TennesseeSB 1859114th General Assembly (2025-2026)SenateWALLET

AN ACT to amend Tennessee Code Annotated, Title 47, relative to the Uniform Commercial Code.

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Bill Overview

Analyzed Economic Effects

22 provisions identified: 13 benefits, 0 costs, 9 mixed.

Clearer repossession and payoff notices

Starting July 1, 2026, sale notices after repossession of consumer goods must say if you owe a deficiency. They must give a phone number for the payoff amount and contact for questions. To get an accounting or a list of collateral, you must send a signed record that clearly identifies the deal. A signed request creates a duty to respond.

Who to pay to clear debts

Starting July 1, 2026, if you owe on a controllable account or payment right, you can discharge it by paying the person who has control of the related electronic record. A payment‑direction notice works only if it is signed, names the new payee, and gives a commercially reasonable way to pay. These rules help you avoid double payment.

Stronger buyer and lessee protections

A buyer who gives value, does not know about a security interest, and gets the required delivery or control before perfection takes the collateral free of that interest. For goods, a buyer takes free of advances made after the earlier of the lender learning of the sale or 45 days after purchase. Lessees get a similar 45‑day protection tied to when the lease becomes enforceable.

Control rules for electronic money

The law defines when a person has control of electronic money: power to use its benefits, to block others, and to transfer control, with clear identification in the system. It defines electronic money and tangible money. These rules set how lenders perfect interests and claim priority in digital money.

Electronic records and signatures now standard

The code uses “signed” records instead of “authenticated” across many rules. It defines “electronic” broadly and explains what it means to send a record, including electronic delivery. A “person” now includes a protected series formed under other law. These updates make e‑sign and e‑delivery work smoothly across sales, leases, and secured transactions.

Investor safeguards and governing law clarity

The issuer’s or securities intermediary’s local law governs listed Article 8 matters, even without other ties. A protected purchaser of a security entitlement takes it free of adverse claims. Controllable accounts and records are not “financial assets” unless a specific rule applies. A person with control does not have to acknowledge it, and an acknowledgment alone does not create new duties unless agreed.

New rules for controllable digital records

Starting July 1, 2026, Tennessee creates a chapter for controllable electronic records. It defines these records and when a person has control. A qualifying purchaser who gives value and takes control gets the record free of competing property claims. Filing a financing statement is not notice of a claim to these records. The law sets which jurisdiction’s law applies and ties control of receivables to control of the electronic record.

Clear rules to secure bank and digital assets

The law spells out when a lender’s interest attaches and is perfected. It explains perfection by filing, by taking possession, and by control. Deposit accounts and electronic money are perfected only by control, not by filing. A bank account can be controlled by being the bank, a signed control deal with the bank, becoming the bank’s customer, or through another controller’s acknowledgment. Some rules in prior law do not apply to controllable accounts and controllable payment intangibles. Software and controllable electronic records count as general intangibles. Article 9’s “money” definition is aligned and excludes deposit accounts and electronic money that cannot be controlled. Some perfection is temporary for 20 days when new value is given or goods/documents are made available.

Faster debtor releases and lender duties

After a debtor’s signed demand, a secured party must act within 10 days. It must release or transfer control for items like deposit accounts, electronic money, electronic documents, and chattel paper, and send releases to notified account debtors. Secured parties with possession or control owe the duties in § 47‑9‑207. A secured party normally owes no duty to unknown debtors, but duties apply when it takes control of certain controllable collateral and knows identifying details are missing. Beginning July 1, 2026, limits on secured‑party liability do not apply in those missing‑information cases.

Safer bank wire security procedures

A “security procedure” is what you and your bank agree to use to verify payment orders. Simple steps like a signature match alone do not count. If the bank follows a commercially reasonable procedure in good faith, a payment order counts as yours even if not authorized. Courts look at your needs, options offered, and common practice to judge reasonableness, and a written choice can be deemed reasonable. Extra damages are only available if the bank expressly agreed to them in a written record.

E-signatures and $500 sales rules

A signature can be a paper mark or an electronic symbol, sound, or process attached to a record. Beginning July 1, 2026, many parts of the code use “signed” and “record,” making electronic records standard. A sale of goods priced at $500 or more needs a signed record to be enforceable. Between merchants, a confirmatory record works unless the recipient objects in writing within 10 days. The law explains how Article 2 applies to hybrid deals with goods and services. “Money” means government‑authorized currency and excludes certain pre‑existing electronic systems.

