filing office immediately may destroy
30 any written record evidencing a financing statement. However,
31 if the filing office destroys a written record, it shall
32 maintain another record of the financing statement which
33 complies with subsection (a).
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1 (810 ILCS 5/9-523 new)
2 Sec. 9-523. Information from filing office; sale or
3 license of records.
4 (a) Acknowledgment of filing written record. If a
5 person that files a written record requests an acknowledgment
6 of the filing, the filing office shall send to the person an
7 image of the record showing the number assigned to the record
8 pursuant to Section 9-519(a)(1) and the date and time of the
9 filing of the record. However, if the person furnishes a
10 copy of the record to the filing office, the filing office
11 may instead:
12 (1) note upon the copy the number assigned to the
13 record pursuant to Section 9-519(a)(1) and the date and
14 time of the filing of the record; and
15 (2) send the copy to the person.
16 (b) Acknowledgment of filing other record. If a person
17 files a record other than a written record, the filing office
18 shall communicate to the person an acknowledgment that
19 provides:
20 (1) the information in the record;
21 (2) the number assigned to the record pursuant to
22 Section 9-519(a)(1); and
23 (3) the date and time of the filing of the record.
24 (c) Communication of requested information. The filing
25 office shall communicate or otherwise make available in a
26 record the following information to any person that requests
27 it:
28 (1) whether there is on file on a date and time
29 specified by the filing office, but not a date earlier
30 than three business days before the filing office
31 receives the request, any financing statement that:
32 (A) designates a particular debtor or, if the
33 request so states, designates a particular debtor at
34 the address specified in the request;
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1 (B) has not lapsed under Section 9-515 with
2 respect to all secured parties of record; and
3 (C) if the request so states, has lapsed under
4 Section 9-515 and a record of which is maintained by
5 the filing office under Section 9-522(a);
6 (2) the date and time of filing of each financing
7 statement; and
8 (3) the information provided in each financing
9 statement.
10 (d) Medium for communicating information. In complying
11 with its duty under subsection (c), the filing office may
12 communicate information in any medium. However, if
13 requested, the filing office shall communicate information by
14 issuing a record that can be admitted into evidence in courts
15 of this State without extensive evidence of its authenticity.
16 (e) Timeliness of filing office performance. The filing
17 office shall perform the acts required by subsections (a)
18 through (d) at the time and in the manner prescribed by
19 filing-office rule, but in the case of a filing office
20 described in Section 9-501(a)(2), not later than two business
21 days after the filing office receives the request.
22 (f) Public availability of records. At least weekly,
23 the Secretary of State shall offer to sell or license to the
24 public on a nonexclusive basis, in bulk, copies of all
25 records filed in it under this Part, in every medium from
26 time to time available to the filing office.
27 (810 ILCS 5/9-524 new)
28 Sec. 9-524. Delay by filing office. Delay by the filing
29 office beyond a time limit prescribed by this Part is excused
30 if:
31 (1) the delay is caused by interruption of
32 communication or computer facilities, war, emergency
33 conditions, failure of equipment, or other circumstances
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1 beyond control of the filing office; and
2 (2) the filing office exercises reasonable
3 diligence under the circumstances.
4 (810 ILCS 5/9-525 new)
5 Sec. 9-525. Fees.
6 (a) Initial financing statement: general rule. Except
7 as otherwise provided in subsection (e), the fee for filing
8 and indexing a record under this Part, other than an initial
9 financing statement of the kind described in subsection (b),
10 is:
11 (1) $20 if the record is communicated in writing
12 and consists of one or two pages;
13 (2) $20 if the record is communicated in writing
14 and consists of more than two pages; and
15 (3) $20 if the record is communicated by another
16 medium authorized by filing-office rule.
17 (b) Initial financing statement: public-finance and
18 manufactured-housing transactions. Except as otherwise
19 provided in subsection (e), the fee for filing and indexing
20 an initial financing statement of the following kind is:
21 (1) $20 if the financing statement indicates that
22 it is filed in connection with a public-finance
23 transaction;
24 (2) $20 if the financing statement indicates that
25 it is filed in connection with a manufactured-home
26 transaction.
27 (c) Number of names. The number of names required to be
28 indexed does not affect the amount of the fee in subsections
29 (a) and (b).
30 (d) Response to information request. The fee for
31 responding to a request for information from the filing
32 office, including for issuing a certificate showing whether
33 there is on file any financing statement naming a particular
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1 debtor, is:
2 (1) $10 if the request is communicated in writing;
3 and
4 (2) $10 if the request is communicated by another
5 medium authorized by filing-office rule.
6 (e) Record of mortgage. This Section does not require a
7 fee with respect to a record of a mortgage which is effective
8 as a financing statement filed as a fixture filing or as a
9 financing statement covering as-extracted collateral or
10 timber to be cut under Section 9-502(c). However, the
11 recording and satisfaction fees that otherwise would be
12 applicable to the record of the mortgage apply.
13 (810 ILCS 5/9-526 new)
14 Sec. 9-526. Filing-office rules.
15 (a) Adoption of filing-office rules. The Secretary of
16 State shall adopt and publish rules to implement this
17 Article. The filing-office rules must be:
18 (1) consistent with this Article; and
19 (2) adopted and published in accordance with the
20 Illinois Administrative Procedure Act.
21 (b) Harmonization of rules. To keep the filing-office
22 rules and practices of the filing office in harmony with the
23 rules and practices of filing offices in other jurisdictions
24 that enact substantially this Part, and to keep the
25 technology used by the filing office compatible with the
26 technology used by filing offices in other jurisdictions that
27 enact substantially this Part, the Secretary of State, so far
28 as is consistent with the purposes, policies, and provisions
29 of this Article, in adopting, amending, and repealing
30 filing-office rules, shall:
31 (1) consult with filing offices in other
32 jurisdictions that enact substantially this Part; and
33 (2) consult the most recent version of the Model
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1 Rules promulgated by the International Association of
2 Corporate Administrators or any successor organization;
3 and
4 (3) take into consideration the rules and practices
5 of, and the technology used by, filing offices in other
6 jurisdictions that enact substantially this Part.
7 (810 ILCS 5/9-527 new)
8 Sec. 9-527. Duty to report. The Secretary of State
9 shall report annually to the Governor and Legislature on the
10 operation of the filing office. The report must contain a
11 statement of the extent to which:
12 (1) the filing-office rules are not in harmony with
13 the rules of filing offices in other jurisdictions that
14 enact substantially this Part and the reasons for these
15 variations; and
16 (2) the filing-office rules are not in harmony with
17 the most recent version of the Model Rules promulgated by
18 the International Association of Corporate
19 Administrators, or any successor organization, and the
20 reasons for these variations.
21 (810 ILCS 5/Art. 9, Part 6 heading new)
22 PART 6. DEFAULT
23 (810 ILCS 5/Art. 9, Part 6, Subpart 1 heading new)
24 SUBPART 1. DEFAULT AND ENFORCEMENT OF SECURITY INTEREST
25 (810 ILCS 5/9-601 new)
26 Sec. 9-601. Rights after default; judicial enforcement;
27 consignor or buyer of accounts, chattel paper, payment
28 intangibles, or promissory notes.
29 (a) Rights of secured party after default. After
30 default, a secured party has the rights provided in this Part
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1 and, except as otherwise provided in Section 9-602, those
2 provided by agreement of the parties. A secured party:
3 (1) may reduce a claim to judgment, foreclose, or
4 otherwise enforce the claim, security interest, or
5 agricultural lien by any available judicial procedure;
6 and
7 (2) if the collateral is documents, may proceed
8 either as to the documents or as to the goods they cover.
9 (b) Rights and duties of secured party in possession or
10 control. A secured party in possession of collateral or
11 control of collateral under Section 9-104, 9-105, 9-106, or
12 9-107 has the rights and duties provided in Section 9-207.
13 (c) Rights cumulative; simultaneous exercise. The
14 rights under subsections (a) and (b) are cumulative and may
15 be exercised simultaneously.
16 (d) Rights of debtor and obligor. Except as otherwise
17 provided in subsection (g) and Section 9-605, after default,
18 a debtor and an obligor have the rights provided in this Part
19 and by agreement of the parties.
20 (e) Lien of levy after judgment. If a secured party has
21 reduced its claim to judgment, the lien of any levy that may
22 be made upon the collateral by virtue of a judgment relates
23 back to the earliest of:
24 (1) the date of perfection of the security interest
25 or agricultural lien in the collateral;
26 (2) the date of filing a financing statement
27 covering the collateral; or
28 (3) any date specified in a statute under which the
29 agricultural lien was created.
30 (f) Execution sale. A sale pursuant to a judgment is a
31 foreclosure of the security interest or agricultural lien by
32 judicial procedure within the meaning of this Section. A
33 secured party may purchase at the sale and thereafter hold
34 the collateral free of any other requirements of this
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1 Article.
2 (g) Consignor or buyer of certain rights to payment.
3 Except as otherwise provided in Section 9-607(c), this Part
4 imposes no duties upon a secured party that is a consignor or
5 is a buyer of accounts, chattel paper, payment intangibles,
6 or promissory notes.
7 (810 ILCS 5/9-602 new)
8 Sec. 9-602. Waiver and variance of rights and duties.
9 Except as otherwise provided in Section 9-624, to the extent
10 that they give rights to a debtor or obligor and impose
11 duties on a secured party, the debtor or obligor may not
12 waive or vary the rules stated in the following listed
13 Sections:
14 (1) Section 9-207(b)(4)(C), which deals with use
15 and operation of the collateral by the secured party;
16 (2) Section 9-210, which deals with requests for an
17 accounting and requests concerning a list of collateral
18 and statement of account;
19 (3) Section 9-607(c), which deals with collection
20 and enforcement of collateral;
21 (4) Sections 9-608(a) and 9-615(c) to the extent
22 that they deal with application or payment of noncash
23 proceeds of collection, enforcement, or disposition;
24 (5) Sections 9-608(a) and 9-615(d) to the extent
25 that they require accounting for or payment of surplus
26 proceeds of collateral;
27 (6) Section 9-609 to the extent that it imposes
28 upon a secured party that takes possession of collateral
29 without judicial process the duty to do so without breach
30 of the peace;
31 (7) Sections 9-610(b), 9-611, 9-613, and 9-614,
32 which deal with disposition of collateral;
33 (8) Section 9-615(f), which deals with calculation
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1 of a deficiency or surplus when a disposition is made to
2 the secured party, a person related to the secured party,
3 or a secondary obligor;
4 (9) Sections 9-620, 9-621, and 9-622, which deal
5 with acceptance of collateral in satisfaction of
6 obligation;
7 (10) Section 9-623, which deals with redemption of
8 collateral;
9 (11) Section 9-624, which deals with permissible
10 waivers; and
11 (12) Sections 9-625 and 9-626, which deal with the
12 secured party's liability for failure to comply with this
13 Article.
14 (810 ILCS 5/9-603 new)
15 Sec. 9-603. Agreement on standards concerning rights and
16 duties.
17 (a) Agreed standards. The parties may determine by
18 agreement the standards measuring the fulfillment of the
19 rights of a debtor or obligor and the duties of a secured
20 party under a rule stated in Section 9-602 if the standards
21 are not manifestly unreasonable.
22 (b) Agreed standards inapplicable to breach of peace.
23 Subsection (a) does not apply to the duty under Section 9-609
24 to refrain from breaching the peace.
25 (810 ILCS 5/9-604 new)
26 Sec. 9-604. Procedure if security agreement covers real
27 property or fixtures.
28 (a) Enforcement: personal and real property. If a
29 security agreement covers both personal and real property, a
30 secured party may proceed:
31 (1) under this Part as to the personal property
32 without prejudicing any rights with respect to the real
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1 property; or
2 (2) as to both the personal property and the real
3 property in accordance with the rights with respect to
4 the real property, in which case the other provisions of
5 this Part do not apply.
6 (b) Enforcement: fixtures. Subject to subsection (c),
7 if a security agreement covers goods that are or become
8 fixtures, a secured party may proceed:
9 (1) under this Part; or
10 (2) in accordance with the rights with respect to
11 real property, in which case the other provisions of this
12 Part do not apply.
13 (c) Removal of fixtures. Subject to the other
14 provisions of this Part, if a secured party holding a
15 security interest in fixtures has priority over all owners
16 and encumbrancers of the real property, the secured party,
17 after default, may remove the collateral from the real
18 property.
19 (d) Injury caused by removal. A secured party that
20 removes collateral shall promptly reimburse any encumbrancer
21 or owner of the real property, other than the debtor, for the
22 cost of repair of any physical injury caused by the removal.
23 The secured party need not reimburse the encumbrancer or
24 owner for any diminution in value of the real property caused
25 by the absence of the goods removed or by any necessity of
26 replacing them. A person entitled to reimbursement may
27 refuse permission to remove until the secured party gives
28 adequate assurance for the performance of the obligation to
29 reimburse.
30 (810 ILCS 5/9-605 new)
31 Sec. 9-605. Unknown debtor or secondary obligor. A
32 secured party does not owe a duty based on its status as
33 secured party:
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1 (1) to a person that is a debtor or obligor, unless
2 the secured party knows:
3 (A) that the person is a debtor or obligor;
4 (B) the identity of the person; and
5 (C) how to communicate with the person; or
6 (2) to a secured party or lienholder that has filed
7 a financing statement against a person, unless the
8 secured party knows:
9 (A) that the person is a debtor; and
10 (B) the identity of the person.
11 (810 ILCS 5/9-606 new)
12 Sec. 9-606. Time of default for agricultural lien. For
13 purposes of this Part, a default occurs in connection with an
14 agricultural lien at the time the secured party becomes
15 entitled to enforce the lien in accordance with the statute
16 under which it was created.
17 (810 ILCS 5/9-607 new)
18 Sec. 9-607. Collection and enforcement by secured party.
19 (a) Collection and enforcement generally. If so agreed,
20 and in any event after default, a secured party:
21 (1) may notify an account debtor or other person
22 obligated on collateral to make payment or otherwise
23 render performance to or for the benefit of the secured
24 party;
25 (2) may take any proceeds to which the secured
26 party is entitled under Section 9-315;
27 (3) may enforce the obligations of an account
28 debtor or other person obligated on collateral and
29 exercise the rights of the debtor with respect to the
30 obligation of the account debtor or other person
31 obligated on collateral to make payment or otherwise
32 render performance to the debtor, and with respect to any
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1 property that secures the obligations of the account
2 debtor or other person obligated on the collateral;
3 (4) if it holds a security interest in a deposit
4 account perfected by control under Section 9-104(a)(1),
5 may apply the balance of the deposit account to the
6 obligation secured by the deposit account; and
7 (5) if it holds a security interest in a deposit
8 account perfected by control under Section 9-104(a)(2) or
9 (3), may instruct the bank to pay the balance of the
10 deposit account to or for the benefit of the secured
11 party.
12 (b) Nonjudicial enforcement of mortgage. If necessary
13 to enable a secured party to exercise under subsection (a)(3)
14 the right of a debtor to enforce a mortgage nonjudicially,
15 the secured party may record in the office in which a record
16 of the mortgage is recorded:
17 (1) a copy of the security agreement that creates
18 or provides for a security interest in the obligation
19 secured by the mortgage; and
20 (2) the secured party's sworn affidavit in
21 recordable form stating that:
22 (A) a default has occurred; and
23 (B) the secured party is entitled to enforce
24 the mortgage nonjudicially.
25 (c) Commercially reasonable collection and enforcement.
26 A secured party shall proceed in a commercially reasonable
27 manner if the secured party:
28 (1) undertakes to collect from or enforce an
29 obligation of an account debtor or other person obligated
30 on collateral; and
31 (2) is entitled to charge back uncollected
32 collateral or otherwise to full or limited recourse
33 against the debtor or a secondary obligor.
34 (d) Expenses of collection and enforcement. A secured
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1 party may deduct from the collections made pursuant to
2 subsection (c) reasonable expenses of collection and
3 enforcement, including reasonable attorney's fees and legal
4 expenses incurred by the secured party.
5 (e) Duties to secured party not affected. This Section
6 does not determine whether an account debtor, bank, or other
7 person obligated on collateral owes a duty to a secured
8 party.
9 (810 ILCS 5/9-608 new)
10 Sec. 9-608. Application of proceeds of collection or
11 enforcement; liability for deficiency and right to surplus.
12 (a) Application of proceeds, surplus, and deficiency if
13 obligation secured. If a security interest or agricultural
14 lien secures payment or performance of an obligation, the
15 following rules apply:
16 (1) A secured party shall apply or pay over for
17 application the cash proceeds of collection or
18 enforcement under this Section in the following order to:
19 (A) the reasonable expenses of collection and
20 enforcement and, to the extent provided for by
21 agreement and not prohibited by law, reasonable
22 attorney's fees and legal expenses incurred by the
23 secured party;
24 (B) the satisfaction of obligations secured by
25 the security interest or agricultural lien under
26 which the collection or enforcement is made; and
27 (C) the satisfaction of obligations secured by
28 any subordinate security interest in or other lien
29 on the collateral subject to the security interest
30 or agricultural lien under which the collection or
31 enforcement is made if the secured party receives an
32 authenticated demand for proceeds before
33 distribution of the proceeds is completed.
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1 (2) If requested by a secured party, a holder of a
2 subordinate security interest or other lien shall furnish
3 reasonable proof of the interest or lien within a
4 reasonable time. Unless the holder complies, the secured
5 party need not comply with the holder's demand under
6 paragraph (1)(C).
7 (3) A secured party need not apply or pay over for
8 application noncash proceeds of collection and
9 enforcement under this Section unless the failure to do
10 so would be commercially unreasonable. A secured party
11 that applies or pays over for application noncash
12 proceeds shall do so in a commercially reasonable manner.
13 (4) A secured party shall account to and pay a
14 debtor for any surplus, and the obligor is liable for any
15 deficiency.
16 (b) No surplus or deficiency in sales of certain rights
17 to payment. If the underlying transaction is a sale of
18 accounts, chattel paper, payment intangibles, or promissory
19 notes, the debtor is not entitled to any surplus, and the
20 obligor is not liable for any deficiency.
21 (810 ILCS 5/9-609 new)
22 Sec. 9-609. Secured party's right to take possession
23 after default.
24 (a) Possession; rendering equipment unusable;
25 disposition on debtor's premises. After default, a secured
26 party:
27 (1) may take possession of the collateral; and
28 (2) without removal, may render equipment unusable
29 and dispose of collateral on a debtor's premises under
30 Section 9-610.
31 (b) Judicial and nonjudicial process. A secured party
32 may proceed under subsection (a):
33 (1) pursuant to judicial process; or
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1 (2) without judicial process, if it proceeds
2 without breach of the peace.
3 (c) Assembly of collateral. If so agreed, and in any
4 event after default, a secured party may require the debtor
5 to assemble the collateral and make it available to the
6 secured party at a place to be designated by the secured
7 party which is reasonably convenient to both parties.
8 (810 ILCS 5/9-610 new)
9 Sec. 9-610. Disposition of collateral after default.
10 (a) Disposition after default. After default, a secured
11 party may sell, lease, license, or otherwise dispose of any
12 or all of the collateral in its present condition or
13 following any commercially reasonable preparation or
14 processing.
15 (b) Commercially reasonable disposition. Every aspect
16 of a disposition of collateral, including the method, manner,
17 time, place, and other terms, must be commercially
18 reasonable. If commercially reasonable, a secured party may
19 dispose of collateral by public or private proceedings, by
20 one or more contracts, as a unit or in parcels, and at any
21 time and place and on any terms.
22 (c) Purchase by secured party. A secured party may
23 purchase collateral:
24 (1) at a public disposition; or
25 (2) at a private disposition only if the collateral
26 is of a kind that is customarily sold on a recognized
27 market or the subject of widely distributed standard
28 price quotations.
29 (d) Warranties on disposition. A contract for sale,
30 lease, license, or other disposition includes the warranties
31 relating to title, possession, quiet enjoyment, and the like
32 which by operation of law accompany a voluntary disposition
33 of property of the kind subject to the contract.
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1 (e) Disclaimer of warranties. A secured party may
2 disclaim or modify warranties under subsection (d):
3 (1) in a manner that would be effective to disclaim
4 or modify the warranties in a voluntary disposition of
5 property of the kind subject to the contract of
6 disposition; or
7 (2) by communicating to the purchaser a record
8 evidencing the contract for disposition and including an
9 express disclaimer or modification of the warranties.
10 (f) Record sufficient to disclaim warranties. A record
11 is sufficient to disclaim warranties under subsection (e) if
12 it indicates "There is no warranty relating to title,
13 possession, quiet enjoyment, or the like in this disposition"
14 or uses words of similar import.
15 (810 ILCS 5/9-611 new)
16 Sec. 9-611. Notification before disposition of
17 collateral.
18 (a) "Notification date." In this Section, "notification
19 date" means the earlier of the date on which:
20 (1) a secured party sends to the debtor and any
21 secondary obligor an authenticated notification of
22 disposition; or
23 (2) the debtor and any secondary obligor waive the
24 right to notification.
25 (b) Notification of disposition required. Except as
26 otherwise provided in subsection (d), a secured party that
27 disposes of collateral under Section 9-610 shall send to the
28 persons specified in subsection (c) a reasonable
29 authenticated notification of disposition.
30 (c) Persons to be notified. To comply with subsection
31 (b), the secured party shall send an authenticated
32 notification of disposition to:
33 (1) the debtor;
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1 (2) any secondary obligor; and
2 (3) if the collateral is other than consumer goods:
3 (A) any other person from which the secured
4 party has received, before the notification date, an
5 authenticated notification of a claim of an interest
6 in the collateral;
7 (B) any other secured party or lienholder
8 that, 10 days before the notification date, held a
9 security interest in or other lien on the collateral
10 perfected by the filing of a financing statement
11 that:
12 (i) identified the collateral;
13 (ii) was indexed under the debtor's name
14 as of that date; and
15 (iii) was filed in the office in which to
16 file a financing statement against the debtor
17 covering the collateral as of that date; and
18 (C) any other secured party that, 10 days
19 before the notification date, held a security
20 interest in the collateral perfected by compliance
21 with a statute, regulation, or treaty described in
22 Section 9-311(a).
23 (d) Subsection (b) inapplicable: perishable collateral;
24 recognized market. Subsection (b) does not apply if the
25 collateral is perishable or threatens to decline speedily in
26 value or is of a type customarily sold on a recognized
27 market.
