An act relating to the Uniform Commercial Code
Sponsored By: Michael J Marcotte (Republican)
Signed by Governor
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Bill Overview
Analyzed Economic Effects
22 provisions identified: 13 benefits, 0 costs, 9 mixed.
Control-based priority for collateral and buyers
A creditor that perfects by control or possession does not need to file a financing statement for many electronic and financial assets. Perfection by possession applies to things like tangible chattel paper, instruments, goods, and negotiable documents, and lasts only while possession continues. Perfection by control applies to investment property, deposit accounts, electronic chattel paper and documents, controllable electronic records, and electronic money, and lasts only while control continues. Good‑faith buyers who give value and get delivery or control before a security interest is perfected can take the asset free of that interest. Purchase‑money lenders in inventory or livestock get priority if they perfect when the debtor takes possession and send authenticated notice to conflicting secured parties.
Faster debtor protections and timelines
The law requires secured creditors to act fast when you ask. After your authenticated, signed demand, they must release or transfer control of listed collateral within 10 days. If an account debtor was told to pay the secured party, the secured party must send that account debtor a signed release within 10 days. They must also send an accounting or approve/correct a collateral list within 14 days of your authenticated request. Beginning July 1, 2025, a secured party that takes control of certain digital receivables or records owes duties if it knows your identity is missing from the system records.
Stronger consumer protections in repossessions
Beginning July 1, 2025, the law strengthens your rights when collateral is repossessed. If the collateral is consumer goods, the notice must name the collateral, state public or private sale, explain your right to attend, explain how to redeem by paying the full amount, and say how any surplus or deficiency works. After the sale, the creditor must send a written explanation before paying any surplus or first demanding a deficiency. You can waive sale notice only by a signed agreement made after default. In consumer‑goods cases, you cannot waive the right to redeem. A creditor can accept collateral only if you consent in a signed record after default and no timely objection is received. After taking the collateral, the creditor must sell or dispose of it within 90 days unless you and all secondary obligors sign a longer period after default.
Stronger protections in repossession and sale
The law limits blanket liens on consumer goods. After‑acquired clauses reach only items you get within 10 days. Before selling collateral, the lender must send an authenticated notice to required parties. If the lender collects or sells, it must pay certain subordinate lien holders or consignors who demand before distribution. When the debt is satisfied, the lender must file a termination within one month, or send or file it within 20 days after your authenticated demand. If the lender wants to accept collateral in full or part, it must notify earlier claimants who gave authenticated notice.
Clear rules for electronic chattel paper
The law sets technical rules to keep one authoritative electronic copy of chattel paper and to name the assignee. A buyer gets control when the system reliably shows them as the assignee and keeps that authoritative copy for them. Starting July 1, 2025, buyers who give value and act in good faith get priority if they take the physical authoritative copy or control the electronic copy. The law also explains which state’s law governs electronic chattel paper.
Priority rules for crop production loans
To get production‑money priority in crops, you must file when you first give new value to enable production. If another creditor already filed, you must send an authenticated notice 10 to 30 days before you give the money. Among qualifying interests, earlier filing ranks first.
Clear rules for e-documents and signatures
Electronic documents of title have clear control rules so a holder can identify the authoritative copy and stop others from changing who controls it. Delivery means transfer of control for electronic titles and transfer of possession for paper items. A “holder” includes the person in possession of negotiable paper, or the person in control of a negotiable electronic title. “Signed” or “sign” includes electronic symbols, sounds, or processes made with intent, and “send” includes mailing or usual electronic methods when properly addressed and paid. A term is “conspicuous” if a reasonable person would notice it, such as by clear headings or contrasting text.
Modern rules for checks and notes
A negotiable instrument can include a clause that picks the governing law and where disputes are handled without losing negotiability. With the payee’s agreement, sending an image and data that allow an electronic check counts as issuing the item. You are liable on an instrument only if you signed it (or an authorized agent did), and a signature can be a handwritten name, mark, or other adopted symbol. An obligation on an instrument can be discharged by intentional acts or a signed renunciation, but destroying a check for imaging alone does not discharge the payer.
