New YorkA 33072025-2026 Regular SessionHouseWALLET

Amends the Uniform Commercial Code to provide for emerging technologies

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Bill Overview

Analyzed Economic Effects

20 provisions identified: 13 benefits, 0 costs, 7 mixed.

Stronger repossession notices and timelines

In consumer-goods cases, a sale or repossession notice must list any deficiency liability, a phone number for the redemption amount, and contact info for questions. Lenders can send these notices electronically and may use a model form. After the sale, if you ask in a signed record, the lender must send an explanation of any surplus or deficiency within 14 days or send a waiver of deficiency.

Priority rules for inventory and livestock

A purchase‑money interest in inventory has priority if it is perfected when the debtor gets the goods and the other secured party received a signed notice within five years before that. For farm livestock, the notice window is six months. A buyer takes goods free of later advances after the secured party learns of the sale or after 45 days, whichever comes first.

Clear rules for mixed sales and leases

The law defines hybrid transactions and hybrid leases as deals that combine goods with services, other goods, or other property. For these mixed deals, the sales or lease rules apply if that part of the deal is the main part. This helps sellers and buyers know which rules control the contract.

Modern e-signing and contract records

The law treats electronic symbols, sounds, or processes as signatures when used to authenticate a record. “Send” includes mail or usual electronic delivery, and a record counts as sent if it arrives when it should. Courts read “record” instead of “writing,” and a seal does not turn a record into a sealed instrument. To waive claims after a breach or lease default without payment, the aggrieved party must sign and deliver a record.

Buyer priority and protections for electronic paper

A buyer of chattel paper gets priority over inventory‑proceeds claims if the buyer gives new value, holds every authoritative paper copy, controls each authoritative electronic copy, and no authoritative copy shows an assignment to someone else. Protected purchasers and qualifying buyers still take free of adverse claims under the code; filing is not notice of a property claim in a controllable electronic record. A transfer statement for a controllable electronic record must be a signed record. Controllable accounts, controllable electronic records, and controllable payment intangibles are not financial assets unless a specific rule applies. Article 8 clarifies how parties communicate, how a purchaser gets control of a security entitlement, and that protected purchasers take free of adverse claims.

Chattel paper control and governing law

To perfect a lien in chattel paper, a creditor must hold every authoritative paper copy and control every authoritative electronic copy, and keep both. A buyer who pays value, lacks knowledge, and gets the authoritative copies and required control before perfection takes free of the lien. The law sets a clear order to pick the chattel paper’s jurisdiction and says those rules apply even if the deal has no tie to that place. It also explains which state’s law governs filing, possession, and electronic chattel paper.

Electronic titles: delivery, holder, buyer rights

Delivery of an electronic document of title means you voluntarily transfer control; for paper, delivery means transfer of possession. A person who controls a negotiable electronic title is treated as the holder, except when control is only under the specific rule in Section 7‑106(g). A buyer who pays value, lacks knowledge, and gets control of each authoritative electronic copy before perfection takes the electronic document free of a security interest.

New control rules for digital collateral

The law treats many electronic assets as collateral that can be secured by “control.” Creditors can perfect by control for items like controllable accounts, controllable electronic records, electronic money, deposit accounts, investment property, letter‑of‑credit rights, and electronic documents. Perfection by control starts when control begins and ends when control is lost. Some assets can be perfected only by control or possession (for example, deposit accounts and electronic money by control, and cash by possession). For electronic documents of title and electronic chattel paper, control requires a single authoritative copy and a system that clearly identifies the controller. If a secured party holds collateral, it may keep non‑money proceeds as extra security, but must use money proceeds to reduce the debt.

Perfection by filing, possession, or custodian

Creditors can perfect by filing for chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, instruments, investment property, and negotiable documents. They can also perfect by taking possession of goods, instruments, tangible documents, or money, and by delivery of certificated securities. A signed record from a third‑party custodian can count as possession for perfection.

Rules for control of digital assets

The law creates new rules for controllable electronic records and when someone has “control.” A buyer who gets control for value, in good faith, and without notice takes the record free of property claims. A secured party with control has priority over one without control. Account debtors can discharge by paying the current controller after a signed notice that identifies the debt; they may ask for proof. The law also sets which state’s law governs these records and related payment rights. These rules apply beginning 180 days after enactment.

Which law applies to your collateral

The law clarifies governing‑law rules for collateral. For negotiable tangible documents, goods, instruments, or cash, the law of the place where the item is located controls perfection and priority. For deposit accounts, the bank’s jurisdiction controls, even if the deal has no other tie there. A perfected interest stays perfected during set windows after a move: generally four months after a debtor relocates, or one year after a transfer to a new debtor in another state (and as long as it would have stayed perfected under the old law). For securities matters, the issuer’s or intermediary’s jurisdiction governs even without another connection.