28 (e) Compliance with subsection (c)(3)(B). A secured
29 party complies with the requirement for notification
30 prescribed by subsection (c)(3)(B) if:
31 (1) not later than 20 days or earlier than 30 days
32 before the notification date, the secured party requests,
33 in a commercially reasonable manner, information
34 concerning financing statements indexed under the
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1 debtor's name in the office indicated in subsection
2 (c)(3)(B); and
3 (2) before the notification date, the secured
4 party:
5 (A) did not receive a response to the request
6 for information; or
7 (B) received a response to the request for
8 information and sent an authenticated notification
9 of disposition to each secured party or other
10 lienholder named in that response whose financing
11 statement covered the collateral.
12 (810 ILCS 5/9-612 new)
13 Sec. 9-612. Timeliness of notification before
14 disposition of collateral.
15 (a) Reasonable time is question of fact. Except as
16 otherwise provided in subsection (b), whether a notification
17 is sent within a reasonable time is a question of fact.
18 (b) 10-day period sufficient. A notification of
19 disposition sent after default and 10 days or more before the
20 earliest time of disposition set forth in the notification is
21 sent within a reasonable time before the disposition.
22 (810 ILCS 5/9-613 new)
23 Sec. 9-613. Contents and form of notification before
24 disposition of collateral: general. Except in a
25 consumer-goods transaction, the following rules apply:
26 (1) The contents of a notification of disposition
27 are sufficient if the notification:
28 (A) describes the debtor and the secured
29 party;
30 (B) describes the collateral that is the
31 subject of the intended disposition;
32 (C) states the method of intended disposition;
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1 (D) states that the debtor is entitled to an
2 accounting of the unpaid indebtedness and states the
3 charge, if any, for an accounting; and
4 (E) states the time and place of a public sale
5 or the time after which any other disposition is to
6 be made.
7 (2) Whether the contents of a notification that
8 lacks any of the information specified in paragraph (1)
9 are nevertheless sufficient is a question of fact.
10 (3) The contents of a notification providing
11 substantially the information specified in paragraph (1)
12 are sufficient, even if the notification is accompanied
13 by other notices or includes:
14 (A) information not specified by that
15 paragraph; or
16 (B) errors that are not seriously and
17 materially misleading.
18 (4) A particular phrasing of the notification is
19 not required.
20 (5) The following form of notification and the form
21 appearing in Section 9-614(4), when completed, each
22 provides sufficient information:
23 NOTIFICATION OF DISPOSITION OF COLLATERAL
24 To: ..................................... (Name of
25 debtor, obligor, or other person to which the
26 notification is sent)
27 From: ................................... (Name,
28 address, and telephone number of secured party)
29 Name of Debtor(s): ..................... (Include
30 only if debtor(s) are not an addressee)
31 For a public disposition:
32 We will sell or lease or license, as applicable, the
33 ............................ (describe collateral) to the
34 highest qualified bidder in public as follows:
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1 Day and Date: ...................................
2 Time: ...........................................
3 Place: ..........................................
4 For a private disposition:
5 We will sell (or lease or license, as applicable)
6 the ........................... (describe collateral)
7 privately sometime after ................ (day and date).
8 You are entitled to an accounting of the unpaid
9 indebtedness secured by the property that we intend to
10 sell or lease or license, as applicable, for a charge of
11 $................. You may request an accounting by
12 calling us at .................. (telephone number).
13 (810 ILCS 5/9-614 new)
14 Sec. 9-614. Contents and form of notification before
15 disposition of collateral: consumer-goods transaction. In a
16 consumer-goods transaction, the following rules apply:
17 (1) A notification of disposition must provide the
18 following information:
19 (A) the information specified in Section
20 9-613(1);
21 (B) a description of any liability for a
22 deficiency of the person to which the notification
23 is sent;
24 (C) a telephone number from which the amount
25 that must be paid to the secured party to redeem the
26 collateral under Section 9-623 is available; and
27 (D) a telephone number or mailing address from
28 which additional information concerning the
29 disposition and the obligation secured is available.
30 (2) A particular phrasing of the notification is
31 not required. Whether the contents of a notification that
32 lacks any of the information specified in paragraph (1)
33 are nevertheless sufficient is a question of fact.
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1 (3) The contents of a notification providing
2 substantially the information specified in paragraph (1)
3 are sufficient, even if the notification is accompanied
4 by other notices or includes:
5 (A) information not specified by that
6 paragraph; or
7 (B) errors that are not seriously and
8 materially misleading.
9 (4) The following form of notification, when
10 completed, provides sufficient information:
11 ............. (Name and address of secured party)
12 ............. (Date)
13 NOTICE OF OUR PLAN TO SELL PROPERTY
14 ......................................................
15 (Name and address of any obligor who is also a debtor)
16 Subject: ..................................
17 (Identification of Transaction)
18 We have your ..................... (describe
19 collateral), because you broke promises in our agreement.
20 For a public disposition:
21 We will sell ....................... (describe
22 collateral) at public sale. A sale could include a lease
23 or license. The sale will be held as follows:
24 Date: ................................
25 Time: ................................
26 Place: ................................
27 You may attend the sale and bring bidders if you
28 want.
29 For a private disposition:
30 We will sell ........................... (describe
31 collateral) at private sale sometime after
32 .................... (date). A sale could include a
33 lease or license.
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1 The money that we get from the sale (after paying
2 our costs) will reduce the amount you owe. If we get
3 less money than you owe, you ............ (will or will
4 not, as applicable) still owe us the difference. If we
5 get more money than you owe, you will get the extra
6 money, unless we must pay it to someone else.
7 You can get the property back at any time before we
8 sell it by paying us the full amount you owe (not just
9 the past due payments), including our expenses. To learn
10 the exact amount you must pay, call us at
11 ................ (telephone number).
12 If you want us to explain to you in writing how we
13 have figured the amount that you owe us, you may call us
14 at .................. (telephone number) or write us at
15 .................................... (secured party's
16 address) and request a written explanation. We will
17 charge you $ ........... for the explanation if we sent
18 you another written explanation of the amount you owe us
19 within the last six months.
20 If you need more information about the sale call us
21 at .................. (telephone number) or write us at
22 ......................... (secured party's address).
23 We are sending this notice to the following other
24 people who have an interest in ......................
25 (describe collateral) or who owe money under your
26 agreement:
27 .................................................
28 (Names of all other debtors and obligors, if any)
29 (5) If a notification under this Section is not in
30 the form of paragraph (4), law other than this Article
31 determines the effect of including information not
32 required by paragraph (1).
33 (810 ILCS 5/9-615 new)
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1 Sec. 9-615. Application of proceeds of disposition;
2 liability for deficiency and right to surplus.
3 (a) Application of proceeds. A secured party shall
4 apply or pay over for application the cash proceeds of
5 disposition in the following order to:
6 (1) the reasonable expenses of retaking, holding,
7 preparing for disposition, processing, and disposing,
8 and, to the extent provided for by agreement and not
9 prohibited by law, reasonable attorney's fees and legal
10 expenses incurred by the secured party;
11 (2) the satisfaction of obligations secured by the
12 security interest or agricultural lien under which the
13 disposition is made;
14 (3) the satisfaction of obligations secured by any
15 subordinate security interest in or other subordinate
16 lien on the collateral if:
17 (A) the secured party receives from the holder
18 of the subordinate security interest or other lien
19 an authenticated demand for proceeds before
20 distribution of the proceeds is completed; and
21 (B) in a case in which a consignor has an
22 interest in the collateral, the subordinate security
23 interest or other lien is senior to the interest of
24 the consignor; and
25 (4) a secured party that is a consignor of the
26 collateral if the secured party receives from the
27 consignor an authenticated demand for proceeds before
28 distribution of the proceeds is completed.
29 (b) Proof of subordinate interest. If requested by a
30 secured party, a holder of a subordinate security interest or
31 other lien shall furnish reasonable proof of the interest or
32 lien within a reasonable time. Unless the holder does so,
33 the secured party need not comply with the holder's demand
34 under subsection (a)(3).
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1 (c) Application of noncash proceeds. A secured party
2 need not apply or pay over for application noncash proceeds
3 of disposition under this Section unless the failure to do so
4 would be commercially unreasonable. A secured party that
5 applies or pays over for application noncash proceeds shall
6 do so in a commercially reasonable manner.
7 (d) Surplus or deficiency if obligation secured. If the
8 security interest under which a disposition is made secures
9 payment or performance of an obligation, after making the
10 payments and applications required by subsection (a) and
11 permitted by subsection (c):
12 (1) unless subsection (a)(4) requires the secured
13 party to apply or pay over cash proceeds to a consignor,
14 the secured party shall account to and pay a debtor for
15 any surplus; and
16 (2) the obligor is liable for any deficiency.
17 (e) No surplus or deficiency in sales of certain rights
18 to payment. If the underlying transaction is a sale of
19 accounts, chattel paper, payment intangibles, or promissory
20 notes:
21 (1) the debtor is not entitled to any surplus; and
22 (2) the obligor is not liable for any deficiency.
23 (f) Calculation of surplus or deficiency in disposition
24 to person related to secured party. The surplus or
25 deficiency following a disposition is calculated based on the
26 amount of proceeds that would have been realized in a
27 disposition complying with this Part and described in item
28 (2) of this subsection to a transferee other than the secured
29 party, a person related to the secured party, or a secondary
30 obligor if:
31 (1) the transferee in the disposition is the
32 secured party, a person related to the secured party, or
33 a secondary obligor; and
34 (2) the amount of proceeds of the disposition is
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1 significantly below the range of proceeds that a
2 complying disposition by a seller who is compelled to
3 sell to a person other than the secured party, a person
4 related to the secured party, or a secondary obligor who
5 is a willing buyer under no compulsion to buy.
6 (g) Cash proceeds received by junior secured party. A
7 secured party that receives cash proceeds of a disposition in
8 good faith and without knowledge that the receipt violates
9 the rights of the holder of a security interest or other lien
10 that is not subordinate to the security interest or
11 agricultural lien under which the disposition is made:
12 (1) takes the cash proceeds free of the security
13 interest or other lien;
14 (2) is not obligated to apply the proceeds of the
15 disposition to the satisfaction of obligations secured by
16 the security interest or other lien; and
17 (3) is not obligated to account to or pay the
18 holder of the security interest or other lien for any
19 surplus.
20 (810 ILCS 5/9-616 new)
21 Sec. 9-616. (Blank).
22 (810 ILCS 5/9-617 new)
23 Sec. 9-617. Rights of transferee of collateral.
24 (a) Effects of disposition. A secured party's
25 disposition of collateral after default:
26 (1) transfers to a transferee for value all of the
27 debtor's rights in the collateral;
28 (2) discharges the security interest under which
29 the disposition is made; and
30 (3) discharges any subordinate security interest or
31 other subordinate lien.
32 (b) Rights of good-faith transferee. A transferee that
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1 acts in good faith takes free of the rights and interests
2 described in subsection (a), even if the secured party fails
3 to comply with this Article or the requirements of any
4 judicial proceeding.
5 (c) Rights of other transferee. If a transferee does
6 not take free of the rights and interests described in
7 subsection (a), the transferee takes the collateral subject
8 to:
9 (1) the debtor's rights in the collateral;
10 (2) the security interest or agricultural lien
11 under which the disposition is made; and
12 (3) any other security interest or other lien.
13 (810 ILCS 5/9-618 new)
14 Sec. 9-618. Rights and duties of certain secondary
15 obligors.
16 (a) Rights and duties of secondary obligor. A secondary
17 obligor acquires the rights and becomes obligated to perform
18 the duties of the secured party after the secondary obligor:
19 (1) receives an assignment of a secured obligation
20 from the secured party;
21 (2) receives a transfer of collateral from the
22 secured party and agrees to accept the rights and assume
23 the duties of the secured party; or
24 (3) is subrogated to the rights of a secured party
25 with respect to collateral.
26 (b) Effect of assignment, transfer, or subrogation. An
27 assignment, transfer, or subrogation described in subsection
28 (a):
29 (1) is not a disposition of collateral under
30 Section 9-610; and
31 (2) relieves the secured party of further duties
32 under this Article.
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1 (810 ILCS 5/9-619 new)
2 Sec. 9-619. Transfer of record or legal title.
3 (a) "Transfer statement." In this Section, "transfer
4 statement" means a record authenticated by a secured party
5 stating:
6 (1) that the debtor has defaulted in connection
7 with an obligation secured by specified collateral;
8 (2) that the secured party has exercised its
9 post-default remedies with respect to the collateral;
10 (3) that, by reason of the exercise, a transferee
11 has acquired the rights of the debtor in the collateral;
12 and
13 (4) the name and mailing address of the secured
14 party, debtor, and transferee.
15 (b) Effect of transfer statement. A transfer statement
16 entitles the transferee to the transfer of record of all
17 rights of the debtor in the collateral specified in the
18 statement in any official filing, recording, registration, or
19 certificate-of-title system covering the collateral. If a
20 transfer statement is presented with the applicable fee and
21 request form to the official or office responsible for
22 maintaining the system, the official or office shall:
23 (1) accept the transfer statement;
24 (2) promptly amend its records to reflect the
25 transfer; and
26 (3) if applicable, issue a new appropriate
27 certificate of title in the name of the transferee.
28 (c) Transfer not a disposition; no relief of secured
29 party's duties. A transfer of the record or legal title to
30 collateral to a secured party under subsection (b) or
31 otherwise is not of itself a disposition of collateral under
32 this Article and does not of itself relieve the secured party
33 of its duties under this Article.
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1 (810 ILCS 5/9-620 new)
2 Sec. 9-620. Acceptance of collateral in full or partial
3 satisfaction of obligation; compulsory disposition of
4 collateral.
5 (a) Conditions to acceptance in satisfaction. Except as
6 otherwise provided in subsection (g), a secured party may
7 accept collateral in full or partial satisfaction of the
8 obligation it secures only if:
9 (1) the debtor consents to the acceptance under
10 subsection (c);
11 (2) the secured party does not receive, within the
12 time set forth in subsection (d), a notification of
13 objection to the proposal authenticated by:
14 (A) a person to which the secured party was
15 required to send a proposal under Section 9-621; or
16 (B) any other person, other than the debtor,
17 holding an interest in the collateral subordinate to
18 the security interest that is the subject of the
19 proposal;
20 (3) if the collateral is consumer goods, the
21 collateral is not in the possession of the debtor when
22 the debtor consents to the acceptance; and
23 (4) subsection (e) does not require the secured
24 party to dispose of the collateral or the debtor waives
25 the requirement pursuant to Section 9-624.
26 (b) Purported acceptance ineffective. A purported or
27 apparent acceptance of collateral under this Section is
28 ineffective unless:
29 (1) the secured party consents to the acceptance of
30 the collateral in full or partial satisfaction of the
31 obligation in an authenticated record or sends a proposal
32 of same to the debtor; and
33 (2) the conditions of subsection (a) are met.
34 (c) Debtor's consent. For purposes of this Section:
-232- LRB9112852JSpc
1 (1) a debtor consents to an acceptance of
2 collateral in partial satisfaction of the obligation it
3 secures only if the debtor agrees to the terms of the
4 acceptance in a record authenticated after default; and
5 (2) a debtor consents to an acceptance of
6 collateral in full satisfaction of the obligation it
7 secures only if the debtor agrees to the terms of the
8 acceptance in a record authenticated after default or the
9 secured party:
10 (A) sends to the debtor after default a
11 proposal that is unconditional or subject only to a
12 condition that collateral not in the possession of
13 the secured party be preserved or maintained;
14 (B) in the proposal, proposes to accept
15 collateral in full satisfaction of the obligation it
16 secures; and
17 (C) does not receive a notification of
18 objection authenticated by the debtor within 20 days
19 after the proposal is sent.
20 (d) Effectiveness of notification. To be effective
21 under subsection (a)(2), a notification of objection must be
22 received by the secured party:
23 (1) in the case of a person to which the proposal
24 was sent pursuant to Section 9-621, within 20 days after
25 notification was sent to that person; and
26 (2) in other cases:
27 (A) within 20 days after the last notification
28 was sent pursuant to Section 9-621; or
29 (B) if a notification was not sent, before the
30 debtor consents to the acceptance under subsection
31 (c).
32 (e) Mandatory disposition of consumer goods. A secured
33 party that has taken possession of collateral shall dispose
34 of the collateral pursuant to Section 9-610 within the time
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1 specified in subsection (f) if:
2 (1) 60 percent of the cash price has been paid in
3 the case of a purchase-money security interest in
4 consumer goods; or
5 (2) 60 percent of the principal amount of the
6 obligation secured has been paid in the case of a
7 non-purchase-money security interest in consumer goods.
8 (f) Compliance with mandatory disposition requirement.
9 To comply with subsection (e), the secured party shall
10 dispose of the collateral:
11 (1) within 90 days after taking possession; or
12 (2) within any longer period to which the debtor
13 and all secondary obligors have agreed in an agreement to
14 that effect entered into and authenticated after default.
15 (g) No partial satisfaction in consumer transaction. In
16 a consumer transaction, a secured party may not accept
17 collateral in partial satisfaction of the obligation it
18 secures.
19 (810 ILCS 5/9-621 new)
20 Sec. 9-621. Notification of proposal to accept
21 collateral.
22 (a) Persons to which proposal to be sent. A secured
23 party that desires to accept collateral in full or partial
24 satisfaction of the obligation it secures shall send its
25 proposal to:
26 (1) any person from which the secured party has
27 received, before the debtor consented to the acceptance,
28 an authenticated notification of a claim of an interest
29 in the collateral;
30 (2) any other secured party or lienholder that, 10
31 days before the debtor consented to the acceptance, held
32 a security interest in or other lien on the collateral
33 perfected by the filing of a financing statement that:
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1 (A) identified the collateral;
2 (B) was indexed under the debtor's name as of
3 that date; and
4 (C) was filed in the office or offices in
5 which to file a financing statement against the
6 debtor covering the collateral as of that date; and
7 (3) any other secured party that, 10 days before
8 the debtor consented to the acceptance, held a security
9 interest in the collateral perfected by compliance with a
10 statute, regulation, or treaty described in Section
11 9-311(a).
12 (b) Proposal to be sent to secondary obligor in partial
13 satisfaction. A secured party that desires to accept
14 collateral in partial satisfaction of the obligation it
15 secures shall send its proposal to any secondary obligor in
16 addition to the persons described in subsection (a).
17 (810 ILCS 5/9-622 new)
18 Sec. 9-622. Effect of acceptance of collateral.
19 (a) Effect of acceptance. A secured party's acceptance
20 of collateral in full or partial satisfaction of the
21 obligation it secures:
22 (1) discharges the obligation to the extent
23 consented to by the debtor;
24 (2) transfers to the secured party all of a
25 debtor's rights in the collateral;
26 (3) discharges the security interest or
27 agricultural lien that is the subject of the debtor's
28 consent and any subordinate security interest or other
29 subordinate lien; and
30 (4) terminates any other subordinate interest.
31 (b) Discharge of subordinate interest notwithstanding
32 noncompliance. A subordinate interest is discharged or
33 terminated under subsection (a), even if the secured party
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1 fails to comply with this Article.
2 (810 ILCS 5/9-623 new)
3 Sec. 9-623. Right to redeem collateral.
4 (a) Persons that may redeem. A debtor, any secondary
5 obligor, or any other secured party or lienholder may redeem
6 collateral.
7 (b) Requirements for redemption. To redeem collateral,
8 a person shall tender:
9 (1) fulfillment of all obligations secured by the
10 collateral; and
11 (2) the reasonable expenses and attorney's fees
12 described in Section 9-615(a)(1).
13 (c) When redemption may occur. A redemption may occur
14 at any time before a secured party:
15 (1) has collected collateral under Section 9-607;
16 (2) has disposed of collateral or entered into a
17 contract for its disposition under Section 9-610; or
18 (3) has accepted collateral in full or partial
19 satisfaction of the obligation it secures under Section
20 9-622.
21 (810 ILCS 5/9-624 new)
22 Sec. 9-624. Waiver.
23 (a) Waiver of disposition notification. A debtor or
24 secondary obligor may waive the right to notification of
25 disposition of collateral under Section 9-611 only by an
26 agreement to that effect entered into and authenticated after
27 default.
28 (b) Waiver of mandatory disposition. A debtor may waive
29 the right to require disposition of collateral under Section
30 9-620(e) only by an agreement to that effect entered into and
31 authenticated after default.
32 (c) Waiver of redemption right. A debtor or secondary
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1 obligor may waive the right to redeem collateral under
2 Section 9-623 only by an agreement to that effect entered
3 into and authenticated after default.
4 (810 ILCS 5/Art. 9, Part 6, Subpart 2 heading new)
5 SUBPART 2. NONCOMPLIANCE WITH ARTICLE
6 (810 ILCS 5/9-625 new)
7 Sec. 9-625. Remedies for secured party's failure to
8 comply with Article.
9 (a) Judicial orders concerning noncompliance. If it is
10 established that a secured party is not proceeding in
11 accordance with this Article, a court may order or restrain
12 collection, enforcement, or disposition of collateral on
13 appropriate terms and conditions.
14 (b) Damages for noncompliance. Subject to subsections
15 (c) and (d), a person is liable for damages in the amount of
16 any loss caused by a failure to comply with this Article.
17 Loss caused by a failure to comply with a request under
18 Section 9-210 may include loss resulting from the debtor's
19 inability to obtain, or increased costs of, alternative
20 financing.
21 (c) Persons entitled to recover damages; statutory
22 damages in consumer-goods transaction. Except as otherwise
23 provided in Section 9-628:
24 (1) a person that, at the time of the failure, was
25 a debtor, was an obligor, or held a security interest in
26 or other lien on the collateral may recover in an
27 individual action damages under subsection (b) for its
28 loss; and
29 (2) if the collateral is consumer goods, a person
30 that was a debtor or a secondary obligor at the time a
31 secured party failed to comply with this Part may recover
32 in an individual action for that failure in any event an
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1 amount not less than the credit service charge plus 10
2 percent of the principal amount of the obligation or the
3 time-price differential plus 10 percent of the cash
4 price.
5 (d) Recovery when deficiency eliminated or reduced. A
6 debtor whose deficiency is eliminated under Section 9-626 may
7 recover damages for the loss of any surplus. However, a
8 debtor or secondary obligor whose deficiency is eliminated or
9 reduced under Section 9-626 may not otherwise recover under
10 subsection (b) for noncompliance with the provisions of this
11 Part relating to collection, enforcement, disposition, or
12 acceptance.
