TennesseeSB 1859114th General Assembly (2025-2026)Senate

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

Sponsored By: Sponsor information unavailable

Signed by Governor

Uniform Commercial Code

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Bill Overview

Analyzed Economic Effects

26 provisions identified: 8 benefits, 0 costs, 18 mixed.

Borrowers get clearer collateral request rights

For covered collateral, a signed debtor demand requires the controlling lender to take the applicable release or transfer action within 10 days. Actions include releasing bank instructions, transferring an account balance, or returning control to the debtor or a chosen person. Signed information requests must identify the transaction and can seek an accounting or correction of collateral lists or unpaid balances. Specified explanations and demands about debt remaining after a collateral sale can use records, including electronic records. Certain liability limits do not protect a lender that knows relevant information is missing from controllable collateral, related records, or its system at the later of obtaining control or the security interest attaching.

Borrowers keep limits on later collateral

A lender generally cannot use a later-acquired-property clause to claim consumer goods acquired more than 10 days after giving value. This limit does not cover an item added to other property and pledged as extra security. The law preserves claims to specified proceeds and goods mixed together. A later-acquired-property clause cannot attach to a commercial tort claim.

Clearer notices and protections for consumers

Notices about selling consumer goods used as collateral must explain any debt remaining after the sale. They must give a phone number to learn the amount needed to get the goods back. They must also give a phone number or mailing address for more information. The law supplies a notice form that is sufficient when completed correctly. Digital-record transactions still follow applicable consumer protections, including laws covering loans and installment sales.

Businesses can use electronic credit documents

Letters of credit and related confirmations, notices, transfers, changes, and cancellations can use any signed record. Parties can choose governing law and a dispute forum in a record signed by the affected parties. Those choices can also appear in the relevant letter of credit or other undertaking. Without an effective choice, liability generally follows the issuer's, nominated person's, or adviser's location. Rules for branches, adopted commercial practices, and conflicts with other commercial-law chapters still apply.

Debtors get release and collateral safeguards

After a debtor's signed demand, a lender must send a signed release within 10 days to a payer previously notified of an assignment. The release ends that payer's further obligation to the lender. Lenders holding or controlling covered collateral have the law's specified rights and duties. For covered digital collateral, a lender owes a duty when it knows identifying or contact information is missing. That knowledge is measured at the later of gaining control or the security interest attaching, using the collateral, related records, and system.

Digital debtors get clearer payment rules

A payer can clear a controllable account or controllable payment obligation by paying whoever controls the electronic record proving it. Payment to a former controller can also clear the obligation, subject to the law's notification rule.

Lenders gain electronic collateral control tools

Required control can satisfy an enforceability condition for a lender's claim when the debtor's security agreement provides for it. Covered assets include controllable records and payment rights, bank accounts, electronic money and documents, investment property, and letter-of-credit rights. Records showing debt secured by goods or a goods lease, called chattel paper, have separate possession and control requirements. A purchaser controls an authoritative electronic copy when the system reliably identifies that purchaser as the assignee. Another person can hold control by acknowledging that it holds or will obtain control for the purchaser.

Lenders get clearer location-based lien rules

A bank's legally designated jurisdiction supplies the rules for establishing and ranking secured claims on its deposit accounts. This applies even when the transaction has no other connection to that jurisdiction. For specified tangible documents, goods, instruments, and money, the collateral's location controls listed secured-transaction issues. These include fixture filings, timber to be cut, and the standing and ranking of claims without possession.

Signed records shape buyers' sales contracts

Goods sales of $500 or more generally need a signed record for enforcement, limited to the quantity recorded. Between merchants, a timely confirmation satisfies that requirement unless the recipient objects in a record within 10 days. Contract terms requiring signed changes or cancellation must be followed; a nonmerchant must separately sign that term on a merchant's form. For deals mixing goods with services or other property, sales rules apply based on whether goods are the main part. Other law can govern non-goods parts; consumer and farmer sales protections remain, and security-only transactions are excluded.

