MontanaSB 42669th Legislature, Regular Session (2025)Senate

Generally revise the Uniform Commercial Code

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Bill Overview

Analyzed Economic Effects

25 provisions identified: 12 benefits, 0 costs, 13 mixed.

Stronger repossession notices and timelines

You get clearer rights when a creditor takes and sells your collateral. The creditor must send a signed sale notice to you and any co-signer unless you waive it. For consumer goods, the notice must explain any possible deficiency and give a phone number for payoff and for more details. If you paid 60% of the cash price (purchase‑money) or 60% of the principal (other), the creditor must sell the collateral within 90 days of taking it unless you and any secondary obligor sign a post‑default extension. You can ask for an explanation of any surplus or deficiency; you get one free written response every 6 months, and extra written responses can cost up to $25 each. In consumer deals, a creditor cannot accept the collateral to satisfy only part of the debt; acceptance must be for full satisfaction or not at all. The law also defines when a notice is sent, including mail and agreed electronic methods.

E-signatures and proof rules updated

An electronic symbol, sound, or process attached to a record counts as a signature when used with present intent to authenticate. “Electronic” covers digital, magnetic, wireless, optical, electromagnetic, and similar technology. In UCC disputes, a party meets its burden by showing a fact is more likely true than not. “Bank” includes savings banks, savings and loan associations, credit unions, and trust companies.

Clear rules for digital titles and chattel paper

The law explains when someone has control of an electronic document of title. It requires a single authoritative electronic copy and makes non‑authoritative copies easy to spot. It clarifies who is a holder for negotiable tangible and electronic documents. Buyers who take possession of authoritative paper and control the authoritative electronic copy of chattel paper can get priority over earlier interests.

Clearer rules for securities and digital assets

A signed record or any agreed electronic method now counts as a communication under the securities rules. An express choice‑of‑law for an issuer or securities intermediary governs key matters across related chapters, and Section 100 is added to the list that can set governing law. A protected purchaser who gives value, has no notice, and obtains control takes the security free of adverse claims. Controllable accounts, controllable electronic records, and controllable payment intangibles are not financial assets under the securities rules unless a specific statutory condition is met.

Control rules for digital collateral

The law sets clear control rules for controllable electronic records and ties control of payment rights or accounts to control of the underlying electronic record. A lender can perfect some collateral by control instead of filing, including controllable electronic records, controllable accounts, controllable payment intangibles, deposit accounts, electronic documents, and investment property. It defines a controllable payment intangible and confirms payment intangibles include the controllable kind. If a secured party gets control of controllable collateral and knows a debtor’s identity or contact information is missing from the record or system, safe‑harbor nonliability does not apply.

New rules for digital assets and accounts

The law creates clear property rules for controllable electronic records and related accounts and payment intangibles. A qualifying purchaser who gets control for value, in good faith, and without notice takes the asset free of other property claims. Filing a financing statement does not give notice of a claim in these records. A secured party with control has priority over one without control. The law of the record’s jurisdiction governs perfection and priority, except that filing and automatic perfection from a sale of a controllable payment intangible follow the debtor’s location.

Stronger security for electronic bank transfers

Electronic records now count as payment orders. Security procedures must use stronger tools like codes, encryption, biometrics, or callbacks; simple email or signature checks alone are not enough. A bank can treat a transfer as yours only if the procedure is commercially reasonable and the bank acted in good faith. You can stop enforcement of an unauthorized order if it was not caused by your trusted agents or by someone using access or software taken from you. Banks, credit unions, and trust companies count as banks, and branches (including some foreign branches) are treated as separate for these rules and for letters of credit.

Modern rules for shipping and titles

Delivery means giving control for an electronic document of title and giving possession for instruments, paper documents of title, and authoritative paper chattel paper copies. A document of title includes bills of lading, transport documents, and warehouse receipts, and can be electronic. A bill of lading shows receipt of goods for shipment from a carrier or forwarder and is not a warehouse receipt. A “bearer” includes a person in control of a negotiable electronic document of title and a person holding bearer paper. A buyer in the ordinary course buys in good faith without knowing of a rights violation and takes possession or has a right to recover the goods.

Electronic records and clearer sales terms

A signed record, including an electronic one, now satisfies many UCC writing and signature rules for contracts, confirmations, notices, and proposals. In mixed deals with goods and services, the sale‑of‑goods rules apply to the goods parts, and apply more broadly if the goods part predominates. Contract changes need no new payment, but a clause that blocks changes unless in a signed record is enforceable and, on a merchant’s form, must be separately signed by the other party unless both are merchants. Courts decide if a term is conspicuous based on all the facts. An aggrieved party may release a breach claim by signing a record, even without new consideration.

No central bank digital currency recognized

The law does not treat a central bank digital currency as money in Montana. It also says the state’s commercial code cannot be read to support or create a national digital currency. Money means government currency that is not in electronic form. A deposit account is not money. No one must accept a CBDC unless Montana law later approves it.

Clearer collateral sales and title transfers

For sales of non‑consumer collateral, the sale notice must name the debtor and secured party, describe the collateral, explain the sale method, state timing, and tell the debtor about the right to an accounting and any charge. A safe‑harbor form is provided, and small, non‑misleading errors do not defeat the notice. A secured party’s signed transfer statement entitles the buyer to a record transfer in filing, registration, or title systems; officials must update records and issue a new title when given the fee and form. The law defines who is an assignee and who is an assignor. It also defines manufactured homes (8 or more feet wide or 40 or more feet long, or with HUD certification) and manufactured‑home purchase‑money deals, excluding homes held as inventory.