Bank accounts, checks, and electronic money rules

A security interest in your deposit account does not change your bank’s normal rights or duties unless the bank agrees. If a check is imaged and its data sent for payment, destroying the paper check does not cancel the duty to pay. The law defines when someone has control of electronic money, including through a custodian. A transferee who gets control of electronic money takes it free of a prior security interest, unless they colluded with the debtor.

Faster releases and clearer proceeds rules

After a debtor’s signed demand, a secured party must act within 10 days to release or transfer control, send releases to banks or intermediaries, or return electronic assets to the debtor or a designee. If a payor was told to pay the secured party, the secured party must send a signed release within 10 days of the debtor’s signed demand so the payor is free from further claims. A debtor can send a signed request for an accounting or collateral list. The secured party must respond in 14 days; one response is free each six months, and extra responses can cost up to $25 each. Holders of subordinate liens and consignors must send a signed demand before proceeds are distributed to claim their share. The law also keeps certain after‑acquired and proceeds property within reach of a security interest, like proceeds of consumer goods or a commercial tort claim.

Updated money and digital asset rules

The law defines money as a medium of exchange authorized by a government and includes units set by international agreements. It excludes electronic records used as private money in a system that operated before any government authorization. Drafts may name the governing law and a forum. The law treats protected series as separate persons and clarifies when someone gives value for rights. When a listed rule, including Section 12‑107, names which law applies, that law controls.

Updated sales and lease rules

A sale of goods for $500 or more needs a signed record; between merchants, a confirmation works unless the other objects within 10 days. A merchant’s signed firm offer is irrevocable for the stated time, or a reasonable time up to 3 months. Contracts that require changes in a signed record cannot be changed another way; if a merchant’s form adds that rule, the other party must sign it separately. Leases with total payments under $1,000 are enforceable without a signed record, and the law explains how mixed leases are treated. Courts decide if a term is conspicuous by whether a reasonable person would notice it.

Modern bank transfer and fraud check rules

An instruction to a bank sent in a record or orally can be a payment order if it is for a set amount, has no extra conditions, and the bank will be reimbursed. Security procedures can include algorithms, codes, biometrics, encryption, and callbacks; checking only a signature, email, IP, or phone is not enough. If you and your bank agree to a commercially reasonable security procedure and the bank acts in good faith, an order that passes the procedure counts as your order. Banks and customers can reject, cancel, or change orders by record or orally, but changes must meet the agreed security procedure if one applies. A receiving bank can limit enforcement by a recorded agreement, and customers can defeat it by proving the order was not caused by an entrusted person or someone with access. The law also lets parties recover consequential damages for covered funds‑transfer failures. If the payee agrees, sending a check image and data counts as issuing the item for electronic collection.

Transition timeline for new UCC rules

The act takes effect 180 days after it becomes law. Deals made before that date stay valid and can be finished under prior law. A perfected interest stays perfected if it already meets the new rules; otherwise it lasts only until its old lapse or the adjustment date, one year after the effective date. Unperfected interests stay enforceable until the adjustment date; secured parties must meet the new rules by then. Some pre‑effective actions and filings still count. After the adjustment date, priority follows the new law, so some old priorities for digital assets and electronic money can change.

Electronic letters of credit and law choice

Letters of credit and related notices can be issued as signed, authenticated electronic records. The parties can also pick which law governs by a signed or authenticated record; otherwise, the law where the person is located applies. Branches are treated as separate entities for these choice‑of‑law rules.

Pay the right party after assignment

Until you get a signed notice of an assignment, you keep your defenses against the original party and you can pay them to discharge your debt. After you get a signed notice to pay the assignee, you discharge the debt only by paying the assignee. If you ask for proof of the assignment and the assignee does not provide it, you can still pay the assignor.

Priority rules for home and business fixtures

A security interest in fixtures beats the property owner or encumbrancer if the owner signed a record consenting or disclaimed rights. It also has priority if the debtor has a right to remove the goods against that owner. This clarifies who gets paid first when financed items are attached to a home or building.

Sponsors & Cosponsors

Sponsor

Alex Bores
Democratic • House

Cosponsors

Alicia Hyndman
Democratic • House
Nader Sayegh
Democratic • House
Rodneyse Bichotte Hermelyn
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 58 • No: 1

House vote • 6/11/2025

FLOOR Vote