More flexible letters of credit rules
Letters of credit and related records can be issued in any signed form and authenticated by signature, agreed methods, or standard practice. Parties can choose the governing law in a signed record or in the undertaking, even if that law has no other tie to the deal. If no choice applies, the law of the issuer’s (or relevant person’s) location in the undertaking controls, and bank branches count as separate entities for law and forum. Customary rules may apply unless they conflict with listed non‑variable rules, and Article 5 governs over conflicting Articles 3, 4, 4A, or 9.
New rules for digital records
Beginning July 1, 2025, the law creates Article 12 for controllable electronic records. It defines these records and what “control” means: you must have exclusive power to use and transfer the record and be easy to identify. If you get control for value, in good faith, and without notice, you take the record free of property claims. Article 9 and state consumer‑protection laws still apply and control where they conflict.
Bank accounts and electronic money rules
Beginning July 1, 2025, the law clarifies control of bank accounts and electronic money. It lists four ways a lender controls a deposit account, like being the bank or using a signed control agreement. Transfers of cash or deposit‑account funds are free of prior security interests unless there is collusion; for electronic money, a transferee must get control and not collude. A bank keeps its normal rights and duties unless an authenticated agreement or a listed exception applies. Saying you control collateral for someone else does not, by itself, create duties or require confirmations.
Who you must pay after assignment
You can pay the original party until you get an authenticated notice of assignment; after that you must pay the assignee. If you ask, the assignee must promptly show reasonable proof, or you may still pay the original party. Unless you waived them, your defenses and claims against the original party still apply against the assignee until you get authenticated notice. For controllable accounts or payment rights, you discharge by paying the person with control and can request proof using the agreed method. Consumer‑protection rules still apply.
Updated sales and lease contract rules
Article 2 and 2A now explain how sales and leases apply to mixed deals that combine goods with services or other property. A merchant’s signed firm offer stays open for the stated time, or a reasonable time up to three months; if the offeree supplied the form, the promise to keep it open must be separately signed. Contract changes for sales do not need new consideration, and a “changes must be in writing” clause on a merchant’s form must be separately signed unless both sides are merchants. Sales of $500 or more must be in a signed record, and between merchants a confirming record works unless the other merchant objects in 10 days; leases must be in a signed record that describes the goods and the lease term. A final written sales record controls over prior or same‑time oral terms, and after a breach or lease default, an aggrieved party can sign a record to waive claims without new consideration.
Broader collateral definitions for deals
The law expands which rights count as accounts and other collateral. It adds items like energy payments, credit card receivables, lottery winnings, and health‑insurance receivables. It also defines electronic money, electronic chattel paper, and controllable accounts and payment rights.
One-year transition to new UCC rules
Deals made before July 1, 2025 stay valid. From July 1, 2025, perfected interests stay perfected if they meet the new rules; otherwise they last only until their old end date or July 1, 2026. Unperfected but enforceable interests stay enforceable until July 1, 2026 and must meet the new rules by then. Some pre‑2025 actions can still perfect, but filings count only if they meet the new content rules. Priority set before July 1, 2025 holds until July 1, 2026, when the amended rules can change it, especially for Article 12 property and electronic money.
Priority and law for digital collateral
Starting July 1, 2025, control decides priority for security interests in controllable accounts, payment rights, and electronic records. A creditor controls a controllable account or payment right by controlling the electronic record that shows it. The law of the record’s chosen jurisdiction governs perfection and priority, with some filing and sale exceptions. Article 12 also explains how to pick that governing law.
Signed consent sets fixture priority
Starting July 1, 2025, a lender’s interest in fixtures is first if the property owner or encumbrancer signed an authenticated consent or a disclaimer. This priority applies even if the lender’s interest is not perfected.
