MontanaSB 42669th Legislature, Regular Session (2025)SenateWALLET

Generally revise the Uniform Commercial Code

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Bill Overview

Analyzed Economic Effects

17 provisions identified: 4 benefits, 0 costs, 13 mixed.

Rules and limits for consumer leases

A lease is a consumer lease when total payments are $25,000 or less. Do not count payments for renewal or buy options. If total payments are under $1,000, a signed writing is not required to enforce the lease. At $1,000 or more, a signed writing that describes the goods and the term is required.

How lenders perfect digital collateral

The law explains when a security interest attaches and is enforceable. Lenders can perfect by possession or by control of deposit accounts, electronic documents, electronic chattel paper, and controllable electronic records, accounts, and payment intangibles. Control requires a reliable system and a single authoritative electronic copy that identifies the secured party. Perfection starts when possession or control exists and ends when it stops.

Priority rules for buyers and lenders

Good‑faith buyers and lessees who give value and obtain delivery or control can take assets free of some security interests. Purchase‑money lenders keep priority if they meet timing and notice rules (20‑day window; longer notice rules for inventory and livestock). A perfected interest can lapse after a move or transfer (4‑month or 1‑year limits) unless re‑perfected. Later advances face a 45‑day limit against lien creditors, subject to exceptions. Chattel‑paper purchasers who take possession or control in good faith can gain priority. Contract terms that block many assignments of receivables are largely ineffective, and filing is not notice to protected holders.

Stronger rights after default and repossession

The law sets clear steps after a repossession or sale. Cash from a sale first pays reasonable repossession and sale costs, then your debt, then junior liens that demand payment; you get any surplus, and in some sales there is no surplus or deficiency. A secured party cannot take your consumer goods in partial satisfaction, and full satisfaction needs your signed consent after default or a proposal with no signed objection within 20 days. You can get a written surplus/deficiency explanation within 14 days; one is free every 6 months and extra ones can cost up to $25. You can waive notice or redemption only in a signed record after default. For consumer goods, the secured party must file a termination within one month (or within 20 days after your signed demand) when the debt is gone. When a secured party sells collateral after default, an authenticated transfer statement lets officials update titles and records when given with the fee and form.

Clear rules for digital assets control

The law defines what counts as a controllable electronic record and who is a qualifying purchaser. It explains when a person has control over an electronic record and says filings are not notice of property-right claims. If you control a controllable record, you have priority over those who do not, and an account debtor can discharge by paying the person with control. Control of the record also gives control of related controllable accounts or payment intangibles. A qualifying purchaser who gets control for value, in good faith, and without notice takes free of claims. It sets which jurisdiction’s law applies and says the secured‑transactions chapter governs if there is a conflict, while consumer-protection laws still apply. Acknowledging control alone does not create extra duties. The code also removes an outdated “tangible chattel paper” phrase to reduce confusion.

Clearer rules for securities and custody

The law updates what counts as a security or financial asset and allows parties to use agreed ways to communicate. It explains how a buyer gets control of certificated and uncertificated securities or entitlements. A protected purchaser who pays, has no notice, and gets control takes free of adverse claims. It also sets which law governs issuer and intermediary duties.

Modern rules for letters of credit

Banks and businesses may issue, amend, or cancel letters of credit using any signed record, including electronic, if it meets agreed authentication or standard practice. Parties may choose which jurisdiction’s law governs liability in an authenticated record, even if that place has no tie to the deal.

Bank transfer security and protections

If you and your bank agree on a security procedure, a payment order that passes it and is accepted in good faith counts as your order. The bank must prove the procedure is commercially reasonable and that it followed the agreement. If you receive money or account funds, you take them free of a prior security interest unless you colluded with the debtor.

Default, repossession, and sale notices

After default, a secured creditor may sue, foreclose, or enforce the claim; an execution sale counts as a foreclosure. Cash collected must first pay reasonable costs, then the secured debt, then subordinate liens that give proof; debtors receive any surplus and may owe a deficiency. Before selling collateral, the creditor must send an authenticated notice to the debtor, secondary obligors, and other listed claimants, with extra consumer‑goods details like a phone number for the redemption amount and a clear deficiency statement. For accepting collateral in satisfaction, the creditor must also notify prior claimants, certain perfected secured parties, and, for partial satisfaction, secondary obligors. Substantial compliance with the model forms is sufficient.

E-signatures valid; $500 sales need writing

A "writing" under the code includes a signed record, including electronic records and signatures. For sales of goods priced at $500 or more, you need a signed record from the other party to enforce the deal. Under $500, no signed record is required.

Limits on filings and creditor duties

Only people the debtor authorizes, or agricultural‑lien filers limited to their lien collateral, may file new financing statements or add debtors or collateral. A secured party does not owe duties to someone it does not know is a debtor or obligor, unless it takes control of certain controllable collateral and sees identifying information is missing. If the secured party lacked that knowledge, it is not liable for noncompliance and any deficiency claim is unchanged.

Modern rules for bank payments and checks

A security procedure is an agreed way for you and your bank to verify payment orders; codes, biometrics, encryption, or callbacks count, but a simple signature or known email alone does not. Banks keep their usual rights over deposit accounts unless they agree otherwise in a signed record. With the payee’s OK, sending a check image counts as issuing the check. Machine- or device-made marks can be valid signatures if made to authenticate. Turning a paper check into an image does not cancel the duty to pay unless a signed cancellation applies.

Farm and property collateral priorities

A buyer in the ordinary course takes farm products free of agricultural liens unless a lien statement is filed with the Secretary of State. Lien statements must list key details, like debtor and lienor info and the county for farm products; the state records them and charges filing fees. For fixtures, a purchase‑money interest wins if a fixture filing is made before or within 20 days after the goods become fixtures, subject to construction‑mortgage rules. A perfected interest in growing crops can have priority if the debtor has a record interest in or possession of the land.

E-documents, assignments, and firm offers

Electronic documents of title, like bills of lading or warehouse receipts, are valid and are delivered by transfer of control. If your customer’s account is assigned, you can raise defenses you had against the seller unless you signed an enforceable no‑defense agreement and received authenticated notice; payment to the seller still discharges until you get that notice, and the assignee must give proof if asked. Some anti‑assignment terms are ineffective. A merchant’s signed firm offer is not revocable for longer than three months, and assurance terms on the offeree’s form must be separately signed by the offeror.

CBDC not money in Montana

The law defines "money" as government currency that is not electronic. A central bank digital currency is not money in Montana. No person or business must accept a CBDC unless Montana law later approves it.

UCC cannot support a national digital currency

The law says Montana’s UCC rules cannot be used to create, support, or implement a national digital currency. Courts and parties may not rely on these sections to authorize such a currency.

Transition deadlines for secured transactions

The law sets an Adjustment date: July 1, 2025, or 1 year after the act starts, whichever is later. Deals made before the law stay valid, and many new rules also apply to older deals. Interests perfected before the law can stay perfected, but some require action by the Adjustment date to remain perfected. Unperfected interests stay enforceable until the Adjustment date and then must meet the new rules. Steps taken before the law can count for enforceability and perfection. Priority orders set before the law stay until the Adjustment date, then the new priority rules apply, including for property covered by the new electronic‑record sections.

Sponsors & Cosponsors

Sponsor

Vince Ricci
Republican • Senate

Cosponsors

Stacy Zinn
Republican • House
Shane Morigeau
Democrat • Senate

Roll Call Votes

All Roll Calls

Yes: 244 • No: 53

Senate vote • 3/28/2025

Do Concur

Yes: 87 • No: 12

Senate vote • 3/27/2025