Bank customers face payment security rules

An unauthorized payment order can bind a customer when the bank proves it followed an agreed, commercially reasonable security procedure. The bank must also act in good faith and follow customer instructions recorded for the transaction. A signature comparison or known email, internet address, or phone number alone is not a security procedure. Customers who reject a reasonable alternative and choose another procedure must expressly agree in a record to be bound. That agreement covers orders accepted in compliance with the chosen procedure.

Check users face updated payment rules

A first check-image transmission counts as issuance when the payee agrees and the bank can collect it under federal law. Destroying the paper check during image-based processing does not, by itself, cancel the duty to pay. A person is liable on an instrument only if they or a legally binding agent signed it. A payment promise or order can name governing law or a dispute forum without losing its negotiable status.

Investors gain clearer control and ownership

A purchaser can control securities-account rights through someone who acknowledges holding or obtaining control for that purchaser. The holder need not give that acknowledgment; giving it creates no duty unless an agreement or other law says otherwise. The acknowledgment also need not be confirmed to others. A purchaser qualifying for protected status acquires a security free of adverse claims. Specified securities and investment-collateral rules follow the designated jurisdiction even when the transaction has no other connection there.

Businesses face different assignment rules

Specified rules about assignment restrictions and related matters no longer apply to controllable accounts or controllable payment rights. Specified assignment-related rules also do not apply to secured claims on ownership interests in general partnerships, limited partnerships, or limited liability companies. These exemptions change which rules govern owners, parties owing payment, and lenders.

Buyers gain protection from lender claims

Covered buyers can take property free of a lender's unprotected claim by giving value without knowing about the claim before protection begins. Delivery or control requirements depend on the property; the general rule for other collateral excludes electronic money. Buyers of goods also take free of claims securing later advances made after the lender learns of the purchase or 45 days pass, whichever comes first. Lessees get the same protection after the lender learns of the lease or 45 days after it becomes enforceable.

Digital-record buyers gain stronger ownership protections

A qualifying buyer takes a controllable electronic record free of property claims by obtaining control for value, in good faith, and without notice. The law also bars covered lawsuits based on that purchase and a property claim in another such record. Protected holders and buyers under rules for payment instruments, digital records, title documents, and investments can outrank earlier lender claims. This includes already-protected claims to the extent those rules provide. A secured-transactions filing does not count as notice of a claim or defense to those protected holders and buyers.

Electronic signatures and clearer commercial notices

The law accepts paper or electronic signatures when a person intends to approve or adopt the record. It replaces paper-only requirements in specified sales, leases, and payment transactions. Notices count as sent through usual methods to a reasonable address, with sending costs provided. Even an improperly sent notice counts if it arrives within the time proper sending would have taken. Courts consider all the circumstances when deciding whether a reasonable person should have noticed a contract term.

Existing deals stay valid during transition

Beginning July 1, 2026, earlier deals and related rights generally stay valid and enforceable under the law that applied to them. Earlier secured and controllable-asset transactions also fall under the law's transition rules; proceedings started before that date remain unaffected. Updated rules govern competing collateral claims, while priorities established before July 1, 2026, generally continue. On July 1, 2027, earlier priorities for specified controllable property and electronic money end to the extent updated rules change them. Secured-transaction priority rules control when applicable; otherwise, the new controllable-record rules determine priority.

Goods renters get clearer lease rules

For leases mixing goods with services or other property, goods-lease rules apply based on which part is most important. When goods are not the main part, only rules mainly about those goods apply, alongside specified finance-lease rules. When goods are the main part, goods-lease rules cover the deal, while other law can govern non-goods parts. A party can give up all or part of a default or warranty claim by signing and delivering a record. No payment or other exchange is needed for that waiver.