When new UCC rules take effect

Most changes take effect July 1, 2026. Transitional rules keep earlier transactions, liens, and priorities valid until the “adjustment date.” The adjustment date is July 1, 2025, or one year after the act’s effective date, whichever is later. Parties must update filings or establish control by that date to keep perfection under the new law.

Which law governs digital chattel paper

For chattel paper shown by an authoritative electronic copy, the chattel paper’s own jurisdiction governs perfection and priority. The law explains how to pick that jurisdiction. For electronic documents of title, “delivery” means transfer of control; for paper, it means transfer of possession. It clarifies what counts as control of a negotiable electronic document of title.

Stronger rules for sales contracts

The law clarifies key sales terms and what a “hybrid transaction” means. Final written terms cannot be contradicted by earlier or same‑time oral deals, but may be explained by trade practice and consistent extra terms. A no‑modification clause is enforceable, but a non‑merchant must separately sign it on a merchant’s form. Courts decide if a term is conspicuous based on what a reasonable person would notice.

Limits on after‑acquired consumer goods

A lender’s after‑acquired property clause does not, by itself, reach your consumer goods. One narrow exception covers an accession you acquire within 10 days after the lender gives value. The law still lets a lender reach proceeds, commingled goods, and proceeds of commercial tort claims as specified.

Control of electronic titles and chattel paper

The law explains how you show “control” of an electronic document of title or electronic chattel paper. A single authoritative copy must exist and show who controls it, or the system must give someone exclusive power to prevent changes and transfer control. For electronic chattel paper, control exists when the system reliably shows you as assignee and meets the authoritative‑copy rules.

Letters of credit go electronic

Letters of credit and related actions can be issued as signed electronic records. The governing law comes from a signed agreement or, if none, where the issuer or adviser is located. Bank branches are treated as separate for these rules.

Modern rules for e-checks and instruments

An instrument is issued when first delivered, including when a payee agrees to receive an image and data that lets a bank collect. Destroying a paper check during imaging does not cancel the duty to pay. You are not liable on an instrument unless you signed it or a binding agent signed for you.

Updated receivables and chattel paper terms

“Account” now covers controllable accounts and healthcare‑insurance receivables. The law defines who is an assignee and an assignor. “Chattel paper” includes recorded rights tied to goods and certain leases. Section 47‑9‑408 does not apply to security interests in partnership, LP, or LLC ownership interests.

Leases and hybrid deals made clearer

The law says lease rules apply to any deal that creates a lease of goods. In mixed deals, only lease parts apply unless the lease parts clearly predominate. After a default, an aggrieved party may waive a lease claim by delivering a signed record.

Standard notices before collateral sales

For non‑consumer cases, a disposition notice must name the debtor and secured party, describe the collateral, and explain how it will be sold. It must also explain the right to an accounting and give the sale time or place. A model form is provided, and small non‑misleading errors do not invalidate the notice.

Technical links to new digital chapter

The law updates internal cross‑references to include the new chapter on controllable electronic records. This technical change supports the new rules and does not change household costs.

Sponsors & Cosponsors

Sponsor

John Stevens
Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 40 • No: 0

Senate vote • 3/2/2026

FLOOR VOTE: Motion to Adopt 3/2/2026

Yes: 32 • No: 0

Senate vote • 2/24/2026

SENATE COMMERCE AND LABOR COMMITTEE

Yes: 8 • No: 0

Actions Timeline

Signed by Governor.
4/13/2026Senate
Transmitted to Governor for action.
4/2/2026Senate
Signed by H. Speaker
4/1/2026House
Signed by Senate Speaker
3/26/2026Senate
Enrolled and ready for signatures
3/25/2026Senate
Subst. for comp. HB.
3/23/2026House
Passed H., Ayes 82, Nays 0, PNV 2
3/23/2026House
Rcvd. from S., held on H. desk.
3/5/2026House
Passed Senate, Ayes 32, Nays 0
3/2/2026Senate
Engrossed; ready for transmission to House
3/2/2026Senate
Placed on Senate Consent Calendar 2 for 3/2/2026
2/27/2026Senate
Recommended for passage, refer to Senate Calendar Committee
2/24/2026Senate
Placed on Senate Commerce and Labor Committee calendar for 2/24/2026
2/17/2026Senate
Passed on Second Consideration, refer to Senate Commerce and Labor Committee
2/2/2026Senate
Introduced, Passed on First Consideration
1/22/2026Senate
Filed for introduction
1/21/2026Senate

Bill Text

Fiscal Note
PDF
Introduced
PDF

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