13 (e) Statutory damages: failure to cause termination of
14 financing statement when due. In addition to any damages
15 recoverable under subsection (b), the debtor, or person named
16 as a debtor in a filed record, as applicable, may recover in
17 an individual action $100 in each case from a person that
18 fails to cause the secured party of record to file or send a
19 termination statement as required by Section 9-513(a) or (c).
20 (f) Limitation of security interest: noncompliance with
21 Section 9-210. If a secured party fails to comply with a
22 request regarding a list of collateral or a statement of
23 account under Section 9-210, the secured party may claim a
24 security interest only as shown in the statement included in
25 the request as against a purchaser who gives new value in
26 good faith in reliance upon the statement or lack thereof and
27 is reasonably misled thereby.
28 (810 ILCS 5/9-626 new)
29 Sec. 9-626. Action in which deficiency or surplus is in
30 issue. Applicable rules if amount of deficiency or surplus in
31 issue. In an action in which the amount of a deficiency or
32 surplus is in issue, the following rules apply:
33 (1) A secured party need not prove compliance with
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1 the provisions of this Part relating to collection,
2 enforcement, disposition, or acceptance unless the debtor
3 or a secondary obligor places the secured party's
4 compliance in issue.
5 (2) If the secured party's compliance is placed in
6 issue, the secured party has the burden of establishing
7 that the collection, enforcement, disposition, or
8 acceptance was conducted in accordance with this Part.
9 (3) Except as otherwise provided in Section 9-628,
10 if a secured party fails to prove that the collection,
11 enforcement, disposition, or acceptance was conducted in
12 accordance with the provisions of this Part relating to
13 collection, enforcement, disposition, or acceptance, the
14 liability of a debtor or a secondary obligor for a
15 deficiency is limited to an amount by which the sum of
16 the secured obligation, expenses, and attorney's fees
17 exceeds the greater of:
18 (A) the proceeds of the collection,
19 enforcement, disposition, or acceptance; or
20 (B) the amount of proceeds that would have
21 been realized had the noncomplying secured party
22 proceeded in accordance with the provisions of this
23 Part relating to collection, enforcement,
24 disposition, or acceptance.
25 (4) For purposes of paragraph (3)(B), the amount of
26 proceeds that would have been realized is equal to the
27 sum of the secured obligation, expenses, and attorney's
28 fees unless the secured party proves that the amount is
29 less than that sum.
30 (5) If a deficiency or surplus is calculated under
31 Section 9-615(f), the debtor or obligor has the burden of
32 establishing that the amount of proceeds of the
33 disposition is significantly below the range of prices
34 that a complying disposition to a person other than the
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1 secured party, a person related to the secured party, or
2 a secondary obligor would have brought.
3 (810 ILCS 5/9-627 new)
4 Sec. 9-627. Determination of whether conduct was
5 commercially reasonable.
6 (a) Greater amount obtainable under other circumstances;
7 no preclusion of commercial reasonableness. The fact that a
8 greater amount could have been obtained by a collection,
9 enforcement, disposition, or acceptance at a different time
10 or in a different method from that selected by the secured
11 party is not of itself sufficient to preclude the secured
12 party from establishing that the collection, enforcement,
13 disposition, or acceptance was made in a commercially
14 reasonable manner.
15 (b) Dispositions that are commercially reasonable. A
16 disposition of collateral is made in a commercially
17 reasonable manner if the disposition is made:
18 (1) in the usual manner on any recognized market;
19 (2) at the price current in any recognized market
20 at the time of the disposition; or
21 (3) otherwise in conformity with reasonable
22 commercial practices among dealers in the type of
23 property that was the subject of the disposition.
24 (c) Approval by court or on behalf of creditors. A
25 collection, enforcement, disposition, or acceptance is
26 commercially reasonable if it has been approved:
27 (1) in a judicial proceeding;
28 (2) by a bona fide creditors' committee;
29 (3) by a representative of creditors; or
30 (4) by an assignee for the benefit of creditors.
31 (d) Approval under subsection (c) not necessary; absence
32 of approval has no effect. Approval under subsection (c)
33 need not be obtained, and lack of approval does not mean that
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1 the collection, enforcement, disposition, or acceptance is
2 not commercially reasonable.
3 (810 ILCS 5/9-628 new)
4 Sec. 9-628. Nonliability and limitation on liability of
5 secured party; liability of secondary obligor.
6 (a) Limitation of liability of secured party for
7 noncompliance with Article. Unless a secured party knows
8 that a person is a debtor or obligor, knows the identity of
9 the person, and knows how to communicate with the person:
10 (1) the secured party is not liable to the person,
11 or to a secured party or lienholder that has filed a
12 financing statement against the person, for failure to
13 comply with this Article; and
14 (2) the secured party's failure to comply with this
15 Article does not affect the liability of the person for a
16 deficiency.
17 (b) Limitation of liability based on status as secured
18 party. A secured party is not liable because of its status
19 as secured party:
20 (1) to a person that is a debtor or obligor, unless
21 the secured party knows:
22 (A) that the person is a debtor or obligor;
23 (B) the identity of the person; and
24 (C) how to communicate with the person; or
25 (2) to a secured party or lienholder that has filed
26 a financing statement against a person, unless the
27 secured party knows:
28 (A) that the person is a debtor; and
29 (B) the identity of the person.
30 (c) Limitation of liability if reasonable belief that
31 transaction not a consumer-goods transaction or consumer
32 transaction. A secured party is not liable to any person,
33 and a person's liability for a deficiency is not affected,
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1 because of any act or omission arising out of the secured
2 party's reasonable belief that a transaction is not a
3 consumer-goods transaction or a consumer transaction or that
4 goods are not consumer goods, if the secured party's belief
5 is based on its reasonable reliance on:
6 (1) a debtor's representation concerning the
7 purpose for which collateral was to be used, acquired, or
8 held; or
9 (2) an obligor's representation concerning the
10 purpose for which a secured obligation was incurred.
11 (d) Limitation of multiple liability for statutory
12 damages. A secured party is not liable under Section
13 9-625(c)(2) more than once with respect to any one secured
14 obligation.
15 (810 ILCS 5/Art. 9, Part 7 heading new)
16 PART 7. TRANSITION
17 (810 ILCS 5/9-701 new)
18 Sec. 9-701. Effective date. (See Section 99 of the
19 Public Act adding this Section to this Act.)
20 (810 ILCS 5/9-702 new)
21 Sec. 9-702. Savings clause.
22 (a) Pre-effective-date transactions or liens. Except as
23 otherwise provided in this Part, this Act applies to a
24 transaction or lien within its scope, even if the transaction
25 or lien was entered into or created before the effective date
26 of this amendatory Act of the 91st General Assembly.
27 (b) Continuing validity. Except as otherwise provided
28 in subsection (c) and Sections 9-703 through 9-708:
29 (1) transactions and liens that were not governed
30 by Article 9 as it existed before the effective date of
31 this amendatory Act of the 91st General Assembly and
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1 would be subject to this Act if they had been entered
2 into or created after the effective date of this
3 amendatory Act of the 91st General Assembly, and the
4 rights, duties, and interests flowing from those
5 transactions and liens remain valid after the effective
6 date of this amendatory Act of the 91st General Assembly;
7 and
8 (2) the transactions and liens may be terminated,
9 completed, consummated, and enforced as required or
10 permitted by this Act or by the law that otherwise would
11 apply if this Act had not taken effect.
12 (c) Pre-effective-date proceedings. This amendatory Act
13 of the 91st General Assembly does not affect an action, case,
14 or proceeding commenced before the effective date of this
15 amendatory Act of the 91st General Assembly.
16 (810 ILCS 5/9-703 new)
17 Sec. 9-703. Security interest perfected before effective
18 date.
19 (a) Continuing priority over lien creditor: perfection
20 requirements satisfied. A security interest that is
21 enforceable immediately before the effective date of this
22 amendatory Act of the 91st General Assembly and would have
23 priority over the rights of a person that becomes a lien
24 creditor at that time is a perfected security interest under
25 this Act if, on the effective date of this amendatory Act of
26 the 91st General Assembly, the applicable requirements for
27 enforceability and perfection under this Act are satisfied
28 without further action.
29 (b) Continuing priority over lien creditor: perfection
30 requirements not satisfied. Except as otherwise provided in
31 Section 9-705, if, immediately before the effective date of
32 this amendatory Act of the 91st General Assembly, a security
33 interest is enforceable and would have priority over the
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1 rights of a person that becomes a lien creditor at that time,
2 but the applicable requirements for enforceability or
3 perfection under this Act are not satisfied on the effective
4 date of this amendatory Act of the 91st General Assembly, the
5 security interest:
6 (1) is a perfected security interest for one year
7 after the effective date of this amendatory Act of the
8 91st General Assembly;
9 (2) remains enforceable thereafter only if the
10 security interest becomes enforceable under Section 9-203
11 before the year expires; and
12 (3) remains perfected thereafter only if the
13 applicable requirements for perfection under this Act are
14 satisfied before the year expires.
15 (810 ILCS 5/9-704 new)
16 Sec. 9-704. Security interest unperfected before
17 effective date. A security interest that is enforceable
18 immediately before the effective date of this amendatory Act
19 of the 91st General Assembly but which would be subordinate
20 to the rights of a person that becomes a lien creditor at
21 that time:
22 (1) remains an enforceable security interest for
23 one year after the effective date of this amendatory Act
24 of the 91st General Assembly;
25 (2) remains enforceable thereafter if the security
26 interest becomes enforceable under Section 9-203 on the
27 effective date of this amendatory Act of the 91st General
28 Assembly or within one year thereafter; and
29 (3) becomes perfected:
30 (A) without further action, on the effective date
31 of this amendatory Act of the 91st General Assembly if
32 the applicable requirements for perfection under this Act
33 are satisfied before or at that time; or
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1 (B) when the applicable requirements for perfection
2 are satisfied if the requirements are satisfied after
3 that time.
4 (810 ILCS 5/9-705 new)
5 Sec. 9-705. Effectiveness of action taken before
6 effective date.
7 (a) Pre-effective-date action; one-year perfection
8 period unless reperfected. If action, other than the filing
9 of a financing statement, is taken before the effective date
10 of this amendatory Act of the 91st General Assembly and the
11 action would have resulted in priority of a security interest
12 over the rights of a person that becomes a lien creditor had
13 the security interest become enforceable before the effective
14 date of this amendatory Act of the 91st General Assembly, the
15 action is effective to perfect a security interest that
16 attaches under this Act within one year after the effective
17 date of this amendatory Act of the 91st General Assembly. An
18 attached security interest becomes unperfected one year after
19 the effective date of this amendatory Act of the 91st General
20 Assembly unless the security interest becomes a perfected
21 security interest under this Act before the expiration of
22 that period.
23 (b) Pre-effective-date filing. The filing of a
24 financing statement before the effective date of this
25 amendatory Act of the 91st General Assembly is effective to
26 perfect a security interest to the extent the filing would
27 satisfy the applicable requirements for perfection under this
28 Act.
29 (c) Pre-effective-date filing in jurisdiction formerly
30 governing perfection. This Act does not render ineffective
31 an effective financing statement that, before the effective
32 date of this amendatory Act of the 91st General Assembly, is
33 filed and satisfies the applicable requirements for
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1 perfection under the law of the jurisdiction governing
2 perfection as provided in Section 9-103 of the Uniform
3 Commercial Code as it existed before the effective date of
4 this amendatory Act of the 91st General Assembly. However,
5 except as otherwise provided in subsections (d) and (e) and
6 Section 9-706, the financing statement ceases to be effective
7 at the earlier of:
8 (1) the time the financing statement would have
9 ceased to be effective under the law of the jurisdiction
10 in which it is filed; or
11 (2) June 30, 2006.
12 (d) Continuation statement. The filing of a
13 continuation statement after the effective date of this
14 amendatory Act of the 91st General Assembly does not continue
15 the effectiveness of the financing statement filed before the
16 effective date of this amendatory Act of the 91st General
17 Assembly. However, upon the timely filing of a continuation
18 statement after the effective date of this amendatory Act of
19 the 91st General Assembly and in accordance with the law of
20 the jurisdiction governing perfection as provided in Part 3,
21 the effectiveness of a financing statement filed in the same
22 office in that jurisdiction before the effective date of this
23 amendatory Act of the 91st General Assembly continues for the
24 period provided by the law of that jurisdiction.
25 (e) Application of subsection (c)(2) to transmitting
26 utility financing statement. Subsection (c)(2) applies to a
27 financing statement that, before the effective date of this
28 amendatory Act of the 91st General Assembly, is filed against
29 a transmitting utility and satisfies the applicable
30 requirements for perfection under the law of the jurisdiction
31 governing perfection as provided in Section 9-103, as that
32 Section existed before the effective date of this amendatory
33 Act of the 91st General Assembly, only to the extent that
34 Part 3 provides that the law of a jurisdiction other than
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1 jurisdiction in which the financing statement is filed
2 governs perfection of a security interest in collateral
3 covered by the financing statement.
4 (f) Application of Part 5. A financing statement that
5 includes a financing statement filed before the effective
6 date of this amendatory Act of the 91st General Assembly and
7 a continuation statement filed after the effective date of
8 this amendatory Act of the 91st General Assembly is effective
9 only to the extent that it satisfies the requirements of Part
10 5 for an initial financing statement.
11 (810 ILCS 5/9-706 new)
12 Sec. 9-706. When initial financing statement suffices to
13 continue effectiveness of financing statement.
14 (a) Initial financing statement in lieu of continuation
15 statement. The filing of an initial financing statement in
16 the office specified in Section 9-501 continues the
17 effectiveness of a financing statement filed before the
18 effective date of this amendatory Act of the 91st General
19 Assembly if:
20 (1) the filing of an initial financing statement in
21 that office would be effective to perfect a security
22 interest under this Act;
23 (2) the pre-effective-date financing statement was
24 filed in an office in another State or another office in
25 this State; and
26 (3) the initial financing statement satisfies
27 subsection (c).
28 (b) Period of continued effectiveness. The filing of an
29 initial financing statement under subsection (a) continues
30 the effectiveness of the pre-effective-date financing
31 statement:
32 (1) if the initial financing statement is filed
33 before the effective date of this amendatory Act of the
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1 91st General Assembly, for the period provided in Section
2 9-403 of the Uniform Commercial Code as it existed before
3 the effective date of this amendatory Act of the 91st
4 General Assembly with respect to a financing statement;
5 and
6 (2) if the initial financing statement is filed
7 after the effective date of this amendatory Act of the
8 91st General Assembly, for the period provided in Section
9 9-515 with respect to an initial financing statement.
10 (c) Requirements for initial financing statement under
11 subsection (a). To be effective for purposes of subsection
12 (a), an initial financing statement must:
13 (1) satisfy the requirements of Part 5 for an
14 initial financing statement;
15 (2) identify the pre-effective-date financing
16 statement by indicating the office in which the financing
17 statement was filed and providing the dates of filing and
18 file numbers, if any, of the financing statement and of
19 the most recent continuation statement filed with respect
20 to the financing statement; and
21 (3) indicate that the pre-effective-date financing
22 statement remains effective.
23 (810 ILCS 5/9-707 new)
24 Sec. 9-707. Persons entitled to file initial financing
25 statement or continuation statement. A person may file an
26 initial financing statement or a continuation statement under
27 this Part if:
28 (1) the secured party of record authorizes the
29 filing; and
30 (2) the filing is necessary under this Part:
31 (A) to continue the effectiveness of a
32 financing statement filed before the effective date
33 of this amendatory Act of the 91st General Assembly;
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1 or
2 (B) to perfect or continue the perfection of a
3 security interest.
4 (810 ILCS 5/9-708 new)
5 Sec. 9-708. Priority.
6 (a) Law governing priority. This Act determines the
7 priority of conflicting claims to collateral. However, if
8 the relative priorities of the claims were established before
9 the effective date of this amendatory Act of the 91st General
10 Assembly, Article 9 as it existed before the effective date
11 of this amendatory Act of the 91st General Assembly
12 determines priority.
13 (b) Priority if security interest becomes enforceable
14 under Section 9-203. For purposes of Section 9-322(a), the
15 priority of a security interest that becomes enforceable
16 under Section 9-203 of this Act dates from the effective date
17 of this amendatory Act of the 91st General Assembly if the
18 security interest is perfected under this Act by the filing
19 of a financing statement before the effective date of this
20 amendatory Act of the 91st General Assembly which would not
21 have been effective to perfect the security interest under
22 Article 9 as it existed before the effective date of this
23 amendatory Act of the 91st General Assembly. This subsection
24 does not apply to conflicting security interests each of
25 which is perfected by the filing of such a financing
26 statement.
27 PART 99. (BLANK) MISCELLANEOUS ILLINOIS PROVISIONS
28 (810 ILCS 5/9-9901) (from Ch. 26, par. 9-9901)
29 Sec. 9-9901. (Blank). Liability of Secretary of State.
30 Neither the Secretary of State nor any of the Secretary of
31 State's employees or agents shall be subject to personal
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1 liability by reason of any error or omission in the
2 performance of any duty under this Article except in case of
3 wilful negligence.
4 (Source: P.A. 87-1047.)
5 (810 ILCS 5/9-9902) (from Ch. 26, par. 9-9902)
6 Sec. 9-9902. (Blank). Security interests in crops.
7 (a) Legislative findings; purpose. The General Assembly
8 finds:
9 (1) it has been the accepted practice between
10 farmers and agricultural lenders for lenders to extend
11 credit with repayment secured by a security interest in
12 crops perfected in accordance with the provisions of this
13 Article;
14 (2) in making these loans, it has been the accepted
15 practice of agricultural lenders to rely upon a search of
16 financing statements properly filed in accordance with
17 the provisions of this Article to determine the presence
18 of claims in favor of other lenders;
19 (3) recently, this long standing practice and the
20 expectations of agricultural lenders have been negated by
21 court decisions that hold that a mortgagee of real estate
22 who takes possession, during foreclosure proceedings, of
23 mortgaged real estate with unsevered crops has priority
24 over a perfected security interest in crops;
25 (4) as a result of these court decisions, the
26 documentation and expenses in connection with prudent
27 agricultural lending practices will significantly
28 increase, creating an undue burden on agricultural
29 lenders;
30 (5) the application of these court decisions to the
31 holders of obligations secured by the collateral
32 assignment of beneficial interests in land trusts will
33 result in the creation of claims against crops that
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1 agricultural lenders will be unable to discover by public
2 record search;
3 (6) these court decisions defeat the legitimate
4 expectations of agricultural lenders, unnecessarily
5 increase the cost of agricultural credit and impede the
6 free flow and availability of agricultural credit,
7 constituting an undue burden on the Illinois farm
8 economy;
9 (7) the application of these court decisions to the
10 holders of obligations secured by the collateral
11 assignment of beneficial interests in land trusts will
12 similarly defeat the expectations of agricultural
13 lenders, unnecessarily increase the cost of agricultural
14 credit and impede the free flow and availability of
15 agricultural credit, constituting an undue burden on the
16 Illinois farm economy;
17 (8) real estate lenders, frequently dealing with
18 farmers prior to the involvement of other agricultural
19 lenders, in the ordinary course of lending can perfect a
20 security interest in crops in accordance with the
21 provisions of this Article to the extent these lenders
22 are relying on that collateral;
23 (9) it is the purpose of this Section to restore an
24 efficient system of searching for the claims of lenders
25 and the protection afforded agricultural lenders by a
26 perfected security interest in crops under this Article,
27 and thereby to foster and encourage the availability of
28 agricultural credit.
29 (b) Definitions. In this Section the following meanings
30 apply:
31 (1) "Collateral assignment of beneficial interest"
32 means any pledge or assignment of the beneficial interest
33 in a land trust to a person to secure a debt or other
34 obligation.
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1 (2) "Land trust" means any trust arrangement under
2 which the legal and equitable title to real estate is
3 held by a trustee, the interest of the beneficiary of the
4 trust is personal property and the beneficiary or any
5 person designated in writing by the beneficiary has (i)
6 the exclusive power to direct or control the trustee in
7 dealing with the title to the trust property, (ii) the
8 exclusive control of the management, operation, renting,
9 and selling of the trust property, and (iii) the
10 exclusive right to the earnings, avails, and proceeds of
11 the trust property.
12 (c) Rights to crops. With respect to any crops growing
13 or to be grown on real estate held in a land trust, the
14 rights of a holder of an obligation secured by a collateral
15 assignment of beneficial interest in the land trust,
16 including rights by virtue of an equitable lien, shall be
17 subject to a security interest properly perfected under this
18 Article.
19 (d) Application of Section. This Section applies to the
20 holder of an obligation secured by a collateral assignment of
21 beneficial interest in a land trust who becomes entitled to
22 crops by obtaining possession on or after December 22, 1988.
23 (Source: P.A. 87-1047.)
24 Section 10. The Uniform Commercial Code is amended by
25 changing Sections 1-105, 1-201, 2-103, 2-210, 2-326, 2-502,
26 2-716, 2A-103, 2A-303, 2A-307, 2A-309, 4-210, 7-503, 8-103,
27 8-106, 8-110, 8-301, 8-302, and 8-510 and by adding Section
28 5-118 as follows:
29 (810 ILCS 5/1-105) (from Ch. 26, par. 1-105)
30 Sec. 1-105. Territorial application of the Act; parties'
31 power to choose applicable law.
32 (1) Except as provided in this Section, when a
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1 transaction bears a reasonable relation to this State and
2 also to another state or nation the parties may agree that
3 the law either of this State or of the other state or nation
4 shall govern their rights and duties. Failing an agreement,
5 this Act applies to transactions bearing an appropriate
6 relation to this State.
7 (2) Where one of the following provisions of this Act
8 specifies the applicable law, that provision governs and a
9 contrary agreement is effective only to the extent permitted
10 by the law (including the conflict of laws rules) so
11 specified:
12 Rights of creditors against sold goods. Section 2-402.
13 Applicability of the Article on Leases. Sections 2A-105
14 and 2A-106.
15 Applicability of the Article on Bank Deposits and
16 Collections. Section 4-102.
17 Governing law in the Article on Funds Transfers. Section
18 4A-507.