Stops unauthorized lien filings
A person can file a new financing statement only if the debtor authorized it in an authenticated, signed record or is bound by a security agreement. A filer with an agricultural lien can file only for collateral covered by that lien. This helps block unauthorized liens against businesses and farms.
Standard sale notice for business loans
Beginning July 1, 2025, non‑consumer transactions get a sample notice that meets the sale‑of‑collateral rules. The form includes required items like debtor name, collateral description, sale type and timing, and how to request an accounting. Using this form helps secured parties and business borrowers get clear, compliant notices.
Investor protections for securities transfers
You are a protected purchaser if you pay value, do not know of a claim, and get control of the security. A protected purchaser takes free of adverse claims. Parties may communicate by any agreed method. Starting July 1, 2025, the law also preserves the rights of protected purchasers, holders in due course, and qualifying purchasers under other UCC rules.
Clearer rules for electronic collateral
Beginning July 1, 2025, the law sets a clear meaning for “electronic,” covering digital, magnetic, wireless, optical, and similar tech. A secured party that has possession or control of collateral must follow standard UCC duties for care, accounting, and return of collateral. The law also defines a signed “transfer statement” for changing record or legal title. These steps make electronic records and collateral control clearer for deals and disputes.
Core definitions and which law applies
“Money” means a medium of exchange authorized by a government, and excludes some older transferable electronic media not so authorized. A “person” includes protected series when other law shields that series’ assets. The law clarifies when someone has “given value,” subject to listed UCC articles. When a UCC section names the governing law, that law controls, and parties cannot override it beyond what that section permits.
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Sponsors & Cosponsors
Sponsor
Michael J Marcotte
Republican • House
Cosponsors
Edye Graning
Democratic • House
Kirk White
Democratic • House
Roll Call Votes
No roll call votes available for this bill.
Actions Timeline
House message: Governor approved bill on May 13, 2025
5/14/2025SenateSigned by Governor on May 13, 2025
5/13/2025HouseDelivered to the Governor on May 7, 2025
5/7/2025HouseHouse message: House concurred in Senate proposal of amendment
4/30/2025SenateSenate proposal of amendment concurred in
4/29/2025HouseAction Calendar: Unfinished Business
4/29/2025HouseAction Calendar: Senate Proposal of Amendment
4/28/2025HouseNotice Calendar: Senate Proposal of Amendment
4/25/2025HouseSenate Message: Passed in concurrence with proposal of amendment
4/24/2025HouseRead 3rd time & passed in concurrence with proposal of amendment
4/23/2025SenatePending third reading, Senator Cummings, Beck, Brock, Chittenden, Gulick, Hardy, and Mattos proposal of amendment, agreed to
4/23/2025SenateProposal of amendment to be offered by Senator(s) Cummings, Beck, Brock, Chittenden, Gulick, Hardy, and Mattos
4/23/2025SenateNew Business/Third Reading
4/23/2025SenateReported favorably by Senator Cummings for Committee on Finance, read 2nd time and 3rd reading ordered
4/22/2025SenateFavorable report by Committee on Finance
4/22/2025SenateSecond Reading
4/22/2025SenateSecond Reading
4/18/2025SenateFavorable report by Committee on Finance
4/18/2025SenateEntered on Notice Calendar
4/18/2025SenateRead 1st time & referred to Committee on Finance
3/19/2025SenateRead third time and passed
3/14/2025HouseAction Calendar: Third Reading
3/14/2025HouseThird Reading ordered
3/13/2025HouseReport of Committee on Commerce and Economic Development agreed to
3/13/2025HouseRep. Olson of Starksboro reported for the Committee on Commerce and Economic Development
3/13/2025House
Bill Text
As Enacted (ACT 17)
5/20/2025
As Passed by Both Chambers
5/13/2025
As Passed by Both Chambers (Unofficial)
5/13/2025
Senate Proposal of Amendment
4/25/2025
Senate Proposal of Amendment (Unofficial)
4/25/2025
As Passed by the House
3/18/2025
As Passed by the House (Unofficial)
3/18/2025
As Introduced
2/12/2025
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