Electronic chattel paper control and law

When chattel paper exists in an authoritative electronic copy (or both electronic and paper), the law of the chattel paper’s jurisdiction governs perfection and priority. If only a paper copy exists, possession-based perfection follows the law where that copy is located; filing follows the debtor’s location. A lender can perfect by holding every authoritative paper copy and controlling every authoritative electronic copy. Perfection starts only once both are in place and lasts only while they are kept.

Modern rules for checks and notes

If the payee agrees, sending an image plus data can count as issuing a check for collection. Destroying a paper check during imaging does not cancel the duty to pay. You are not liable on a note or check unless you signed it or a binding agent did. Parties may pick the governing law and forum in the instrument, and can renounce claims by a signed electronic record. The law also clarifies what counts as an instrument and treats some chattel‑paper instruments as promissory notes.

New rules for controllable digital assets

Qualifying purchasers of controllable accounts, controllable electronic records, and controllable payment rights keep their priority under the code. Filing a financing statement by itself does not give them notice of defenses or claims. Some assignment and notice protections do not apply to controllable accounts and controllable payment rights. Controllable electronic records and payment rights count as general intangibles, so lenders can take them as collateral.

Priority and cross‑border secured rules

A perfected security interest stays perfected after a change of governing jurisdiction only until it would have lapsed under the old law or 4 months after the change, whichever comes first. It must be reperfected under the new law by then. A buyer, lessee, or licensee who pays value, has no notice, takes delivery, and gets required control can take the item free of an unperfected security interest. Security agreements and third‑party possession acknowledgments must be signed, and a signed agreement can trigger a 20‑day temporary perfection for new value.

Updated collateral and title definitions

The law expands the term account to include controllable accounts and health‑care‑insurance receivables, and defines health‑care‑insurance receivable. It revises chattel paper so both the payment right and the security or lease are shown in a record, and lease chattel paper must mainly give the lessee possession and use. A person who must pay a negotiable instrument is not an account debtor. An accounting must be a signed record with amounts listed as of a date within 35 days before or after the record date. A government’s alternative title record can act like a certificate of title if a statute allows showing the security interest on that record.

Clearer rules for consumer leases

A lease is a consumer lease when total payments are $25,000 or less, not counting renewal or buy options. Consumer leases get added protections. A lease is not enforceable unless payments are under $1,000 or there is a signed record by the party you seek to enforce against that describes the goods and the lease term. Usual statute‑of‑frauds exceptions still apply.

Clearer rules for leases and hybrids

A hybrid transaction mixes a sale of goods with services, a lease of other goods, or a sale, lease, or license of other property. Lease rules apply to any deal that creates a lease; they mainly cover the lease parts when those parts do not predominate, and the whole deal when they do. A merchant’s signed firm offer to buy, sell, or lease goods is not revocable for the stated time or a reasonable time, up to 3 months. If that promise is on the offeree’s form, the offeror must separately sign that term. A lease claim or right is discharged without consideration only by a signed record delivered by the aggrieved party.

Clearer rules for bank account collateral

The law defines what counts as a bank deposit account. It lists four ways a lender can control a deposit account to gain priority. If you receive money or funds from a deposit account and did not collude with the debtor, you take the funds free of a security interest.

Clearer shipping and warehouse terms

A shipper is the person who makes the transport contract. A warehouse is a business that stores goods for hire. The general UCC definition of record now applies in this chapter.

Consignments and embedded software clarified

A delivery counts as a consignment only if the goods in that delivery are worth at least $1,000 and other criteria are met. Some built‑in software and its info are treated as part of the goods when it is integrated or ownership gives the right to use it. This clarifies ownership, sales, and lending on products with embedded software.

Farm liens must be filed to stick

To keep an agricultural lien enforceable against ordinary‑course buyers, the lienholder must file a statement with the Montana Secretary of State. If no filing is on record, an ordinary‑course buyer takes the farm product free of the lien. The filing must use the Secretary’s form and include names and addresses, lien type and authority, collateral, filing details, the unpaid amount, and other required facts. The Secretary records the filing in a central computer system and charges a recording fee.

Entity series and ownership transfer limits

A protected series of an entity counts as a person under the commercial code. Normal restraints on assigning or pledging partnership and LLC ownership interests still apply. This changes how creditors, owners, and entities handle claims and transfers.

Fewer duties after control acknowledgments

A bank or intermediary that has control does not have to acknowledge control for a purchaser. If it does acknowledge control, that alone usually creates no duty to the purchaser and needs no confirmation to others, unless the parties agree or another law applies.

Updated secured-loan filing and priority rules

Consents, notices, and authorizations now use a signed record. Signing or becoming bound by a security agreement authorizes a financing‑statement filing. Secured‑party duties and rights are clarified, including duties to debtors without listed contact info for certain digital collateral. Before paying a junior lienholder, a secured party must get a signed demand and, if asked, proof. The law clarifies when value is given. Buyers and lessees take free of advances made after the secured party learns of the deal or after 45 days. For purchase‑money security in inventory and livestock, the competing creditor must get a signed notice within 5 years (inventory) or 6 months (livestock) before the debtor takes possession.

Sponsors & Cosponsors

Sponsor

Vince Ricci
Republican • Senate

Cosponsors

Bill Mercer
Republican • House
Shane Morigeau
Democrat • Senate

Roll Call Votes

All Roll Calls

Yes: 245 • No: 53

House vote • 3/28/2025

Do Concur

Yes: 87 • No: 12

House vote • 3/27/2025