19 Letters of Credit. Section 5-116.
20 Applicability of the Article on Investment Securities.
21 Section 8-110.
22 Law governing perfection, the effect of perfection or
23 nonperfection, and the priority of security
24 interests and agricultural liens. Sections 9-301
25 through 9-307.
26 Perfection provisions of the Article on Secured
27 Transactions. Section 9-103.
28 (Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97.)
29 (810 ILCS 5/1-201) (from Ch. 26, par. 1-201)
30 Sec. 1-201. General Definitions. Subject to additional
31 definitions contained in the subsequent Articles of this Act
32 which are applicable to specific Articles or Parts thereof,
33 and unless the context otherwise requires, in this Act:
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1 (1) "Action" in the sense of a judicial proceeding
2 includes recoupment, counterclaim, set-off, suit in equity
3 and any other proceedings in which rights are determined.
4 (2) "Aggrieved party" means a party entitled to resort
5 to a remedy.
6 (3) "Agreement" means the bargain of the parties in fact
7 as found in their language or by implication from other
8 circumstances including course of dealing or usage of trade
9 or course of performance as provided in this Act (Sections
10 1-205, and 2-208, and 2A-207). Whether an agreement has legal
11 consequences is determined by the provisions of this Act, if
12 applicable; otherwise by the law of contracts (Section
13 1-103). (Compare "Contract".)
14 (4) "Bank" means any person engaged in the business of
15 banking.
16 (5) "Bearer" means the person in possession of an
17 instrument, document of title, or certificated security
18 payable to bearer or indorsed in blank.
19 (6) "Bill of lading" means a document evidencing the
20 receipt of goods for shipment issued by a person engaged in
21 the business of transporting or forwarding goods, and
22 includes an airbill. "Airbill" means a document serving for
23 air transportation as a bill of lading does for marine or
24 rail transportation, and includes an air consignment note or
25 air waybill.
26 (7) "Branch" includes a separately incorporated foreign
27 branch of a bank.
28 (8) "Burden of establishing" a fact means the burden of
29 persuading the triers of fact that the existence of the fact
30 is more probable than its non-existence.
31 (9) "Buyer in ordinary course of business" means a
32 person that buys goods who in good faith, and without
33 knowledge that the sale violates to him is in violation of
34 the ownership rights or security interest of another person a
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1 third party in the goods, and buys in the ordinary course
2 from a person, other than a pawnbroker, in the business of
3 selling goods of that kind but does not include a pawnbroker.
4 A person buys goods in the ordinary course if the sale to the
5 person comports with the usual or customary practices in the
6 kind of business in which the seller is engaged or with the
7 seller's own usual or customary practices. A person that
8 sells oil, gas, or other minerals at the wellhead or minehead
9 is a person All persons who sell minerals or the like
10 (including oil and gas) at wellhead or minehead shall be
11 deemed to be persons in the business of selling goods of that
12 kind. A buyer in ordinary course of business "Buying" may
13 buy be for cash, or by exchange of other property, or on
14 secured or unsecured credit, and may acquire includes
15 receiving goods or documents of title under a pre-existing
16 contract for sale. Only a buyer that takes possession of the
17 goods or has a right to recover the goods from the seller
18 under Article 2 may be a buyer in ordinary course of
19 business. A person that acquires goods in a transfer in bulk
20 or as security for or in total or partial satisfaction of a
21 money debt is not a buyer in ordinary course of business. but
22 does not include a transfer in bulk or as security for or in
23 total or partial satisfaction of a money debt.
24 (10) "Conspicuous": A term or clause is conspicuous when
25 it is so written that a reasonable person against whom it is
26 to operate ought to have noticed it. A printed heading in
27 capitals (as: NON-NEGOTIABLE BILL OF LADING) is conspicuous.
28 Language in the body of a form is "conspicuous" if it is in
29 larger or other contrasting type or color. But in a telegram
30 any stated term is "conspicuous". Whether a term or clause is
31 "conspicuous" or not is for decision by the court.
32 (11) "Contract" means the total legal obligation which
33 results from the parties' agreement as affected by this Act
34 and any other applicable rules of law. (Compare "Agreement".)
-255- LRB9112852JSpc
1 (12) "Creditor" includes a general creditor, a secured
2 creditor, a lien creditor and any representative of
3 creditors, including an assignee for the benefit of
4 creditors, a trustee in bankruptcy, a receiver in equity and
5 an executor or administrator of an insolvent debtor's or
6 assignor's estate.
7 (13) "Defendant" includes a person in the position of
8 defendant in a cross-action or counterclaim.
9 (14) "Delivery" with respect to instruments, documents
10 of title, chattel paper or certificated securities means
11 voluntary transfer of possession.
12 (15) "Document of title" includes bill of lading, dock
13 warrant, dock receipt, warehouse receipt or order for the
14 delivery of goods, and also any other document which in the
15 regular course of business or financing is treated as
16 adequately evidencing that the person in possession of it is
17 entitled to receive, hold and dispose of the document and the
18 goods it covers. To be a document of title a document must
19 purport to be issued by or addressed to a bailee and purport
20 to cover goods in the bailee's possession which are either
21 identified or are fungible portions of an identified mass.
22 (16) "Fault" means wrongful act, omission or breach.
23 (17) "Fungible" with respect to goods or securities
24 means goods or securities of which any unit is, by nature or
25 usage of trade, the equivalent of any other like unit. Goods
26 which are not fungible shall be deemed fungible for the
27 purposes of this Act to the extent that under a particular
28 agreement or document unlike units are treated as
29 equivalents.
30 (18) "Genuine" means free of forgery or counterfeiting.
31 (19) "Good faith" means honesty in fact in the conduct
32 or transaction concerned.
33 (20) "Holder" with respect to a negotiable instrument
34 means the person in possession if the instrument is payable
-256- LRB9112852JSpc
1 to bearer or, in the case of an instrument payable to an
2 identified person, if the identified person is in possession.
3 "Holder" with respect to a document of title means the person
4 in possession if the goods are deliverable to bearer or to
5 the order of the person in possession.
6 (21) To "honor" is to pay or accept and pay, or where a
7 credit so engages to purchase or discount a draft complying
8 with the terms of the credit.
9 (22) "Insolvency proceedings" includes any assignment
10 for the benefit of creditors or other proceedings intended to
11 liquidate or rehabilitate the estate of the person involved.
12 (23) A person is "insolvent" who either has ceased to
13 pay his debts in the ordinary course of business or cannot
14 pay his debts as they become due or is insolvent within the
15 meaning of the federal bankruptcy law.
16 (24) "Money" means a medium of exchange authorized or
17 adopted by a domestic or foreign government and includes a
18 monetary unit of account established by an intergovernmental
19 organization or by agreement between 2 or more nations.
20 (25) A person has "notice" of a fact when
21 (a) he has actual knowledge of it; or
22 (b) he has received a notice or notification of it;
23 or
24 (c) from all the facts and circumstances known to
25 him at the time in question he has reason to know that it
26 exists. A person "knows" or has "knowledge" of a fact
27 when he has actual knowledge of it. "Discover" or "learn"
28 or a word or phrase of similar import refers to knowledge
29 rather than to reason to know. The time and circumstances
30 under which a notice or notification may cease to be
31 effective are not determined by this Act.
32 (26) A person "notifies" or "gives" a notice or
33 notification to another by taking such steps as may be
34 reasonably required to inform the other in ordinary course
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1 whether or not such other actually comes to know of it. A
2 person "receives" a notice or notification when
3 (a) it comes to his attention; or
4 (b) it is duly delivered at the place of business
5 through which the contract was made or at any other place
6 held out by him as the place for receipt of such
7 communications.
8 (27) Notice, knowledge or a notice or notification
9 received by an organization is effective for a particular
10 transaction from the time when it is brought to the attention
11 of the individual conducting that transaction, and in any
12 event from the time when it would have been brought to his
13 attention if the organization had exercised due diligence. An
14 organization exercises due diligence if it maintains
15 reasonable routines for communicating significant information
16 to the person conducting the transaction and there is
17 reasonable compliance with the routines. Due diligence does
18 not require an individual acting for the organization to
19 communicate information unless such communication is part of
20 his regular duties or unless he has reason to know of the
21 transaction and that the transaction would be materially
22 affected by the information.
23 (28) "Organization" includes a corporation, government
24 or governmental subdivision or agency, business trust,
25 estate, trust, partnership or association, two or more
26 persons having a joint or common interest, or any other legal
27 or commercial entity.
28 (29) "Party", as distinct from "third party", means a
29 person who has engaged in a transaction or made an agreement
30 within this Act.
31 (30) "Person" includes an individual or an organization
32 (see Section 1-102).
33 (31) "Presumption" or "presumed" means that the trier of
34 fact must find the existence of the fact presumed unless and
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1 until evidence is introduced which would support a finding of
2 its non-existence.
3 (32) "Purchase" includes taking by sale, discount,
4 negotiation, mortgage, pledge, lien, security interest, issue
5 or reissue, gift or any other voluntary transaction creating
6 an interest in property.
7 (33) "Purchaser" means a person who takes by purchase.
8 (34) "Remedy" means any remedial right to which an
9 aggrieved party is entitled with or without resort to a
10 tribunal.
11 (35) "Representative" includes an agent, an officer of a
12 corporation or association, and a trustee, executor or
13 administrator of an estate, or any other person empowered to
14 act for another.
15 (36) "Rights" includes remedies.
16 (37) "Security interest" means an interest in personal
17 property or fixtures which secures payment or performance of
18 an obligation. The retention or reservation of title by a
19 seller of goods notwithstanding shipment or delivery to the
20 buyer (Section 2-401) is limited in effect to a reservation
21 of a "security interest". The term also includes any interest
22 of a consignor and a buyer of accounts, or chattel paper, a
23 payment intangible, or a promissory note in a transaction
24 that which is subject to Article 9. The special property
25 interest of a buyer of goods on identification of those goods
26 to a contract for sale under Section 2-401 is not a "security
27 interest", but a buyer may also acquire a "security
28 interest", by complying with Article 9. Except as otherwise
29 provided in Section 2-505, the right of a seller or lessor of
30 goods under Article 2 or 2A to retain or acquire possession
31 of the goods is not a "security interest", but a seller or
32 lessor may also acquire a "security interest" by complying
33 with Article 9. The retention or reservation of title by a
34 seller of goods notwithstanding shipment or delivery to the
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1 buyer (Section 2-401) is limited in effect to a reservation
2 of a "security interest". Unless a consignment is intended as
3 security, reservation of title thereunder is not a "security
4 interest" but a consignment is in any event subject to the
5 provisions on consignment sales (Section 2-326).
6 Whether a transaction creates a lease or security
7 interest is determined by the facts of each case; however, a
8 transaction creates a security interest if the consideration
9 the lessee is to pay the lessor for the right to possession
10 and use of the goods is an obligation for the term of the
11 lease not subject to termination by the lessee; and
12 (a) the original term of the lease is equal to or
13 greater than the remaining economic life of the goods;
14 (b) the lessee is bound to renew the lease for the
15 remaining economic life of the goods or is bound to
16 become the owner of the goods;
17 (c) the lessee has an option to renew the lease for
18 the remaining economic life of the goods for no
19 additional consideration or nominal additional
20 consideration upon compliance with the lease agreement;
21 or
22 (d) the lessee has an option to become the owner of
23 the goods for no additional consideration or nominal
24 additional consideration upon compliance with the lease
25 agreement.
26 A transaction does not create a security interest merely
27 because it provides that:
28 (a) the present value of the consideration the
29 lessee is obligated to pay the lessor for the right to
30 possession and use of the goods is substantially equal to
31 or is greater than the fair market value of the goods at
32 the time the lease is entered into;
33 (b) the lessee assumes risk of loss of the goods,
34 or agrees to pay taxes, insurance, filing, recording, or
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1 registration fees, or service or maintenance costs with
2 respect to the goods;
3 (c) the lessee has an option to renew the lease or
4 to become the owner of the goods;
5 (d) the lessee has an option to renew the lease for
6 a fixed rent that is equal to or greater than the
7 reasonably predictable fair market rent for the use of
8 the goods for the term of the renewal at the time the
9 option is to be performed; or
10 (e) the lessee has an option to become the owner of
11 the goods for a fixed price that is equal to or greater
12 than the reasonably predictable fair market value of the
13 goods at the time the option is to be performed.
14 For purposes of this subsection (37):
15 (x) Additional consideration is not nominal if (i)
16 when the option to renew the lease is granted to the
17 lessee the rent is stated to be the fair market rent for
18 the use of the goods for the term of the renewal
19 determined at the time the option is to be performed, or
20 (ii) when the option to become the owner of the goods is
21 granted to the lessee the price is stated to be the fair
22 market value of the goods determined at the time the
23 option is to be performed. Additional consideration is
24 nominal if it is less than the lessee's reasonably
25 predictable cost of performing under the lease agreement
26 if the option is not exercised;
27 (y) "Reasonably predictable" and "remaining
28 economic life of the goods" are to be determined with
29 reference to the facts and circumstances at the time the
30 transaction is entered into; and
31 (z) "Present value" means the amount as of a date
32 certain of one or more sums payable in the future,
33 discounted to the date certain. The discount is
34 determined by the interest rate specified by the parties
-261- LRB9112852JSpc
1 if the rate is not manifestly unreasonable at the time
2 the transaction is entered into; otherwise, the discount
3 is determined by a commercially reasonable rate that
4 takes into account the facts and circumstances as of each
5 case at the time the transaction was entered into.
6 (38) "Send" in connection with any writing or notice
7 means to deposit in the mail or deliver for transmission by
8 any other usual means of communication with postage or cost
9 of transmission provided for and properly addressed and in
10 the case of an instrument to an address specified thereon or
11 otherwise agreed, or if there be none to any address
12 reasonable under the circumstances. The receipt of any
13 writing or notice within the time at which it would have
14 arrived if properly sent has the effect of a proper sending.
15 (39) "Signed" includes any symbol executed or adopted by
16 a party with present intention to authenticate a writing.
17 (40) "Surety" includes guarantor.
18 (41) "Telegram" includes a message transmitted by radio,
19 teletype, cable, any mechanical method of transmission, or
20 the like.
21 (42) "Term" means that portion of an agreement which
22 relates to a particular matter.
23 (43) "Unauthorized" signature means one made without
24 actual, implied, or apparent authority and includes a
25 forgery.
26 (44) "Value". Except as otherwise provided with respect
27 to negotiable instruments and bank collections (Sections
28 3-303, 4-210, 4-208 and 4-211 4-209), a person gives "value"
29 for rights if he acquires them:
30 (a) in return for a binding commitment to extend
31 credit or for the extension of immediately available
32 credit whether or not drawn upon and whether or not a
33 charge-back is provided for in the event of difficulties
34 in collection; or
-262- LRB9112852JSpc
1 (b) as security for or in total or partial
2 satisfaction of a pre-existing claim; or
3 (c) by accepting delivery pursuant to a
4 pre-existing contract for purchase; or
5 (d) generally, in return for any consideration
6 sufficient to support a simple contract.
7 (45) "Warehouse receipt" means a receipt issued by a
8 person engaged in the business of storing goods for hire.
9 (46) "Written" or "writing" includes printing,
10 typewriting or any other intentional reduction to tangible
11 form.
12 (Source: P.A. 87-493; 87-582; 87-895; 87-1135.)
13 (810 ILCS 5/2-103) (from Ch. 26, par. 2-103)
14 Sec. 2-103. Definitions and index of definitions.
15 (1) In this Article unless the context otherwise
16 requires
17 (a) "Buyer" means a person who buys or contracts to
18 buy goods.
19 (b) "Good faith" in the case of a merchant means
20 honesty in fact and the observance of reasonable commercial
21 standards of fair dealing in the trade.
22 (c) "Receipt" of goods means taking physical
23 possession of them.
24 (d) "Seller" means a person who sells or contracts
25 to sell goods.
26 (2) Other definitions applying to this Article or to
27 specified Parts thereof, and the sections in which they
28 appear are:
29 "Acceptance". Section 2--606.
30 "Banker's credit". Section 2--325.
31 "Between merchants". Section 2--104.
32 "Cancellation". Section 2--106(4).
33 "Commercial unit". Section 2--105.
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1 "Confirmed credit". Section 2--325.
2 "Conforming to contract". Section 2--106.
3 "Contract for sale". Section 2--106.
4 "Cover". Section 2--712.
5 "Entrusting". Section 2--403.
6 "Financing agency". Section 2--104.
7 "Future goods". Section 2--105.
8 "Goods". Section 2--105.
9 "Identification". Section 2--501.
10 "Installment contract". Section 2--612.
11 "Letter of Credit". Section 2--325.
12 "Lot". Section 2--105.
13 "Merchant". Section 2--104.
14 "Overseas". Section 2--323.
15 "Person in position of seller". Section 2--707.
16 "Present sale". Section 2--106.
17 "Sale". Section 2--106.
18 "Sale on approval". Section 2--326.
19 "Sale or return". Section 2--326.
20 "Termination". Section 2--106.
21 (3) The following definitions in other Articles apply to
22 this Article:
23 "Check". Section 3--104.
24 "Consignee". Section 7--102.
25 "Consignor". Section 7--102.
26 "Consumer goods". Section 9-102 9--109.
27 "Dishonor". Section 3-502 3--507.
28 "Draft". Section 3--104.
29 (4) In addition Article 1 contains general definitions
30 and principles of construction and interpretation applicable
31 throughout this Article.
32 (Source: Laws 1961, p. 2101.)
33 (810 ILCS 5/2-210) (from Ch. 26, par. 2-210)
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1 Sec. 2-210. Delegation of performance; assignment of
2 rights.
3 (1) A party may perform his duty through a delegate
4 unless otherwise agreed or unless the other party has a
5 substantial interest in having his original promisor perform
6 or control the acts required by the contract. No delegation
7 of performance relieves the party delegating of any duty to
8 perform or any liability for breach.
9 (2) Except as otherwise provided in Section 9-406,
10 unless otherwise agreed, all rights of either seller or buyer
11 can be assigned except where the assignment would materially
12 change the duty of the other party, or increase materially
13 the burden or risk imposed on him by his contract, or impair
14 materially his chance of obtaining return performance. A
15 right to damages for breach of the whole contract or a right
16 arising out of the assignor's due performance of his entire
17 obligation can be assigned despite agreement otherwise.
18 (3) The creation, attachment, perfection, or enforcement
19 of a security interest in the seller's interest under a
20 contract is not a transfer that materially changes the duty
21 of or increases materially the burden or risk imposed on the
22 buyer or impairs materially the buyer's chance of obtaining
23 return performance within the purview of subsection (2)
24 unless, and then only to the extent that, enforcement
25 actually results in a delegation of material performance of
26 the seller. Even in that event, the creation, attachment,
27 perfection, and enforcement of the security interest remain
28 effective, but (i) the seller is liable to the buyer for
29 damages caused by the delegation to the extent that the
30 damages could not reasonably be prevented by the buyer, and
31 (ii) a court having jurisdiction may grant other appropriate
32 relief, including cancellation of the contract for sale or an
33 injunction against enforcement of the security interest or
34 consummation of the enforcement.
-265- LRB9112852JSpc
1 (4) (3) Unless the circumstances indicate the contrary a
2 prohibition of assignment of "the contract" is to be
3 construed as barring only the delegation to the assignee of
4 the assignor's performance.
5 (5) (4) An assignment of "the contract" or of "all my
6 rights under the contract" or an assignment in similar
7 general terms is an assignment of rights and unless the
8 language or the circumstances (as in an assignment for
9 security) indicate the contrary, it is a delegation of
10 performance of the duties of the assignor and its acceptance
11 by the assignee constitutes a promise by him to perform those
12 duties. This promise is enforceable by either the assignor or
13 the other party to the original contract.
14 (6) (5) The other party may treat any assignment which
15 delegates performance as creating reasonable grounds for
16 insecurity and may without prejudice to his rights against
17 the assignor demand assurances from the assignee (Section
18 2--609).
19 (Source: Laws 1961, p. 2101.)
20 (810 ILCS 5/2-326) (from Ch. 26, par. 2-326)
21 Sec. 2-326. Sale on approval and sale or return;
22 consignment sales and rights of creditors.
23 (1) Unless otherwise agreed, if delivered goods may be
24 returned by the buyer even though they conform to the
25 contract, the transaction is
26 (a) a "sale on approval" if the goods are delivered
27 primarily for use, and
28 (b) a "sale or return" if the goods are delivered
29 primarily for resale.
30 (2) Except as provided in subsection (3), Goods held on
31 approval are not subject to the claims of the buyer's
32 creditors until acceptance; goods held on sale or return are
33 subject to such claims while in the buyer's possession.
-266- LRB9112852JSpc
1 (3) Where goods are delivered to a person for sale and
2 such person maintains a place of business at which he deals
3 in goods of the kind involved, under a name other than the
4 name of the person making delivery, then with respect to
5 claims of creditors of the person conducting the business the
6 goods are deemed to be on sale or return. The provisions of
7 this subsection are applicable even though an agreement
8 purports to reserve title to the person making delivery until
9 payment or resale or uses such words as "on consignment" or
10 "on memorandum". However, this subsection is not applicable
11 if the person making delivery
12 (a) complies with an applicable law providing for a
13 consignor's interest or the like to be evidenced by a sign,
14 or
15 (b) establishes that the person conducting the
16 business is generally known by his creditors to be
17 substantially engaged in selling the goods of others, or
18 (c) complies with the filing provisions of the
19 Article on Secured Transactions (Article 9).
20 (4) Any "or return" term of a contract for sale is to be
21 treated as a separate contract for sale within the statute of
22 frauds section of this Article (Section 2--201) and as
23 contradicting the sale aspect of the contract within the
24 provisions of this Article on parol or extrinsic evidence
25 (Section 2--202).
26 (Source: Laws 1961, p. 2101.)
27 (810 ILCS 5/2-502) (from Ch. 26, par. 2-502)
28 Sec. 2-502. Buyer's right to goods on seller's
29 insolvency.
30 (1) Subject to subsections subsection (2) and (3) and
31 even though the goods have not been shipped a buyer who has
32 paid a part or all of the price of goods in which he has a
33 special property under the provisions of the immediately
-267- LRB9112852JSpc
1 preceding section may on making and keeping good a tender of
2 any unpaid portion of their price recover them from the
3 seller if:
4 (a) in the case of goods bought for personal,
5 family, or household purposes, the seller repudiates or
6 fails to deliver as required by the contract; or
7 (b) in all cases, the seller becomes insolvent
8 within 10 days after receipt of the first installment on
9 their price.
10 (2) The buyer's right to recover the goods under
11 subsection (1)(a) vests upon acquisition of a special
12 property, even if the seller had not then repudiated or
13 failed to deliver.
14 (3) If the identification creating his special property
15 has been made by the buyer he acquires the right to recover
16 the goods only if they conform to the contract for sale.
17 (Source: Laws 1961, p. 2101.)
18 (810 ILCS 5/2-716) (from Ch. 26, par. 2-716)
19 Sec. 2-716. Buyer's right to specific performance or
20 replevin.
21 (1) Specific performance may be ordered where the goods
22 are unique or in other proper circumstances.
23 (2) The judgment for specific performance may include
24 such terms and conditions as to payment of the price,
25 damages, or other relief as the court may deem just.
26 (3) The buyer has a right of replevin for goods
27 identified to the contract if after reasonable effort he is
28 unable to effect cover for such goods or the circumstances
29 reasonably indicate that such effort will be unavailing or if
30 the goods have been shipped under reservation and
31 satisfaction of the security interest in them has been made
32 or tendered. In the case of goods bought for personal,
33 family, or household purposes, the buyer's right of replevin
-268- LRB9112852JSpc
1 vests upon acquisition of a special property, even if the
2 seller had not then repudiated or failed to deliver.
3 (Source: P.A. 84-545.)
4 (810 ILCS 5/2A-103) (from Ch. 26, par. 2A-103)
5 Sec. 2A-103. Definitions and index of definitions.
6 (1) In this Article unless the context otherwise
7 requires:
8 (a) "Buyer in ordinary course of business" means a
9 person who, in good faith and without knowledge that the
10 sale to him or her is in violation of the ownership
11 rights or security interest or leasehold interest of a
12 third party in the goods, buys in ordinary course from a
13 person in the business of selling goods of that kind but
14 does not include a pawnbroker. "Buying" may be for cash
15 or by exchange of other property or on secured or
16 unsecured credit and includes receiving goods or
17 documents of title under a pre-existing contract for sale
18 but does not include a transfer in bulk or as security
19 for or in total or partial satisfaction of a money debt.
20 (b) "Cancellation" occurs when either party puts an
21 end to the lease contract for default by the other party.
22 (c) "Commercial unit" means such a unit of goods as
23 by commercial usage is a single whole for purposes of
24 lease and division of which materially impairs its
25 character or value on the market or in use. A commercial
26 unit may be a single article, as a machine, or a set of
27 articles, as a suite of furniture or a line of machinery,
28 or a quantity, as a gross or carload, or any other unit
29 treated in use or in the relevant market as a single
30 whole.
31 (d) "Conforming" goods or performance under a lease
32 contract means goods or performance that are in
33 accordance with the obligations under the lease contract.
-269- LRB9112852JSpc
1 (e) "Consumer lease" means a lease that a lessor
2 regularly engaged in the business of leasing or selling
3 makes to a lessee who is an individual and who takes
4 under the lease primarily for a personal, family, or
5 household purpose, if the total payments to be made under
6 the lease contract, excluding payments for options to
7 renew or buy, do not exceed $40,000.
8 (f) "Fault" means wrongful act, omission, breach,
9 or default.
10 (g) "Finance lease" means a lease with respect to
11 which:
12 (i) the lessor does not select, manufacture,
13 or supply the goods;
14 (ii) the lessor acquires the goods or the
15 right to possession and use of the goods in
16 connection with the lease; and
17 (iii) one of the following occurs:
18 (A) the lessee receives a copy of the
19 contract by which the lessor acquired the goods
20 or the right to possession and use of the goods
21 before signing the lease contract;
22 (B) the lessee's approval of the contract
23 by which the lessor acquired the goods or the
24 right to possession and use of the goods is a
25 condition to effectiveness of the lease
26 contract;
27 (C) the lessee, before signing the lease
28 contract, receives an accurate and complete
29 statement designating the promises and
30 warranties, and any disclaimers of warranties,
31 limitations or modifications of remedies, or
32 liquidated damages, including those of a third
33 party, such as the manufacturer of the goods,
34 provided to the lessor by the person supplying
-270- LRB9112852JSpc
1 the goods in connection with or as part of the
2 contract by which the lessor acquired the goods
3 or the right to possession and use of the
4 goods; or
5 (D) if the lease is not a consumer lease,
6 the lessor, before the lessee signs the lease
7 contract, informs the lessee in writing (a) of
8 the identity of the person supplying the goods
9 to the lessor, unless the lessee has selected
10 that person and directed the lessor to acquire
11 the goods or the right to possession and use of
12 the goods from that person, (b) that the lessee
13 is entitled under this Article to the promises
14 and warranties, including those of any third
15 party, provided to the lessor by the person
16 supplying the goods in connection with or as
17 part of the contract by which the lessor
18 acquired the goods or the right to possession
19 and use of the goods, and (c) that the lessee
20 may communicate with the person supplying the
21 goods to the lessor and receive an accurate and
22 complete statement of those promises and
23 warranties, including any disclaimers and
24 limitations of them or of remedies.
25 (h) "Goods" means all things that are movable at
26 the time of identification to the lease contract, or are
27 fixtures (Section 2A-309), but the term does not include
28 money, documents, instruments, accounts, chattel paper,
29 general intangibles, or minerals or the like, including
30 oil and gas, before extraction. The term also includes
31 the unborn young of animals.
32 (i) "Installment lease contract" means a lease
33 contract that authorizes or requires the delivery of
34 goods in separate lots to be separately accepted, even
-271- LRB9112852JSpc
1 though the lease contract contains a clause "each
2 delivery is a separate lease" or its equivalent.
3 (j) "Lease" means a transfer of the right to
4 possession and use of goods for a term in return for
5 consideration, but a sale, including a sale on approval
6 or a sale or return, or retention or creation of a
7 security interest is not a lease. Unless the context
8 clearly indicates otherwise, the term includes a
9 sublease.
10 (k) "Lease agreement" means the bargain, with
11 respect to the lease, of the lessor and the lessee in
12 fact as found in their language or by implication from
13 other circumstances including course of dealing or usage
14 of trade or course of performance as provided in this
15 Article. Unless the context clearly indicates otherwise,
16 the term includes a sublease agreement.
17 (l) "Lease contract" means the total legal
18 obligation that results from the lease agreement as
19 affected by this Article and any other applicable rules
20 of law. Unless the context clearly indicates otherwise,
21 the term includes a sublease contract.
22 (m) "Leasehold interest" means the interest of the
23 lessor or the lessee under a lease contact.
24 (n) "Lessee" means a person who acquires the right
25 to possession and use of goods under a lease. Unless the
26 context clearly indicates otherwise, the term includes a
27 sublessee.
28 (o) "Lessee in ordinary course of business" means a
29 person who in good faith and without knowledge that the
30 lease to him or her is in violation of the ownership
31 rights or security interest or leasehold interest of a
32 third party in the goods leases in ordinary course from a
33 person in the business of selling or leasing goods of
34 that kind but does not include a pawnbroker. "Leasing"
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1 may be for cash or by exchange of other property or on
2 secured or unsecured credit and includes receiving goods
3 or documents of title under a pre-existing lease contract
4 but does not include a transfer in bulk or as security
5 for or in total or partial satisfaction of a money debt.
6 (p) "Lessor" means a person who transfers the right
7 to possession and use of goods under a lease. Unless the
8 context clearly indicates otherwise, the term includes a
9 sublessor.
10 (q) "Lessor's residual interest" means the lessor's
11 interest in the goods after expiration, termination, or
12 cancellation of the lease contract.
13 (r) "Lien" means a charge against or interest in
14 goods to secure payment of a debt or performance of an
15 obligation, but the term does not include a security
16 interest.
17 (s) "Lot" means a parcel or a single article that
18 is the subject matter of a separate lease or delivery,
19 whether or not it is sufficient to perform the lease
20 contract.
21 (t) "Merchant lessee" means a lessee that is a
22 merchant with respect to goods of the kind subject to the
23 lease.
24 (u) "Present value" means the amount as of a date
25 certain of one or more sums payable in the future,
26 discounted to the date certain. The discount is
27 determined by the interest rate specified by the parties
28 if the rate was not manifestly unreasonable at the time
29 the transaction was entered into; otherwise, the discount
30 is determined by a commercially reasonable rate that
31 takes into account the facts and circumstances of each
32 case at the time the transaction was entered into.
33 (v) "Purchase" includes taking by sale, lease,
34 mortgage, security interest, pledge, gift, or any other
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1 voluntary transaction creating an interest in goods.
2 (w) "Sublease" means a lease of goods the right to
3 possession and use of which was acquired by the lessor as
4 a lessee under an existing lease.
5 (x) "Supplier" means a person from whom a lessor
6 buys or leases goods to be leased under a finance lease.
7 (y) "Supply contract" means a contract under which
8 a lessor buys or leases goods to be leased.
9 (z) "Termination" occurs when either party pursuant
10 to a power created by agreement or law puts an end to the
11 lease contract otherwise than for default.
12 (2) Other definitions applying to this Article and the
13 Sections in which they appear are:
14 "Accessions". Section 2A-310(1).
15 "Construction mortgage". Section 2A-309(1)(d).
16 "Encumbrance". Section 2A-309(1)(e).
17 "Fixtures". Section 2A-309(1)(a).
18 "Fixture filing". Section 2A-309(1)(b).
19 "Purchase money lease". Section 2A-309(1)(c).
20 (3) The following definitions in other Articles apply to
21 this Article:
22 "Account". Section 9-102(a)(2) 9-106.
23 "Between merchants". Section 2-104(3).
24 "Buyer". Section 2-103(1)(a).
25 "Chattel paper". Section 9-102(a)(11) 9-105 (1)(b).
26 "Consumer goods". Section 9-102(a)(23) 9-109(1).
27 "Document". Section 9-102(a)(30) 9-105 (1)(f).
28 "Entrusting". Section 2-403(3).
29 "General intangible intangibles". Section 9-102(a)(42)
30 9-106.
31 "Good faith". Section 2-103(1)(b).
32 "Instrument". Section 9-102(a)(47) 9-105 (1)(i).
33 "Merchant". Section 2-104(1).
34 "Mortgage". Section 9-102(a)(55) 9-105 (1)(j).
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1 "Pursuant to commitment". Section 9-102(a)(68) 9-105
2 (1)(k).
3 "Receipt". Section 2-103(1)(c).
4 "Sale". Section 2-106(1).
5 "Sale on approval". Section 2-326.
6 "Sale or return". Section 2-326.
7 "Seller". Section 2-103(1)(d).
8 (4) In addition, Article 1 contains general definitions
9 and principles of construction and interpretation applicable
10 throughout this Article.
11 (Source: P.A. 87-493.)
12 (810 ILCS 5/2A-303) (from Ch. 26, par. 2A-303)
13 Sec. 2A-303. Alienability of party's interest under
14 lease contract or of lessor's residual interest in goods;
15 delegation of performance; transfer of rights.
16 (1) As used in this Section, "creation of a security
17 interest" includes the sale of a lease contract that is
18 subject to Article 9, Secured Transactions, by reason of
19 Section 9-109(a)(3) 9-102(1)(b).
20 (2) Except as provided in subsection subsections (3) and
21 Section 9-407 (4), a provision in a lease agreement which (i)
22 prohibits the voluntary or involuntary transfer, including a
23 transfer by sale, sublease, creation or enforcement of a
24 security interest, or attachment, levy, or other judicial
25 process, of an interest of a party under the lease contract
26 or of the lessor's residual interest in the goods, or (ii)
27 makes such a transfer an event of default, gives rise to the
28 rights and remedies provided in subsection (4) (5), but a
29 transfer that is prohibited or is an event of default under
30 the lease agreement is otherwise effective.
31 (3) A provision in a lease agreement which (i) prohibits
32 the creation or enforcement of a security interest in an
33 interest of a party under the lease contract or in the
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1 lessor's residual interest in the goods, or (ii) makes such a
2 transfer an event of default, is not enforceable unless, and
3 then only to the extent that, there is an actual transfer by
4 the lessee of the lessee's right of possession or use of the
5 goods in violation of the provision or an actual delegation
6 of a material performance of either party to the lease
7 contract in violation of the provision. Neither the granting
8 nor the enforcement of a security interest in (i) the
9 lessor's interest under the lease contract or (ii) the
10 lessor's residual interest in the goods is a transfer that
11 materially impairs the prospect of obtaining return
12 performance by, materially changes the duty of, or materially
13 increases the burden or risk imposed on, the lessee within
14 the purview of subsection (5) unless, and then only to the
15 extent that, there is an actual delegation of a material
16 performance of the lessor.
17 (4) A provision in a lease agreement which (i) prohibits
18 a transfer of a right to damages for default with respect to
19 the whole lease contract or of a right to payment arising out
20 of the transferor's due performance of the transferor's
21 entire obligation, or (ii) makes such a transfer an event of
22 default, is not enforceable, and such a transfer is not a
23 transfer that materially impairs the prospect of obtaining
24 return performance by, materially changes the duty of, or
25 materially increases the burden or risk imposed on, the other
26 party to the lease contract within the purview of subsection
27 (4) (5).
28 (4) (5) Subject to subsection subsections (3) and
29 Section 9-407 (4):
30 (a) if a transfer is made which is made an event of
31 default under a lease agreement, the party to the lease
32 contract not making the transfer, unless that party
33 waives the default or otherwise agrees, has the rights
34 and remedies described in Section 2A-501(2);
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1 (b) if paragraph (a) is not applicable and if a
2 transfer is made that (i) is prohibited under a lease
3 agreement or (ii) materially impairs the prospect of
4 obtaining return performance by, materially changes the
5 duty of, or materially increases the burden of risk
6 imposed on, the other party to the lease contract, unless
7 the party not making the transfer agrees at any time to
8 the transfer in the lease contract or otherwise, then,
9 except as limited by contract, (i) the transferor is
10 liable to the party not making the transfer for damages
11 caused by the transfer to the extent that the damages
12 could not reasonably be prevented by the party not making
13 the transfer and (ii) a court having jurisdiction may
14 grant other appropriate relief, including cancellation of
15 the lease contract or an injunction against the transfer.
16 (5) (6) A transfer of "the lease" or of "all my rights
17 under the lease", or a transfer in similar general terms, is
18 a transfer of rights and, unless the language or the
19 circumstances, as in a transfer for security, indicate the
20 contrary, the transfer is a delegation of duties by the
21 transferor to the transferee. Acceptance by the transferee
22 constitutes a promise by the transferee to perform those
23 duties. The promise is enforceable by either the transferor
24 or the other party to the lease contract.
25 (6) (7) Unless otherwise agreed by the lessor and the
26 lessee, a delegation of performance does not relieve the
27 transferor as against the other party of any duty to perform
28 or of any liability for default.
29 (7) (8) In a consumer lease, to prohibit the transfer of
30 an interest of a party under the lease contract or to make a
31 transfer an event of default, the language must be specific,
32 by a writing, and conspicuous.
33 (Source: P.A. 87-493.)
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1 (810 ILCS 5/2A-307) (from Ch. 26, par. 2A-307)
2 Sec. 2A-307. Priority of liens arising by attachment or
3 levy on, security interests in, and other claims to goods.
4 (1) Except as otherwise provided in Section 2A-306, a
5 creditor of a lessee takes subject to the lease contract.
6 (2) Except as otherwise provided in subsection
7 subsections (3) and (4) and in Sections 2A-306 and 2A-308, a
8 creditor of a lessor takes subject to the lease contract
9 unless: (a) the creditor holds a lien that attached to the
10 goods before the lease contract became enforceable,
11 (b) the creditor holds a security interest in the
12 goods and the lessee did not give value and receive
13 delivery of the goods without knowledge of the security
14 interest; or
15 (c) the creditor holds a security interest in the
16 goods which was perfected (Section 9-303) before the
17 lease contract became enforceable.
18 (3) Except as otherwise provided in Sections 9-317,
19 9-321, and 9-323, a lessee takes a leasehold interest subject
20 to a security interest held by a creditor of the lessor. A
21 lessee in the ordinary course of business takes the leasehold
22 interest free of a security interest in the goods created by
23 the lessor even though the security interest is perfected
24 (Section 9-303) and the lessee knows of its existence.
25 (4) A lessee other than a lessee in the ordinary course
26 of business takes the leasehold interest free of a security
27 interest to the extent that it secures future advances made
28 after the secured party acquires knowledge of the lease or
29 more than 45 days after the lease contract becomes
30 enforceable, whichever first occurs, unless the future
31 advances are made pursuant to a commitment entered into
32 without knowledge of the lease and before the expiration of
33 the 45-day period.
34 (Source: P.A. 87-493.)
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1 (810 ILCS 5/2A-309) (from Ch. 26, par. 2A-309)
2 Sec. 2A-309. Lessor's and lessee's rights when goods
3 become fixtures.
4 (1) In this Section:
5 (a) goods are "fixtures" when they become so
6 related to particular real estate that an interest in
7 them arises under real estate law;
8 (b) a "fixture filing" is the filing, in the office
9 where a mortgage on the real estate would be filed or
10 recorded, of a financing statement covering goods that
11 are or are to become fixtures and conforming to the
12 requirements of Section 9-502(a) and (b) 9-402(5);
13 (c) a lease is a "purchase money lease" unless the
14 lessee has possession or use of the goods or the right to
15 possession or use of the goods before the lease agreement
16 is enforceable;
17 (d) a mortgage is a "construction mortgage" to the
18 extent it secures an obligation incurred for the
19 construction of an improvement on land including the
20 acquisition cost of the land, if the recorded writing so
21 indicates; and
22 (e) "encumbrance" includes real estate mortgages
23 and other liens on real estate and all other rights in
24 real estate that are not ownership interests.
25 (2) Under this Article a lease may be of goods that are
26 fixtures or may continue in goods that become fixtures, but
27 no lease exists under this Article of ordinary building
28 materials incorporated into an improvement on land.
29 (3) This Article does not prevent creation of a lease of
30 fixtures pursuant to real estate law.
31 (4) The perfected interest of a lessor of fixtures has
32 priority over a conflicting interest of an encumbrancer or
33 owner of the real estate if:
34 (a) the lease is a purchase money lease, the
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1 conflicting interest of the encumbrancer or owner arises
2 before the goods become fixtures, the interest of the
3 lessor is perfected by a fixture filing before the goods
4 become fixtures or within 10 days thereafter, and the
5 lessee has an interest of record in the real estate or is
6 in possession of the real estate; or
7 (b) the interest of the lessor is perfected by a
8 fixture filing before the interest of the encumbrancer or
9 owner is of record, the lessor's interest has priority
10 over any conflicting interest of a predecessor in title
11 of the encumbrancer or owner, and the lessee has an
12 interest of record in the real estate or is in possession
13 of the real estate.
14 (5) The interest of a lessor of fixtures, whether or not
15 perfected, has priority over the conflicting interest of an
16 encumbrancer or owner of the real estate if:
17 (a) the fixtures are readily removable factory or
18 office machines, readily removable equipment that is not
19 primarily used or leased for use in the operation of the
20 real estate, or readily removable replacements of
21 domestic appliances that are goods subject to a consumer
22 lease, and before the goods become fixtures the lease
23 contract is enforceable; or
24 (b) the conflicting interest is a lien on the real
25 estate obtained by legal or equitable proceedings after
26 the lease contract is enforceable; or
27 (c) the encumbrancer or owner has consented in
28 writing to the lease or has disclaimed an interest in the
29 goods as fixtures; or
30 (d) the lessee has a right to remove the goods as
31 against the encumbrancer or owner. If the lessee's right
32 to remove terminates, the priority of the interest of the
33 lessor continues for a reasonable time.
34 (6) Notwithstanding subsection (4)(a) but otherwise
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1 subject to subsections (4) and (5), the interest of a lessor
2 of fixtures, including the lessor's residual interest, is
3 subordinate to the conflicting interest of an encumbrancer of
4 the real estate under a construction mortgage recorded before
5 the goods become fixtures if the goods become fixtures before
6 the completion of the construction. To the extent given to
7 refinance a construction mortgage, the conflicting interest
8 of an encumbrancer of the real estate under a mortgage has
9 this priority to the same extent as the encumbrancer of the
10 real estate under the construction mortgage.
11 (7) In cases not within the preceding subsections,
12 priority between the interest of a lessor of fixtures,
13 including the lessor's residual interest, and the conflicting
14 interest of an encumbrancer or owner of the real estate who
15 is not the lessee is determined by the priority rules
16 governing conflicting interests in real estate.
17 (8) If the interest of a lessor of fixtures, including
18 the lessor's residual interest, has priority over all
19 conflicting interests of all owners and encumbrancers of the
20 real estate, the lessor or the lessee may (i) on default,
21 expiration, termination, or cancellation of the lease
22 agreement but subject to the lease agreement and this
23 Article, or (ii) if necessary to enforce other rights and
24 remedies of the lessor or lessee under this Article, remove
25 the goods from the real estate, free and clear of all
26 conflicting interests of all owners and encumbrancers of the
27 real estate, but the lessor or lessee must reimburse any
28 encumbrancer or owner of the real estate who is not the
29 lessee and who has not otherwise agreed for the cost of
30 repair of any physical injury, but not for any diminution in
31 value of the real estate caused by the absence of the goods
32 removed or by any necessity of replacing them. A person
33 entitled to reimbursement may refuse permission to remove
34 until the party seeking removal gives adequate security for
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1 the performance of this obligation.
2 (9) Even though the lease agreement does not create a
3 security interest, the interest of a lessor of fixtures,
4 including the lessor's residual interest, is perfected by
5 filing a financing statement as a fixture filing for leased
6 goods that are or are to become fixtures in accordance with
7 the relevant provisions of the Article on Secured
8 Transactions (Article 9).
9 (Source: P.A. 87-493.)
10 (810 ILCS 5/4-210) (from Ch. 26, par. 4-210)
11 Sec. 4-210. Security interest of collecting bank in
12 items, accompanying documents and proceeds.
13 (a) A collecting bank has a security interest in an item
14 and any accompanying documents or the proceeds of either:
15 (1) in case of an item deposited in an account, to
16 the extent to which credit given for the item has been
17 withdrawn or applied;
18 (2) in case of an item for which it has given
19 credit available for withdrawal as of right, to the
20 extent of the credit given, whether or not the credit is
21 drawn upon or there is a right of charge-back; or
22 (3) if it makes an advance on or against the item.
23 (b) If credit given for several items received at one
24 time or pursuant to a single agreement is withdrawn or
25 applied in part, the security interest remains upon all the
26 items, any accompanying documents or the proceeds of either.
27 For the purpose of this Section, credits first given are
28 first withdrawn.
29 (c) Receipt by a collecting bank of a final settlement
30 for an item is a realization on its security interest in the
31 item, accompanying documents, and proceeds. So long as the
32 bank does not receive final settlement for the item or give
33 up possession of the item or accompanying documents for
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1 purposes other than collection, the security interest
2 continues to that extent and is subject to Article 9, but:
3 (1) no security agreement is necessary to make the
4 security interest enforceable (Section 9-203(b)(3)(A))
5 9-203 (1)(a);
6 (2) no filing is required to perfect the security
7 interest; and
8 (3) the security interest has priority over
9 conflicting perfected security interests in the item,
10 accompanying documents, or proceeds.
11 (Source: P.A. 87-582; 87-1135.)
12 (810 ILCS 5/5-118 new)
13 Sec. 5-118. Security interest of issuer or nominated
14 person.
15 (a) An issuer or nominated person has a security
16 interest in a document presented under a letter of credit to
17 the extent that the issuer or nominated person honors or
18 gives value for the presentation.
19 (b) So long as and to the extent that an issuer or
20 nominated person has not been reimbursed or has not otherwise
21 recovered the value given with respect to a security interest
22 in a document under subsection (a), the security interest
23 continues and is subject to Article 9, but:
24 (1) a security agreement is not necessary to make
25 the security interest enforceable under Section
26 9-203(b)(3);
27 (2) if the document is presented in a medium other
28 than a written or other tangible medium, the security
29 interest is perfected; and
30 (3) if the document is presented in a written or
31 other tangible medium and is not a certificated security,
32 chattel paper, a document of title, an instrument, or a
33 letter of credit, the security interest is perfected and
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1 has priority over a conflicting security interest in the
2 document so long as the debtor does not have possession
3 of the document.
4 (810 ILCS 5/7-503) (from Ch. 26, par. 7-503)
5 Sec. 7-503. Document of title to goods defeated in
6 certain cases.
7 (1) A document of title confers no right in goods
8 against a person who before issuance of the document had a
9 legal interest or a perfected security interest in them and
10 who neither
11 (a) delivered or entrusted them or any document of
12 title covering them to the bailor or his nominee with actual
13 or apparent authority to ship, store, or sell with power to
14 obtain delivery under this Article (Section 7--403) or with
15 power of disposition under this Act (Sections 2--403 and
16 9-320 9--307) or other statute or rule of law; nor
17 (b) acquiesced in the procurement by the bailor or
18 his nominee of any document of title.
19 (2) Title to goods based upon an unaccepted delivery
20 order is subject to the rights of anyone to whom a negotiable
21 warehouse receipt or bill of lading covering the goods has
22 been duly negotiated. Such a title may be defeated under the
23 next section to the same extent as the right of the issuer or
24 a transferee from the issuer.
25 (3) Title to goods based upon a bill of lading issued to
26 a freight forwarder is subject to the rights of anyone to
27 whom a bill issued by the freight forwarder is duly
28 negotiated; but delivery by the carrier in accordance with
29 Part 4 of this Article pursuant to its own bill of lading
30 discharges the carrier's obligation to deliver.
31 (Source: Laws 1961, p. 2101.)
32 (810 ILCS 5/8-103) (from Ch. 26, par. 8-103)
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1 Sec. 8-103. Rules for determining whether certain
2 obligations and interests are securities or financial assets.
3 (a) A share or similar equity interest issued by a
4 corporation, business trust, joint stock company, or similar
5 entity is a security.
6 (b) An "investment company security" is a security.
7 "Investment company security" means a share or similar equity
8 interest issued by an entity that is registered as an
9 investment company under the federal investment company laws,
10 an interest in a unit investment trust that is so registered,
11 or a face-amount certificate issued by a face-amount
12 certificate company that is so registered. Investment
13 company security does not include an insurance policy or
14 endowment policy or annuity contract issued by an insurance
15 company.
16 (c) An interest in a partnership or limited liability
17 company is not a security unless it is dealt in or traded on
18 securities exchanges or in securities markets, its terms
19 expressly provide that it is a security governed by this
20 Article, or it is an investment company security. However,
21 an interest in a partnership or limited liability company is
22 a financial asset if it is held in a securities account.
23 (d) A writing that is a security certificate is governed
24 by this Article and not by Article 3, even though it also
25 meets the requirements of that Article. However, a
26 negotiable instrument governed by Article 3 is a financial
27 asset if it is held in a securities account.
28 (e) An option or similar obligation issued by a clearing
29 corporation to its participants is not a security, but is a
30 financial asset.
31 (f) A commodity contract, as defined in Section
32 9-102(a)(15) 9-115, is not a security or a financial asset.
33 (Source: P.A. 89-364, eff. 1-1-96.)
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1 (810 ILCS 5/8-106) (from Ch. 26, par. 8-106)
2 Sec. 8-106. Control.
3 (a) A purchaser has "control" of a certificated security
4 in bearer form if the certificated security is delivered to
5 the purchaser.
6 (b) A purchaser has "control" of a certificated security
7 in registered form if the certificated security is delivered
8 to the purchaser, and:
9 (1) the certificate is indorsed to the purchaser or
10 in blank by an effective indorsement; or
11 (2) the certificate is registered in the name of
12 the purchaser, upon original issue or registration of
13 transfer by the issuer.
14 (c) A purchaser has "control" of an uncertificated
15 security if:
16 (1) the uncertificated security is delivered to the
17 purchaser; or
18 (2) the issuer has agreed that it will comply with
19 instructions originated by the purchaser without further
20 consent by the registered owner.
21 (d) A purchaser has "control" of a security entitlement
22 if:
23 (1) the purchaser becomes the entitlement holder;
24 or
25 (2) the securities intermediary has agreed that it
26 will comply with entitlement orders originated by the
27 purchaser without further consent by the entitlement
28 holder; or
29 (3) another person has control of the security
30 entitlement on behalf of the purchaser or, having
31 previously acquired control of the security entitlement,
32 acknowledges that it has control on behalf of the
33 purchaser.
34 (e) If an interest in a security entitlement is granted
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1 by the entitlement holder to the entitlement holder's own
2 securities intermediary, the securities intermediary has
3 control.
4 (f) A purchaser who has satisfied the requirements of
5 subsection (c)(2) or (d)(2) has control, even if the
6 registered owner in the case of subsection (c)(2) or the
7 entitlement holder in the case of subsection (d)(2) retains
8 the right to make substitutions for the uncertificated
9 security or security entitlement, to originate instructions
10 or entitlement orders to the issuer or securities
11 intermediary, or otherwise to deal with the uncertificated
12 security or security entitlement.
13 (g) An issuer or a securities intermediary may not enter
14 into an agreement of the kind described in subsection (c)(2)
15 or (d)(2) without the consent of the registered owner or
16 entitlement holder, but an issuer or a securities
17 intermediary is not required to enter into such an agreement
18 even though the registered owner or entitlement holder so
19 directs. An issuer or securities intermediary that has
20 entered into such an agreement is not required to confirm the
21 existence of the agreement to another party unless requested
22 to do so by the registered owner or entitlement holder.
23 (Source: P.A. 89-364, eff. 1-1-96.)
24 (810 ILCS 5/8-110)
25 Sec. 8-110. Applicability; choice of law.
26 (a) The local law of the issuer's jurisdiction, as
27 specified in subsection (d), governs:
28 (1) the validity of a security;
29 (2) the rights and duties of the issuer with
30 respect to registration of transfer;
31 (3) the effectiveness of registration of transfer
32 by the issuer;
33 (4) whether the issuer owes any duties to an
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1 adverse claimant to a security; and
2 (5) whether an adverse claim can be asserted
3 against a person to whom transfer of a certificated or
4 uncertificated security is registered or a person who
5 obtains control of an uncertificated security.
6 (b) The local law of the securities intermediary's
7 jurisdiction, as specified in subsection (e), governs:
8 (1) acquisition of a security entitlement from the
9 securities intermediary;
10 (2) the rights and duties of the securities
11 intermediary and entitlement holder arising out of a
12 security entitlement;
13 (3) whether the securities intermediary owes any
14 duties to an adverse claimant to a security entitlement;
15 and
16 (4) whether an adverse claim can be asserted
17 against a person who acquires a security entitlement from
18 the securities intermediary or a person who purchases a
19 security entitlement or interest therein from an
20 entitlement holder.
21 (c) The local law of the jurisdiction in which a
22 security certificate is located at the time of delivery
23 governs whether an adverse claim can be asserted against a
24 person to whom the security certificate is delivered.
25 (d) "Issuer's jurisdiction" means the jurisdiction under
26 which the issuer of the security is organized or, if
27 permitted by the law of that jurisdiction, the law of another
28 jurisdiction specified by the issuer. An issuer organized
29 under the law of this State may specify the law of another
30 jurisdiction as the law governing the matters specified in
31 subsection (a)(2) through (5).
32 (e) The following rules determine a "securities
33 intermediary's jurisdiction" for purposes of this Section:
34 (1) If an agreement between the securities
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1 intermediary and its entitlement holder governing the
2 securities account expressly provides that a particular
3 jurisdiction is the securities intermediary's
4 jurisdiction for purposes of this Part, this Article, or
5 this Act specifies that it is governed by the law of a
6 particular jurisdiction, that jurisdiction is the
7 securities intermediary's jurisdiction.
8 (2) If paragraph (1) does not apply and an
9 agreement between the securities intermediary and its
10 entitlement holder governing the securities account
11 expressly provides that the agreement is governed by the
12 law of a particular jurisdiction, that jurisdiction is
13 the securities intermediary's jurisdiction.
14 (3) If neither paragraph (1) nor paragraph (2)
15 applies and an agreement between the securities
16 intermediary and its entitlement holder governing the
17 securities account does not specify the governing law as
18 provided in paragraph (1), but expressly provides
19 specifies that the securities account is maintained at an
20 office in a particular jurisdiction, that jurisdiction is
21 the securities intermediary's jurisdiction.
22 (4) (3) If none of the preceding paragraphs applies
23 an agreement between the securities intermediary and its
24 entitlement holder does not specify a jurisdiction as
25 provided in paragraph (1) or (2), the securities
26 intermediary's jurisdiction is the jurisdiction in which
27 is located the office identified in an account statement
28 as the office serving the entitlement holder's account is
29 located.
30 (5) (4) If none of the preceding paragraphs
31 applies, an agreement between the securities intermediary
32 and its entitlement holder does not specify a
33 jurisdiction as provided in paragraph (1) or (2) and an
34 account statement does not identify an office serving the
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1 entitlement holder's account as provided in paragraph
2 (3), the securities intermediary's jurisdiction is the
3 jurisdiction in which is located the chief executive
4 office of the securities intermediary is located.
5 (f) A securities intermediary's jurisdiction is not
6 determined by the physical location of certificates
7 representing financial assets, or by the jurisdiction in
8 which is organized the issuer of the financial asset with
9 respect to which an entitlement holder has a security
10 entitlement, or by the location of facilities for data
11 processing or other record keeping concerning the account.
12 (Source: P.A. 89-364, eff. 1-1-96.)
13 (810 ILCS 5/8-301) (from Ch. 26, par. 8-301)
14 Sec. 8-301. Delivery.
15 (a) Delivery of a certificated security to a purchaser
16 occurs when:
17 (1) the purchaser acquires possession of the
18 security certificate;
19 (2) another person, other than a securities
20 intermediary, either acquires possession of the security
21 certificate on behalf of the purchaser or, having
22 previously acquired possession of the certificate,
23 acknowledges that it holds for the purchaser; or
24 (3) a securities intermediary acting on behalf of
25 the purchaser acquires possession of the security
26 certificate, only if the certificate is in registered
27 form and is (i) registered in the name of the purchaser,
28 (ii) payable to the order of the purchaser, or (iii) has
29 been specially indorsed to the purchaser by an effective
30 indorsement and has not been indorsed to the securities
31 intermediary or in blank.
32 (b) Delivery of an uncertificated security to a
33 purchaser occurs when:
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1 (1) the issuer registers the purchaser as the
2 registered owner, upon original issue or registration of
3 transfer; or
4 (2) another person, other than a securities
5 intermediary, either becomes the registered owner of the
6 uncertificated security on behalf of the purchaser or,
7 having previously become the registered owner,
8 acknowledges that it holds for the purchaser.
9 (Source: P.A. 89-364, eff. 1-1-96.)
10 (810 ILCS 5/8-302) (from Ch. 26, par. 8-302)
11 Sec. 8-302. Rights of purchaser.
12 (a) Except as otherwise provided in subsections (b) and
13 (c), a purchaser upon delivery of a certificated or
14 uncertificated security to a purchaser, the purchaser
15 acquires all rights in the security that the transferor had
16 or had power to transfer.
17 (b) A purchaser of a limited interest acquires rights
18 only to the extent of the interest purchased.
19 (c) A purchaser of a certificated security who as a
20 previous holder had notice of an adverse claim does not
21 improve its position by taking from a protected purchaser.
22 (Source: P.A. 89-364, eff. 1-1-96.)
23 (810 ILCS 5/8-510)
24 Sec. 8-510. Rights of purchaser of security entitlement
25 from entitlement holder.
26 (a) In a case not covered by the priority rules in
27 Article 9 or the rules stated in subsection (c), an action
28 based on an adverse claim to a financial asset or security
29 entitlement, whether framed in conversion, replevin,
30 constructive trust, equitable lien, or other theory, may not
31 be asserted against a person who purchases a security
32 entitlement, or an interest therein, from an entitlement
-291- LRB9112852JSpc
1 holder if the purchaser gives value, does not have notice of
2 the adverse claim, and obtains control.
3 (b) If an adverse claim could not have been asserted
4 against an entitlement holder under Section 8-502, the
5 adverse claim cannot be asserted against a person who
6 purchases a security entitlement, or an interest therein,
7 from the entitlement holder.
8 (c) In a case not covered by the priority rules in
9 Article 9, a purchaser for value of a security entitlement,
10 or an interest therein, who obtains control has priority over
11 a purchaser of a security entitlement, or an interest
12 therein, who does not obtain control. Except as otherwise
13 provided in subsection (d), purchasers who have control rank
14 according to priority in time of:
15 (1) the purchaser's becoming the person for whom
16 the securities account, in which the security entitlement
17 is carried, is maintained, if the purchaser obtained
18 control under Section 8-106(d)(1);
19 (2) the securities intermediary's agreement to
20 comply with the purchaser's entitlement orders with
21 respect to security entitlements carried or to be
22 carried in the securities account in which the security
23 entitlement is carried, if the purchaser obtained control
24 under Section 8-106(d)(2); or
25 (3) if the purchaser obtained control through
26 another person under Section 8-106(d)(3), the time on
27 which priority would be based under this subsection if
28 the other person were the secured party.
29 (d) A equally, except that a securities intermediary as
30 purchaser has priority over a conflicting purchaser who has
31 control unless otherwise agreed by the securities
32 intermediary.
33 (Source: P.A. 89-364, eff. 1-1-96.)
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1 Section 15. The Local Records Act is amended by changing
2 Section 14 as follows:
3 (50 ILCS 205/14) (from Ch. 116, par. 43.114)
4 Sec. 14. Part 5 4 of Article 9 of the "Uniform Commercial
5 Code", approved July 31, 1961, as amended, is subject to the
6 provisions of this Act, as now or hereafter amended.
7 (Source: P.A. 76-1708.)
8 Section 20. The Counties Code is amended by changing
9 Section 3-5018 as follows:
10 (55 ILCS 5/3-5018) (from Ch. 34, par. 3-5018)
11 Sec. 3-5018. Fees. The recorder elected as provided for
12 in this Division shall receive such fees as are or may be
13 provided for him by law, in case of provision therefor:
14 otherwise he shall receive the same fees as are or may be
15 provided in this Section, except when increased by county
16 ordinance pursuant to the provisions of this Section, to be
17 paid to the county clerk for his services in the office of
18 recorder for like services. No filing fee shall be charged
19 for providing informational copies of financing statements to
20 the recorder pursuant to subsection (8) of Section 9-403 of
21 the Uniform Commercial Code.
22 For recording deeds or other instruments $12 for the
23 first 4 pages thereof, plus $1 for each additional page
24 thereof, plus $1 for each additional document number therein
25 noted. The aggregate minimum fee for recording any one
26 instrument shall not be less than $12.
27 For recording deeds or other instruments wherein the
28 premises affected thereby are referred to by document number
29 and not by legal description a fee of $1 in addition to that
30 hereinabove referred to for each document number therein
31 noted.
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1 For recording assignments of mortgages, leases or liens
2 $12 for the first 4 pages thereof, plus $1 for each
3 additional page thereof. However, except for leases and
4 liens pertaining to oil, gas and other minerals, whenever a
5 mortgage, lease or lien assignment assigns more than one
6 mortgage, lease or lien document, a $7 fee shall be charged
7 for the recording of each such mortgage, lease or lien
8 document after the first one.
9 For recording maps or plats of additions or subdivisions
10 approved by the county or municipality (including the
11 spreading of the same of record in map case or other proper
12 books) or plats of condominiums $50 for the first page, plus
13 $1 for each additional page thereof except that in the case
14 of recording a single page, legal size 8 1/2 x 14, plat of
15 survey in which there are no more than two lots or parcels of
16 land, the fee shall be $12. In each county where such maps
17 or plats are to be recorded, the recorder may require the
18 same to be accompanied by such number of exact, true and
19 legible copies thereof as the recorder deems necessary for
20 the efficient conduct and operation of his office.
21 For certified copies of records the same fees as for
22 recording, but in no case shall the fee for a certified copy
23 of a map or plat of an addition, subdivision or otherwise
24 exceed $10.
25 Each certificate of such recorder of the recording of the
26 deed or other writing and of the date of recording the same
27 signed by such recorder, shall be sufficient evidence of the
28 recording thereof, and such certificate including the
29 indexing of record, shall be furnished upon the payment of
30 the fee for recording the instrument, and no additional fee
31 shall be allowed for the certificate or indexing.
32 The recorder shall charge an additional fee, in an amount
33 equal to the fee otherwise provided by law, for recording a
34 document (other than a document filed under the Plat Act or
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1 the Uniform Commercial Code) that does not conform to the
2 following standards:
3 (1) The document shall consist of one or more
4 individual sheets measuring 8.5 inches by 11 inches, not
5 permanently bound and not a continuous form. Graphic
6 displays accompanying a document to be recorded that
7 measure up to 11 inches by 17 inches shall be recorded
8 without charging an additional fee.
9 (2) The document shall be legibly printed in black
10 ink, by hand, type, or computer. Signatures and dates
11 may be in contrasting colors if they will reproduce
12 clearly.
13 (3) The document shall be on white paper of not
14 less than 20-pound weight and shall have a clean margin
15 of at least one-half inch on the top, the bottom, and
16 each side. Margins may be used for non-essential
17 notations that will not affect the validity of the
18 document, including but not limited to form numbers, page
19 numbers, and customer notations.
20 (4) The first page of the document shall contain a
21 blank space, measuring at least 3 inches by 5 inches,
22 from the upper right corner.
23 (5) The document shall not have any attachment
24 stapled or otherwise affixed to any page.
25 A document that does not conform to these standards shall not
26 be recorded except upon payment of the additional fee
27 required under this paragraph. This paragraph, as amended by
28 this amendatory Act of 1995, applies only to documents dated
29 after the effective date of this amendatory Act of 1995.
30 The county board of any county may provide for an
31 additional charge of $3 for filing every instrument, paper,
32 or notice for record, in order to defray the cost of
33 converting the county recorder's document storage system to
34 computers or micrographics.
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1 A special fund shall be set up by the treasurer of the
2 county and such funds collected pursuant to Public Act
3 83-1321 shall be used solely for a document storage system to
4 provide the equipment, materials and necessary expenses
5 incurred to help defray the costs of implementing and
6 maintaining such a document records system.
7 The foregoing fees allowed by this Section are the
8 maximum fees that may be collected from any officer, agency,
9 department or other instrumentality of the State. The county
10 board may, however, by ordinance, increase the fees allowed
11 by this Section and collect such increased fees from all
12 persons and entities other than officers, agencies,
13 departments and other instrumentalities of the State if the
14 increase is justified by an acceptable cost study showing
15 that the fees allowed by this Section are not sufficient to
16 cover the cost of providing the service.
17 A statement of the costs of providing each service,
18 program and activity shall be prepared by the county board.
19 All supporting documents shall be public record and subject
20 to public examination and audit. All direct and indirect
21 costs, as defined in the United States Office of Management
22 and Budget Circular A-87, may be included in the
23 determination of the costs of each service, program and
24 activity.
25 (Source: P.A. 89-160, eff. 7-19-95; 90-300, eff. 1-1-98.)
26 Section 25. The Public Utilities Act is amended by
27 changing Section 18-107 as follows:
28 (220 ILCS 5/18-107)
29 Sec. 18-107. Security interests in intangible transition
30 property and grantee instruments.
31 (a) Notwithstanding any other provision of law, neither
32 intangible transition property, grantee instruments nor any
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1 right, title or interest therein, shall constitute property
2 in which a security interest may be created under the Uniform
3 Commercial Code nor shall any such rights be deemed proceeds
4 of any property which is not intangible transition property
5 or grantee instruments, as the case may be. For purposes of
6 the foregoing, the terms "account" and "general intangible"
7 (as defined under Section 9-102 9-106 of the Uniform
8 Commercial Code) and the term "instrument" (as defined under
9 Section 9-102 9-105 of the Uniform Commercial Code) shall, as
10 used in the Uniform Commercial Code, be deemed to exclude any
11 such intangible transition property, grantee instruments or
12 any right, title, or interest therein.
13 (b) The granting, perfection and enforcement of security
14 interests in intangible transition property or grantee
15 instruments are governed by this Section rather than by
16 Article 9 of the Uniform Commercial Code.
17 (c) A valid and enforceable security interest in
18 intangible transition property and in grantee instruments
19 shall attach and be perfected only by the means set forth
20 below in this subsection (c) of Section 18-107:
21 (1) To the extent transitional funding instruments
22 or grantee instruments are purported to be secured by
23 intangible transition property or to the extent
24 transitional funding instruments are purported to be
25 secured by grantee instruments, as the case may be, as
26 specified in the applicable transitional funding order,
27 the lien of the transitional funding instruments and
28 grantee instruments, if any, shall attach automatically
29 to such intangible transition property and grantee
30 instruments, if any, from the time of issuance of the
31 transitional funding instruments and grantee instruments,
32 if any. Such lien shall be a valid and enforceable
33 security interest in the intangible transition property
34 or the grantee instruments, as the case may be, securing
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1 the transitional funding instruments and grantee
2 instruments, if any, and shall be continuously perfected
3 if, before the date of issuance of the applicable
4 transitional funding instruments or grantee instruments,
5 if any, or within no more than 10 days thereafter, a
6 filing has been made by or on behalf of the holder with
7 the Chief Clerk of the Commission stating that such
8 transitional funding instruments or grantee instruments,
9 if any, have been issued. Any such filing made with the
10 Commission in respect to such transitional funding
11 instruments or grantee instruments shall take precedence
12 over any subsequent filing except as may otherwise be
13 provided in the applicable transitional funding order.
14 (2) The liens under subparagraph (1) are
15 enforceable against the electric utility, any assignee,
16 grantee or issuer, and all third parties, including
17 judicial lien creditors, subject only to the rights of
18 any third parties holding security interests in the
19 intangible transition property or grantee instruments
20 previously perfected in the manner described in this
21 subsection if value has been given by the purchasers of
22 transitional funding instruments or grantee instruments.
23 A perfected lien in intangible transition property and
24 grantee instruments, if any, is a continuously perfected
25 security interest in all then existing or thereafter
26 arising revenues and proceeds arising with respect to the
27 associated intangible transition property or grantee
28 instruments, as the case may be, whether or not the
29 electric power and energy included in the calculation of
30 such revenues and proceeds have been provided. The lien
31 created under this subsection is perfected and ranks
32 prior to any other lien, including any judicial lien,
33 which subsequently attaches to the intangible transition
34 property or grantee instruments, as the case may be, and
-298- LRB9112852JSpc
1 to any other rights created by the transitional funding
2 order or any revenues or proceeds of the foregoing. The
3 relative priority of a lien created under this subsection
4 is not defeated or adversely affected by changes to the
5 transitional funding order or to the instrument funding
6 charges payable by any retail customer, class of retail
7 customers or other person or group of persons obligated
8 to pay such charges.
9 (3) The relative priority of a lien created under
10 this subsection is not defeated or adversely affected by
11 the commingling of revenues arising with respect to
12 intangible transition property or grantee instruments
13 with funds of the electric utility or other funds of the
14 assignee, issuer or grantee.
15 (4) If an event of default occurs under
16 transitional funding instruments or grantee instruments,
17 the holders thereof or their authorized representatives,
18 as secured parties, may foreclose or otherwise enforce
19 the lien in the grantee instruments or in the intangible
20 transition property securing the transitional funding
21 instruments or grantee instruments, as applicable,
22 subject to the rights of any third parties holding prior
23 security interests in the intangible transition property
24 or grantee instruments previously perfected in the manner
25 provided in this subsection. Upon application by the
26 holders or their authorized representatives, without
27 limiting their other remedies, the Commission shall order
28 the sequestration and payment to the holders or their
29 authorized representatives of revenues arising with
30 respect to the intangible transition property or grantee
31 instruments pledged to the holders. An order under this
32 subsection shall remain in full force and effect
33 notwithstanding any bankruptcy, reorganization, or other
34 insolvency proceedings with respect to the electric
-299- LRB9112852JSpc
1 utility, grantee, assignee or issuer.
2 (5) The Commission shall maintain segregated
3 records which reflect the date and time of receipt of all
4 filings made under this subsection. The Commission may
5 provide that transfers of intangible transition property
6 or of grantee instruments be filed in accordance with the
7 same system.
8 (Source: P.A. 90-561, eff. 12-16-97.)
9 Section 30. The Illinois Vehicle Code is amended by
10 changing Sections 3-114 and 3-202 as follows:
11 (625 ILCS 5/3-114) (from Ch. 95 1/2, par. 3-114)
12 Sec. 3-114. Transfer by operation of law.
13 (a) If the interest of an owner in a vehicle passes to
14 another other than by voluntary transfer, the transferee
15 shall, except as provided in paragraph (b), promptly mail or
16 deliver within 20 days to the Secretary of State the last
17 certificate of title, if available, proof of the transfer,
18 and his application for a new certificate in the form the
19 Secretary of State prescribes. It shall be unlawful for any
20 person having possession of a certificate of title for a
21 motor vehicle, semi-trailer, or house car by reason of his
22 having a lien or encumbrance on such vehicle, to fail or
23 refuse to deliver such certificate to the owner, upon the
24 satisfaction or discharge of the lien or encumbrance,
25 indicated upon such certificate of title.
26 (b) If the interest of an owner in a vehicle passes to
27 another under the provisions of the Small Estates provisions
28 of the Probate Act of 1975 the transferee shall promptly mail
29 or deliver to the Secretary of State, within 120 days, the
30 last certificate of title, if available, the documentation
31 required under the provisions of the Probate Act of 1975, and
32 an application for certificate of title. The Small Estate
-300- LRB9112852JSpc
1 Affidavit form shall be furnished by the Secretary of State.
2 The transfer may be to the transferee or to the nominee of
3 the transferee.
4 (c) If the interest of an owner in a vehicle passes to
5 another under other provisions of the Probate Act of 1975, as
6 amended, and the transfer is made by a representative or
7 guardian, such transferee shall promptly mail or deliver to
8 the Secretary of State, the last certificate of title, if
9 available, and a certified copy of the letters of office or
10 guardianship, and an application for certificate of title.
11 Such application shall be made before the estate is closed.
12 The transfer may be to the transferee or to the nominee of
13 the transferee.
14 (d) If the interest of an owner in joint tenancy passes
15 to the other joint tenant with survivorship rights as
16 provided by law, the transferee shall promptly mail or
17 deliver to the Secretary of State, the last certificate of
18 title, if available, proof of death of the one joint tenant
19 and survivorship of the surviving joint tenant, and an
20 application for certificate of title. Such application shall
21 be made within 120 days after the death of the joint tenant.
22 The transfer may be to the transferee or to the nominee of
23 the transferee.
24 (e) The Secretary of State shall transfer a decedent's
25 vehicle title to any legatee, representative or heir of the
26 decedent who submits to the Secretary a death certificate and
27 an affidavit by an attorney at law on the letterhead
28 stationery of the attorney at law stating the facts of the
29 transfer.
30 (f) Repossession with assignment of title. In all cases
31 wherein a lienholder has repossessed a vehicle by other than
32 judicial process and holds it for resale under a security
33 agreement, and the owner of record has executed an assignment
34 of the existing certificate of title after default, the
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1 lienholder may proceed to sell or otherwise dispose of the
2 vehicle as authorized under the Uniform Commercial Code.
3 Upon selling the vehicle to another person, the lienholder
4 need not send the certificate of title to the Secretary of
5 State, but shall promptly and within 20 days mail or deliver
6 to the purchaser as transferee the existing certificate of
7 title for the repossessed vehicle, reflecting the release of
8 the lienholder's security interest in the vehicle. The
9 application for a certificate of title made by the purchaser
10 shall comply with subsection (a) of Section 3-104 and be
11 accompanied by the existing certificate of title for the
12 repossessed vehicle. The lienholder shall execute the
13 assignment and warranty of title showing the name and address
14 of the purchaser in the spaces provided therefor on the
15 certificate of title or as the Secretary of State prescribes.
16 The lienholder shall complete the assignment of title in the
17 certificate of title to reflect the transfer of the vehicle
18 to the lienholder and also a reassignment to reflect the
19 transfer from the lienholder to the purchaser. For this
20 purpose, the lienholder is specifically authorized to
21 complete and execute the space reserved in the certificate of
22 title for a dealer reassignment, notwithstanding that the
23 lienholder is not a licensed dealer. Nothing herein shall be
24 construed to mean that the lienholder is taking title to the
25 repossessed vehicle for purposes of liability for retailer
26 occupation, vehicle use, or other tax with respect to the
27 proceeds from the repossession sale. Delivery of the
28 existing certificate of title to the purchaser shall be
29 deemed disclosure to the purchaser of the owner of the
30 vehicle.
31 (f-5) Repossession without assignment of title. In all
32 cases wherein a lienholder has repossessed a vehicle by other
33 than judicial process and holds it for resale under a
34 security agreement, and the owner of record has not executed
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1 an assignment of the existing certificate of title, the
2 lienholder shall comply with the following provisions:
3 (1) Prior to sale, the lienholder shall deliver or
4 mail to the owner at the owner's last known address and
5 to any other lienholder of record, a notice of redemption
6 setting forth the following information: (i) the name of
7 the owner of record and in bold type at or near the top
8 of the notice a statement that the owner's vehicle was
9 repossessed on a specified date for failure to make
10 payments on the loan (or other reason), (ii) a
11 description of the vehicle subject to the lien sufficient
12 to identify it, (iii) the right of the owner to redeem
13 the vehicle, (iv) the lienholder's intent to sell or
14 otherwise dispose of the vehicle after the expiration of
15 21 days from the date of mailing or delivery of the
16 notice, and (v) the name, address, and telephone number
17 of the lienholder from whom information may be obtained
18 concerning the amount due to redeem the vehicle and from
19 whom the vehicle may be redeemed under Section 9-623
20 9-506 of the Uniform Commercial Code. At the
21 lienholder's option, the information required to be set
22 forth in this notice of redemption may be made a part of
23 or accompany the notification of sale or other
24 disposition required under subsection (3) of Section
25 9-611(b) 9-504 of the Uniform Commercial Code, but none
26 of the information required by this notice shall be
27 construed to impose any requirement under Article 9 of
28 the Uniform Commercial Code.
29 (2) With respect to the repossession of a vehicle
30 used primarily for personal, family, or household
31 purposes, the lienholder shall also deliver or mail to
32 the owner at the owner's last known address an affidavit
33 of defense. The affidavit of defense shall accompany the
34 notice of redemption required in subdivision (f-5)(1) of
-303- LRB9112852JSpc
1 this Section. The affidavit of defense shall (i) identify
2 the lienholder, owner, and the vehicle; (ii) provide
3 space for the owner to state the defense claimed by the
4 owner; and (iii) include an acknowledgment by the owner
5 that the owner may be liable to the lienholder for fees,
6 charges, and costs incurred by the lienholder in
7 establishing the insufficiency or invalidity of the
8 owner's defense. To stop the transfer of title, the
9 affidavit of defense must be received by the lienholder
10 no later than 21 days after the date of mailing or
11 delivery of the notice required in subdivision (f-5)(1)
12 of this Section. If the lienholder receives the affidavit
13 from the owner in a timely manner, the lienholder must
14 apply to a court of competent jurisdiction to determine
15 if the lienholder is entitled to possession of the
16 vehicle.
17 (3) Upon selling the vehicle to another person, the
18 lienholder need not send the certificate of title to the
19 Secretary of State, but shall promptly and within 20 days
20 mail or deliver to the purchaser as transferee (i) the
21 existing certificate of title for the repossessed
22 vehicle, reflecting the release of the lienholder's
23 security interest in the vehicle; and (ii) an affidavit
24 of repossession made by or on behalf of the lienholder
25 which provides the following information: that the
26 vehicle was repossessed, a description of the vehicle
27 sufficient to identify it, whether the vehicle has been
28 damaged in excess of 33 1/3% of its fair market value as
29 required under subdivision (b)(3) of Section 3-117.1,
30 that the owner and any other lienholder of record were
31 given the notice required in subdivision (f-5)(1) of this
32 Section, that the owner of record was given the affidavit
33 of defense required in subdivision (f-5)(2) of this
34 Section, that the interest of the owner was lawfully
-304- LRB9112852JSpc
1 terminated or sold pursuant to the terms of the security
2 agreement, and the purchaser's name and address. If the
3 vehicle is damaged in excess of 33 1/3% of its fair
4 market value, the lienholder shall make application for a
5 salvage certificate under Section 3-117.1 and transfer
6 the vehicle to a person eligible to receive assignments
7 of salvage certificates identified in Section 3-118.
8 (4) The application for a certificate of title made
9 by the purchaser shall comply with subsection (a) of
10 Section 3-104 and be accompanied by the affidavit of
11 repossession furnished by the lienholder and the existing
12 certificate of title for the repossessed vehicle. The
13 lienholder shall execute the assignment and warranty of
14 title showing the name and address of the purchaser in
15 the spaces provided therefor on the certificate of title
16 or as the Secretary of State prescribes. The lienholder
17 shall complete the assignment of title in the certificate
18 of title to reflect the transfer of the vehicle to the
19 lienholder and also a reassignment to reflect the
20 transfer from the lienholder to the purchaser. For this
21 purpose, the lienholder is specifically authorized to
22 execute the assignment on behalf of the owner as seller
23 if the owner has not done so and to complete and execute
24 the space reserved in the certificate of title for a
25 dealer reassignment, notwithstanding that the lienholder
26 is not a licensed dealer. Nothing herein shall be
27 construed to mean that the lienholder is taking title to
28 the repossessed vehicle for purposes of liability for
29 retailer occupation, vehicle use, or other tax with
30 respect to the proceeds from the repossession sale.
31 Delivery of the existing certificate of title to the
32 purchaser shall be deemed disclosure to the purchaser of
33 the owner of the vehicle. In the event the lienholder
34 does not hold the certificate of title for the
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1 repossessed vehicle, the lienholder shall make
2 application for and may obtain a new certificate of title
3 in the name of the lienholder upon furnishing information
4 satisfactory to the Secretary of State. Upon receiving
5 the new certificate of title, the lienholder may proceed
6 with the sale described in subdivision (f-5)(3), except
7 that upon selling the vehicle the lienholder shall
8 promptly and within 20 days mail or deliver to the
9 purchaser the new certificate of title reflecting the
10 assignment and transfer of title to the purchaser.
11 (5) Neither the lienholder nor the owner shall file
12 with the Office of the Secretary of State the notice of
13 redemption or affidavit of defense described in
14 subdivisions (f-5)(1) and (f-5)(2) of this Section. The
15 Office of the Secretary of State shall not determine the
16 merits of an owner's affidavit of defense, nor consider
17 any allegations or assertions regarding the validity or
18 invalidity of a lienholder's claim to the vehicle or an
19 owner's asserted defenses to the repossession action.
20 (f-7) Notice of reinstatement in certain cases.
21 (1) If, at the time of repossession by a lienholder
22 that is seeking to transfer title pursuant to subsection
23 (f-5), the owner has paid an amount equal to 30% or more
24 of the deferred payment price or total of payments due,
25 the owner may, within 21 days of the date of
26 repossession, reinstate the contract or loan agreement
27 and recover the vehicle from the lienholder by tendering
28 in a lump sum (i) the total of all unpaid amounts,
29 including any unpaid delinquency or deferral charges due
30 at the date of reinstatement, without acceleration; and
31 (ii) performance necessary to cure any default other than
32 nonpayment of the amounts due; and (iii) all reasonable
33 costs and fees incurred by the lienholder in retaking,
34 holding, and preparing the vehicle for disposition and in
-306- LRB9112852JSpc
1 arranging for the sale of the vehicle. Reasonable costs
2 and fees incurred by the lienholder include without
3 limitation repossession and storage expenses and, if
4 authorized by the contract or loan agreement, reasonable
5 attorneys' fees and collection agency charges.
6 (2) Tender of payment and performance pursuant to
7 this limited right of reinstatement restores to the owner
8 his rights under the contract or loan agreement as though
9 no default had occurred. The owner has the right to
10 reinstate the contract or loan agreement and recover the
11 vehicle from the lienholder only once under this
12 subsection. The lienholder may, in the lienholder's sole
13 discretion, extend the period during which the owner may
14 reinstate the contract or loan agreement and recover the
15 vehicle beyond the 21 days allowed under this subsection,
16 and the extension shall not subject the lienholder to
17 liability to the owner under the laws of this State.
18 (3) The lienholder shall deliver or mail written
19 notice to the owner at the owner's last known address,
20 within 3 business days of the date of repossession, of
21 the owner's right to reinstate the contract or loan
22 agreement and recover the vehicle pursuant to the limited
23 right of reinstatement described in this subsection. At
24 the lienholder's option, the information required to be
25 set forth in this notice of reinstatement may be made
26 part of or accompany the notice of redemption required in
27 subdivision (f-5)(1) of this Section and the notification
28 of sale or other disposition required under subsection
29 (3) of Section 9-611(b) 9-504 of the Uniform Commercial
30 Code, but none of the information required by this notice
31 of reinstatement shall be construed to impose any
32 requirement under Article 9 of the Uniform Commercial
33 Code.
34 (4) The reinstatement period, if applicable, and
-307- LRB9112852JSpc
1 the redemption period described in subdivision (f-5)(1)
2 of this Section, shall run concurrently if the
3 information required to be set forth in the notice of
4 reinstatement is part of or accompanies the notice of
5 redemption. In any event, the 21 day redemption period
6 described in subdivision (f-5)(1) of this Section shall
7 commence on the date of mailing or delivery to the owner
8 of the information required to be set forth in the notice
9 of redemption, and the 21 day reinstatement period
10 described in this subdivision, if applicable, shall
11 commence on the date of mailing or delivery to the owner
12 of the information required to be set forth in the notice
13 of reinstatement.
14 (5) The Office of the Secretary of State shall not
15 determine the merits of an owner's claim of right to
16 reinstatement, nor consider any allegations or assertions
17 regarding the validity or invalidity of a lienholder's
18 claim to the vehicle or an owner's asserted right to
19 reinstatement. Where a lienholder is subject to
20 licensing and regulatory supervision by the State of
21 Illinois, the lienholder shall be subject to all of the
22 powers and authority of the lienholder's primary State
23 regulator to enforce compliance with the procedures set
24 forth in this subsection (f-7).
25 (f-10) Repossession by judicial process. In all cases
26 wherein a lienholder has repossessed a vehicle by judicial
27 process and holds it for resale under a security agreement,
28 order for replevin, or other court order establishing the
29 lienholder's right to possession of the vehicle, the
30 lienholder may proceed to sell or otherwise dispose of the
31 vehicle as authorized under the Uniform Commercial Code or
32 the court order. Upon selling the vehicle to another person,
33 the lienholder need not send the certificate of title to the
34 Secretary of State, but shall promptly and within 20 days
-308- LRB9112852JSpc
1 mail or deliver to the purchaser as transferee (i) the
2 existing certificate of title for the repossessed vehicle
3 reflecting the release of the lienholder's security interest
4 in the vehicle; (ii) a certified copy of the court order; and
5 (iii) a bill of sale identifying the new owner's name and
6 address and the year, make, model, and vehicle identification
7 number of the vehicle. The application for a certificate of
8 title made by the purchaser shall comply with subsection (a)
9 of Section 3-104 and be accompanied by the certified copy of
10 the court order furnished by the lienholder and the existing
11 certificate of title for the repossessed vehicle. The
12 lienholder shall execute the assignment and warranty of title
13 showing the name and address of the purchaser in the spaces
14 provided therefor on the certificate of title or as the
15 Secretary of State prescribes. The lienholder shall complete
16 the assignment of title in the certificate of title to
17 reflect the transfer of the vehicle to the lienholder and
18 also a reassignment to reflect the transfer from the
19 lienholder to the purchaser. For this purpose, the
20 lienholder is specifically authorized to execute the
21 assignment on behalf of the owner as seller if the owner has
22 not done so and to complete and execute the space reserved in
23 the certificate of title for a dealer reassignment,
24 notwithstanding that the lienholder is not a licensed dealer.
25 Nothing herein shall be construed to mean that the lienholder
26 is taking title to the repossessed vehicle for purposes of
27 liability for retailer occupation, vehicle use, or other tax
28 with respect to the proceeds from the repossession sale.
29 Delivery of the existing certificate of title to the
30 purchaser shall be deemed disclosure to the purchaser of the
31 owner of the vehicle. In the event the lienholder does not
32 hold the certificate of title for the repossessed vehicle,
33 the lienholder shall make application for and may obtain a
34 new certificate of title in the name of the lienholder upon
-309- LRB9112852JSpc
1 furnishing information satisfactory to the Secretary of
2 State. Upon receiving the new certificate of title, the
3 lienholder may proceed with the sale described in this
4 subsection, except that upon selling the vehicle the
5 lienholder shall promptly and within 20 days mail or deliver
6 to the purchaser the new certificate of title reflecting the
7 assignment and transfer of title to the purchaser.
8 (f-15) The Secretary of State shall not issue a
9 certificate of title to a purchaser under subsection (f),
10 (f-5), or (f-10) of this Section, unless the person from whom
11 the vehicle has been repossessed by the lienholder is shown
12 to be the last registered owner of the motor vehicle. The
13 Secretary of State may provide by rule for the standards to
14 be followed by a lienholder in assigning and transferring
15 certificates of title with respect to repossessed vehicles.
16 (f-20) If applying for a salvage certificate or a
17 junking certificate, the lienholder shall within 20 days make
18 an application to the Secretary of State for a salvage
19 certificate or a junking certificate, as set forth in this
20 Code. The Secretary of State shall not issue a salvage
21 certificate or a junking certificate to such lienholder
22 unless the person from whom such vehicle has been repossessed
23 is shown to be the last registered owner of such motor
24 vehicle and such lienholder establishes to the satisfaction
25 of the Secretary of State that he is entitled to such salvage
26 certificate or junking certificate. The Secretary of State
27 may provide by rule for the standards to be followed by a
28 lienholder in order to obtain a salvage certificate or
29 junking certificate for a repossessed vehicle.
30 (g) A person holding a certificate of title whose
31 interest in the vehicle has been extinguished or transferred
32 other than by voluntary transfer shall mail or deliver the
33 certificate, within 20 days upon request of the Secretary of
34 State. The delivery of the certificate pursuant to the
-310- LRB9112852JSpc
1 request of the Secretary of State does not affect the rights
2 of the person surrendering the certificate, and the action of
3 the Secretary of State in issuing a new certificate of title
4 as provided herein is not conclusive upon the rights of an
5 owner or lienholder named in the old certificate.
6 (h) The Secretary of State may decline to process any
7 application for a transfer of an interest in a vehicle
8 hereunder if any fees or taxes due under this Act from the
9 transferor or the transferee have not been paid upon
10 reasonable notice and demand.
11 (i) The Secretary of State shall not be held civilly or
12 criminally liable to any person because any purported
13 transferor may not have had the power or authority to make a
14 transfer of any interest in any vehicle or because a
15 certificate of title issued in error is subsequently used to
16 commit a fraudulent act.
17 (Source: P.A. 90-212, eff. 1-1-98; 90-665, eff. 1-1-99.)
18 (625 ILCS 5/3-202) (from Ch. 95 1/2, par. 3-202)
19 Sec. 3-202. Perfection of security interest. (a) Unless
20 excepted by Section 3-201, a security interest in a vehicle
21 of a type for which a certificate of title is required is not
22 valid against subsequent transferees or lienholders of the
23 vehicle unless perfected as provided in this Act.
24 (b) A security interest is perfected by the delivery to
25 the Secretary of State of the existing certificate of title,
26 if any, an application for a certificate of title containing
27 the name and address of the lienholder and the required fee.
28 The security interest It is perfected as of the time of its
29 creation if the delivery to the Secretary of State is
30 completed within 21 days after the creation of the security
31 interest or receipt by the new lien holder of the existing
32 certificate of title from a prior lien holder or licensed
33 dealer thereafter, otherwise as of the time of the delivery.
-311- LRB9112852JSpc
1 (c) If a vehicle is subject to a security interest when
2 brought into this State, the validity of the security
3 interest is determined by the law of the jurisdiction where
4 the vehicle was when the security interest attached, subject
5 to the following:
6 1. If the parties understood at the time the security
7 interest attached that the vehicle would be kept in this
8 State and it was brought into this State within 30 days
9 thereafter for purposes other than transportation through
10 this State, the validity of the security interest in this
11 State is determined by the law of this State.
12 2. If the security interest was perfected under the law
13 of the jurisdiction where the vehicle was when the security
14 interest attached, the following rules apply:
15 (A) If the name of the lienholder is shown on an
16 existing certificate of title issued by that jurisdiction,
17 his security interest continues perfected in this State.
18 (B) If the name of the lienholder is not shown on an
19 existing certificate of title issued by that jurisdiction, a
20 security interest may be perfected by the lienholder
21 delivering to the Secretary of State the prescribed notice
22 and by payment of the required fee. Such security interest is
23 perfected as of the time of delivery of the prescribed notice
24 and payment of the required fee.
25 3. If the security interest was not perfected under the
26 law of the jurisdiction where the vehicle was when the
27 security interest attached, it may be perfected in this
28 State; in that case perfection dates from the time of
29 perfection in this State.
30 4. A security interest may be perfected under paragraph
31 3 of this subsection either as provided in subsection (b) or
32 by the lienholder delivering to the Secretary of State a
33 notice of security interest in the form the Secretary of
34 State prescribes and the required fee.
-312- LRB9112852JSpc
1 (Source: P.A. 81-557.)
2 Section 35. The Uniform Federal Lien Registration Act is
3 amended by changing Section 4 as follows:
4 (770 ILCS 110/4) (from Ch. 82, par. 404)
5 Sec. 4. (a) If a notice of federal lien, a refiling of a
6 notice of federal lien or a notice of revocation of any
7 certificate described in subsection (b) is presented to a
8 filing officer who is:
9 (1) the Secretary of State, he shall cause the notice to
10 be marked, held and indexed in accordance with the provisions
11 of Section 9-519 9-403(4) of the Uniform Commercial Code as
12 if the notice were a financing statement within the meaning
13 of that Code; or
14 (2) any other officer described in Section 2, he shall
15 endorse thereon his identification and the date and time of
16 receipt and forthwith file it alphabetically or enter it in
17 an alphabetical index showing the name and address of the
18 person named in the notice, the date and time of receipt, the
19 title and address of the official or entity certifying the
20 lien, the total amount appearing on the notice of lien, and
21 in the case of federal tax liens, the collector's serial
22 number of the notice.
23 (b) If a certificate of release, nonattachment,
24 discharge or subordination of any lien is presented to the
25 Secretary of State for filing he shall:
26 (1) cause a certificate of release or nonattachment to
27 be marked, held and indexed as if the certificate were a
28 termination statement within the meaning of the Uniform
29 Commercial Code, but the notice of lien to which the
30 certificate relates may not be removed from the files; and
31 (2) cause a certificate of discharge or subordination to
32 be marked, held and indexed as if the certificate were a
-313- LRB9112852JSpc
1 release of collateral within the meaning of the Uniform
2 Commercial Code.
3 (c) If a refiled notice of federal lien referred to in
4 subsection (a) or any of the certificates or notices referred
5 to in subsection (b) is presented for filing to any other
6 filing officer specified in Section 2, he shall permanently
7 attach the refiled notice or the certificate to the original
8 notice of lien and enter the refiled notice or the
9 certificate with the date of filing in any alphabetical lien
10 index on the line where the original notice of lien is
11 entered.
12 (d) Upon request of any person, the filing officer shall
13 issue his certificate showing whether there is on file, on
14 the date and hour stated therein, any notice of lien or
15 certificate or notice affecting any lien filed under this Act
16 or "An Act in relation to liens of the United States of
17 America", approved June 27, 1923, as amended, naming a
18 particular person, and if a notice or certificate is on file,
19 giving the date and hour of filing of each notice or
20 certificate. The fee for a certificate is $5. Upon request,
21 the filing officer shall furnish a copy of any notice of
22 federal lien, or notice or certificate affecting a federal
23 lien, for a fee of 50¢ per page.
24 (Source: P.A. 86-254.)
25 Section 37. The Uniform Commercial Code is amended by
26 adding Section 9-404.5 as follows:
27 (810 ILCS 5/9-404.5 new)
28 Sec. 9-404.5 Termination statement; duties of filing
29 officer.
30 (1) If a financing statement covering consumer goods is
31 filed on or after July 1, 1973, then within one month or
32 within 10 days following written demand by the debtor after
-314- LRB9112852JSpc
1 there is no outstanding secured obligation and no commitment
2 to make advances, incur obligations or otherwise give value,
3 the secured party must file with each filing officer with
4 whom the financing statement was filed, a termination
5 statement to the effect that he no longer claims a security
6 interest under the financing statement, which shall be
7 identified by file number. In other cases whenever there is
8 no outstanding secured obligation and no commitment to make
9 advances, incur obligations or otherwise give value, the
10 secured party must on written demand by the debtor send the
11 debtor, for each filing officer with whom the financing
12 statement was filed, a termination statement to the effect
13 that he no longer claims a security interest under the
14 financing statement, which shall be identified by file
15 number. A termination statement signed by a person other than
16 the secured party of record must be accompanied by a separate
17 written statement of assignment signed by the secured party
18 of record. If the affected secured party fails to file such
19 a termination statement as required by this subsection, or to
20 send such a termination statement within 10 days after proper
21 demand therefor, he shall be liable to the debtor for $100
22 and in addition for any loss caused to the debtor by such
23 failure.
24 (2) On presentation to the filing officer of such a
25 termination statement he must note it in the index. If he has
26 received the termination statement in duplicate, he shall
27 return one copy of the termination statement to the secured
28 party stamped to show the time of receipt thereof. If the
29 filing officer has a microfilm or other photographic record
30 of the financing statement, and of any related continuation
31 statement, statement of assignment and statement of release,
32 he may remove the originals from the files at any time after
33 receipt of the termination statement, or if he has no such
34 record, he may remove them from the files at any time after
-315- LRB9112852JSpc
1 one year after receipt of the termination statement.
2 (3) If the termination statement is in the standard form
3 prescribed by the Secretary of State, the uniform fee for
4 filing and indexing the termination statement in the office
5 of a county recorder shall be $5 and otherwise shall be $10,
6 plus in each case an additional fee of $5 for each name more
7 than one at each address listed against which the termination
8 statement is required to be indexed.
9 Section 40. The Toxic Substances Disclosure to Employees
10 Act is amended by changing Section 6 as follows:
11 (820 ILCS 255/6) (from Ch. 48, par. 1406)
12 Sec. 6. Exemptions. This Act shall not apply to:
13 (a) Use of toxic substances, compounds or mixtures
14 regulated by this Act which are:
15 (1) Intended for personal consumption by employees in
16 the workplace.
17 (2) Consumer goods used, stored or sold by an employer,
18 manufacturer, importer, retailer or supplier in the same
19 form, approximate amount, concentration and manner as they
20 are sold to consumers, provided that employee exposure to
21 such consumer goods is not significantly greater than
22 consumer exposure occurring during the principal consumer
23 uses of the consumer goods. For purposes of this Act,
24 "consumer goods" shall be defined as in Section 9-102 9-109.1
25 of the Uniform Commercial Code.
26 (3) Present in a concentration of less than 1%. In the
27 cases of carcinogens, mutagens or teratogens, only those
28 substances shall be exempt which are present in a
29 concentration of 0.1% or less. No substance shall be exempt
30 under this paragraph which is present in concentrations
31 exceeding threshold concentrations established by regulation
32 of the Department.
-316- LRB9112852JSpc
1 (b) Laboratories in which a toxic substance, compound or
2 mixture regulated by this Act is used by or under the direct
3 supervision of a technically qualified individual, provided
4 that the toxic substance or mixture is not produced in the
5 laboratories for commercial sale. The Department shall
6 promulgate rules prescribing the standards used in
7 determining whether a laboratory is under the direct
8 supervision of a technically qualified individual.
9 (c) All retail trade establishments as listed in the
10 "Standard Industrial Classification Manual" Division G,
11 Retail Trade, published by the U.S. Government Printing
12 Office, except the Act shall apply to those retail trade
13 establishments listed within Major Groups: 52 - Building
14 Materials, Hardware, Garden Supply, and Mobile Home Dealers;
15 and 55 - Automotive Dealers and Gasoline Service Stations,
16 except for those activities involving the retail sales of
17 gasoline motor fuels or lubricants, or if the retail trade
18 establishments are engaged in any of the following specific
19 activities, this Act shall apply only to the retail trade
20 establishments' involvement in such specific activities:
21 paint mixing, other than the tinting of consumer sized
22 containers of paint; finishing or refinishing operations
23 using paint or paint related products; automobile battery
24 servicing, photo finishing operations; and dry cleaning
25 operations.
26 (Source: P.A. 85-506.)
27 Section 99. Effective date. This Act takes effect on
28 July 1, 2001, except that this Section and Sections 30 and 37
29 take effect upon becoming law.
-317- LRB9112852JSpc
1 INDEX
2 Statutes amended in order of appearance
3 810 ILCS 5/Art. 9 heading
4 810 ILCS 5/Art. 9, Part 1 heading
5 810 ILCS 5/Art. 9, Part 1, Subpart 1 heading new
6 810 ILCS 5/9-101 from Ch. 26, par. 9-101
7 810 ILCS 5/9-102 from Ch. 26, par. 9-102
8 810 ILCS 5/9-103 from Ch. 26, par. 9-103
9 810 ILCS 5/9-104 from Ch. 26, par. 9-104
10 810 ILCS 5/9-105 from Ch. 26, par. 9-105
11 810 ILCS 5/9-106 from Ch. 26, par. 9-106
12 810 ILCS 5/9-107 from Ch. 26, par. 9-107
13 810 ILCS 5/9-108 from Ch. 26, par. 9-108
14 810 ILCS 5/Art. 9, Part 1, Subpart 2 heading new
15 810 ILCS 5/9-109 from Ch. 26, par. 9-109
16 810 ILCS 5/9-110 from Ch. 26, par. 9-110
17 810 ILCS 5/9-112 from Ch. 26, par. 9-112
18 810 ILCS 5/9-113 from Ch. 26, par. 9-113
19 810 ILCS 5/9-114 from Ch. 26, par. 9-114
20 810 ILCS 5/9-115 from Ch. 26, par. 9-115
21 810 ILCS 5/9-116
22 810 ILCS 5/9-150
23 810 ILCS 5/Art. 9, Part 2 heading
24 810 ILCS 5/Art. 9, Part 2, Subpart 1 heading new
25 810 ILCS 5/9-201 from Ch. 26, par. 9-201
26 810 ILCS 5/9-202 from Ch. 26, par. 9-202
27 810 ILCS 5/9-203 from Ch. 26, par. 9-203
28 810 ILCS 5/9-204 from Ch. 26, par. 9-204
29 810 ILCS 5/9-205 from Ch. 26, par. 9-205
30 810 ILCS 5/9-205.1 from Ch. 26, par. 9-205.1
31 810 ILCS 5/9-206 from Ch. 26, par. 9-206
32 810 ILCS 5/Art. 9, Part 2, Subpart 2 heading new
33 810 ILCS 5/9-207 from Ch. 26, par. 9-207
34 810 ILCS 5/9-208 from Ch. 26, par. 9-208
-318- LRB9112852JSpc
1 810 ILCS 5/9-209 new
2 810 ILCS 5/9-210 new
3 810 ILCS 5/Art. 9, Part 3 heading
4 810 ILCS 5/Art. 9, Part 3, Subpart 1 heading new
5 810 ILCS 5/9-301 from Ch. 26, par. 9-301
6 810 ILCS 5/9-302 from Ch. 26, par. 9-302
7 810 ILCS 5/9-303 from Ch. 26, par. 9-303
8 810 ILCS 5/9-304 from Ch. 26, par. 9-304
9 810 ILCS 5/9-305 from Ch. 26, par. 9-305
10 810 ILCS 5/9-306 from Ch. 26, par. 9-306
11 810 ILCS 5/9-306.01 from Ch. 26, par. 9-306.01
12 810 ILCS 5/9-306.02 from Ch. 26, par. 9-306.02
13 810 ILCS 5/9-307 from Ch. 26, par. 9-307
14 810 ILCS 5/9-307.1 from Ch. 26, par. 9-307.1
15 810 ILCS 5/9-307.2 from Ch. 26, par. 9-307.2
16 810 ILCS 5/Art. 9, Part 3, Subpart 2 heading new
17 810 ILCS 5/9-308 from Ch. 26, par. 9-308
18 810 ILCS 5/9-309 from Ch. 26, par. 9-309
19 810 ILCS 5/9-310 from Ch. 26, par. 9-310
20 810 ILCS 5/9-311 from Ch. 26, par. 9-311
21 810 ILCS 5/9-312 from Ch. 26, par. 9-312
22 810 ILCS 5/9-313 from Ch. 26, par. 9-313
23 810 ILCS 5/9-314 from Ch. 26, par. 9-314
24 810 ILCS 5/9-315 from Ch. 26, par. 9-315
25 810 ILCS 5/9-315.01 new
26 810 ILCS 5/9-315.02 new
27 810 ILCS 5/9-316 from Ch. 26, par. 9-316
28 810 ILCS 5/Art. 9, Part 3, Subpart 3 heading new
29 810 ILCS 5/9-317 from Ch. 26, par. 9-317
30 810 ILCS 5/9-318 from Ch. 26, par. 9-318
31 810 ILCS 5/9-319 new
32 810 ILCS 5/9-320 new
33 810 ILCS 5/9-320.1 new
34 810 ILCS 5/9-320.2 new
-319- LRB9112852JSpc
1 810 ILCS 5/9-320.3 new
2 810 ILCS 5/9-321 new
3 810 ILCS 5/9-322 new
4 810 ILCS 5/9-323 new
5 810 ILCS 5/9-324 new
6 810 ILCS 5/9-325 new
7 810 ILCS 5/9-326 new
8 810 ILCS 5/9-327 new
9 810 ILCS 5/9-328 new
10 810 ILCS 5/9-329 new
11 810 ILCS 5/9-330 new
12 810 ILCS 5/9-331 new
13 810 ILCS 5/9-332 new
14 810 ILCS 5/9-333 new
15 810 ILCS 5/9-334 new
16 810 ILCS 5/9-335 new
17 810 ILCS 5/9-336 new
18 810 ILCS 5/9-337 new
19 810 ILCS 5/9-338 new
20 810 ILCS 5/9-339 new
21 810 ILCS 5/Art. 9, Part 3, Subpart 4 heading new
22 810 ILCS 5/9-340 new
23 810 ILCS 5/9-341 new
24 810 ILCS 5/9-342 new
25 810 ILCS 5/Art. 9, Part 4 heading
26 810 ILCS 5/9-401 from Ch. 26, par. 9-401
27 810 ILCS 5/9-401A
28 810 ILCS 5/9-402 from Ch. 26, par. 9-402
29 810 ILCS 5/9-403 from Ch. 26, par. 9-403
30 810 ILCS 5/9-404 from Ch. 26, par. 9-404
31 810 ILCS 5/9-405 from Ch. 26, par. 9-405
32 810 ILCS 5/9-406 from Ch. 26, par. 9-406
33 810 ILCS 5/9-407 from Ch. 26, par. 9-407
34 810 ILCS 5/9-408 from Ch. 26, par. 9-408
-320- LRB9112852JSpc
1 810 ILCS 5/9-409 new
2 810 ILCS 5/9-410
3 810 ILCS 5/Art. 9, Part 5 heading
4 810 ILCS 5/Art. 9, Part 5, Subpart 1 heading new
5 810 ILCS 5/9-501 from Ch. 26, par. 9-501
6 810 ILCS 5/9-501.5 new
7 810 ILCS 5/9-502 from Ch. 26, par. 9-502
8 810 ILCS 5/9-503 from Ch. 26, par. 9-503
9 810 ILCS 5/9-504 from Ch. 26, par. 9-504
10 810 ILCS 5/9-505 from Ch. 26, par. 9-505
11 810 ILCS 5/9-506 from Ch. 26, par. 9-506
12 810 ILCS 5/9-507 from Ch. 26, par. 9-507
13 810 ILCS 5/9-508 new
14 810 ILCS 5/9-509 new
15 810 ILCS 5/9-510 new
16 810 ILCS 5/9-511 new
17 810 ILCS 5/9-512 new
18 810 ILCS 5/9-513 new
19 810 ILCS 5/9-514 new
20 810 ILCS 5/9-515 new
21 810 ILCS 5/9-516 new
22 810 ILCS 5/9-517 new
23 810 ILCS 5/9-518 new
24 810 ILCS 5/Art. 9, Part 5, Subpart 2 heading new
25 810 ILCS 5/9-519 new
26 810 ILCS 5/9-520 new
27 810 ILCS 5/9-521 new
28 810 ILCS 5/9-522 new
29 810 ILCS 5/9-523 new
30 810 ILCS 5/9-524 new
31 810 ILCS 5/9-525 new
32 810 ILCS 5/9-526 new
33 810 ILCS 5/9-527 new
34 810 ILCS 5/Art. 9, Part 6 heading new
-321- LRB9112852JSpc
1 810 ILCS 5/Art. 9, Part 6, Subpart 1 heading new
2 810 ILCS 5/9-601 new
3 810 ILCS 5/9-602 new
4 810 ILCS 5/9-603 new
5 810 ILCS 5/9-604 new
6 810 ILCS 5/9-605 new
7 810 ILCS 5/9-606 new
8 810 ILCS 5/9-607 new
9 810 ILCS 5/9-608 new
10 810 ILCS 5/9-609 new
11 810 ILCS 5/9-610 new
12 810 ILCS 5/9-611 new
13 810 ILCS 5/9-612 new
14 810 ILCS 5/9-613 new
15 810 ILCS 5/9-614 new
16 810 ILCS 5/9-615 new
17 810 ILCS 5/9-616 new
18 810 ILCS 5/9-617 new
19 810 ILCS 5/9-618 new
20 810 ILCS 5/9-619 new
21 810 ILCS 5/9-620 new
22 810 ILCS 5/9-621 new
23 810 ILCS 5/9-622 new
24 810 ILCS 5/9-623 new
25 810 ILCS 5/9-624 new
26 810 ILCS 5/Art. 9, Part 6, Subpart 2 heading new
27 810 ILCS 5/9-625 new
28 810 ILCS 5/9-626 new
29 810 ILCS 5/9-627 new
30 810 ILCS 5/9-628 new
31 810 ILCS 5/Art. 9, Part 7 heading new
32 810 ILCS 5/9-701 new
33 810 ILCS 5/9-702 new
34 810 ILCS 5/9-703 new
-322- LRB9112852JSpc
1 810 ILCS 5/9-704 new
2 810 ILCS 5/9-705 new
3 810 ILCS 5/9-706 new
4 810 ILCS 5/9-707 new
5 810 ILCS 5/9-708 new
6 810 ILCS 5/9-9901 from Ch. 26, par. 9-9901
7 810 ILCS 5/9-9902 from Ch. 26, par. 9-9902
8 810 ILCS 5/1-105 from Ch. 26, par. 1-105
9 810 ILCS 5/1-201 from Ch. 26, par. 1-201
10 810 ILCS 5/2-103 from Ch. 26, par. 2-103
11 810 ILCS 5/2-210 from Ch. 26, par. 2-210
12 810 ILCS 5/2-326 from Ch. 26, par. 2-326
13 810 ILCS 5/2-502 from Ch. 26, par. 2-502
14 810 ILCS 5/2-716 from Ch. 26, par. 2-716
15 810 ILCS 5/2A-103 from Ch. 26, par. 2A-103
16 810 ILCS 5/2A-303 from Ch. 26, par. 2A-303
17 810 ILCS 5/2A-307 from Ch. 26, par. 2A-307
18 810 ILCS 5/2A-309 from Ch. 26, par. 2A-309
19 810 ILCS 5/4-210 from Ch. 26, par. 4-210
20 810 ILCS 5/5-118 new
21 810 ILCS 5/7-503 from Ch. 26, par. 7-503
22 810 ILCS 5/8-103 from Ch. 26, par. 8-103
23 810 ILCS 5/8-106 from Ch. 26, par. 8-106
24 810 ILCS 5/8-110
25 810 ILCS 5/8-301 from Ch. 26, par. 8-301
26 810 ILCS 5/8-302 from Ch. 26, par. 8-302
27 810 ILCS 5/8-510
28 50 ILCS 205/14 from Ch. 116, par. 43.114
29 55 ILCS 5/3-5018 from Ch. 34, par. 3-5018
30 220 ILCS 5/18-107
31 625 ILCS 5/3-114 from Ch. 95 1/2, par. 3-114
32 625 ILCS 5/3-202 from Ch. 95 1/2, par. 3-202
33 770 ILCS 110/4 from Ch. 82, par. 404
34 810 ILCS 5/9-404.5 new
-323- LRB9112852JSpc
1 820 ILCS 255/6 from Ch. 48, par. 1406