Lender claims follow new location rules

For electronic chattel paper, record terms or system rules identify which place's law governs protected claims and priority. Without those terms or rules, the debtor's location applies; filing also follows the debtor's location. For paper-only chattel paper, the official copy's location governs possession-based protection and priority. Controllable electronic records and related payment rights generally follow the record's jurisdiction. Filing and automatic protection from selling a controllable payment right instead follow the debtor's location. After a covered jurisdiction change, existing protection lasts until it expires under the former law or four months pass, whichever comes first.

Lenders face new asset classification rules

The law's money definition covers government-authorized exchange media and monetary units created by international organizations or agreements between countries. It excludes electronic exchange records whose systems operated before government approval. Qualifying protected business series count as persons when their governing law limits creditor access to the series' assets. Controllable accounts, electronic records, and payment rights are generally not securities-law financial assets, except for the stated statutory exception. Updated collateral definitions cover healthcare-insurance receivables, specified lease payments, electronic money and records, software, assignments, and accountings.

Lenders face updated collateral protection rules

The law sets how lenders legally protect claims to property used as collateral, subject to statutory exceptions. Deposit accounts and electronic money require control; tangible money requires possession. For chattel paper—records of secured payment obligations—possession or control requires handling every authoritative paper and electronic copy. Listed security interests receive 20 days of protection from attachment without filing, possession, or control, including new-value claims under signed agreements. This temporary rule also covers listed cases involving goods, documents, certificates, or instruments made available or delivered to the debtor; continued protection requires the applicable steps afterward. Covered agreements, notices, demands, and proposals now use signed records instead of authenticated records.

Lenders get transition time and deadlines

Beginning July 1, 2026, existing perfected liens stay perfected if they meet the updated enforceability and perfection requirements. Otherwise, perfection lasts only until the earlier old-law lapse date or July 1, 2027; updated enforceability requirements must also be met before July 1, 2027. Existing enforceable but unperfected liens remain enforceable until July 1, 2027, and must meet updated enforceability requirements to continue afterward. Earlier nonfiling steps can establish perfection for interests attaching before July 1, 2027, but that perfection ends then unless updated requirements are met. Earlier financing statements work only to the extent they satisfy updated requirements; unperfected interests gain perfection when those requirements are satisfied, subject to transition rules.

Lenders with digital control rank first

Controlling an electronic record generally requires access to substantially all its benefits, power to block others, and power to transfer control. The holder must be identifiable, and the law explains how shared or delegated powers count. A lender controls related controllable accounts or payment rights by controlling the record that proves them. A person need not acknowledge holding control for someone else; an acknowledgment alone creates no duty or confirmation requirement unless an agreement or other law says otherwise. Lenders with control of these assets rank ahead of competing lenders without control.

New rules for controlling and receiving money

Electronic-money control requires access to substantially all its benefits, exclusive powers to block others and transfer control, and an identifiable holder. The law explains when programmed limits, shared powers, or another person's acknowledgment still allow control. A lender can control a deposit account through someone other than the debtor who acknowledges holding or obtaining control for it. Recipients take cash or deposit-account funds free of lender claims when they receive possession without colluding with the debtor. Electronic-money recipients get that protection when they obtain control without colluding to violate the lender's rights.

Payment-record buyers can outrank lenders

Buyers of chattel paper—records of secured payment obligations—can rank ahead of certain lender claims. They must give new value, possess every authoritative paper copy, and control every authoritative electronic copy. They must also act in good faith and in the ordinary course of business. For claims based on inventory proceeds, the authoritative copies must not name another assignee. For other lender claims, buyers must not know that the purchase violates the lender's rights.

Traders can transfer electronic title documents

Delivering an electronic title document means voluntarily transferring control; delivering listed paper documents means voluntarily transferring possession. Electronic control depends on identifying and maintaining the authoritative copy and limiting changes or transfers. The law recognizes holders of negotiable electronic title documents, subject to its stated control exception. Another person can hold control for a trader by acknowledging that role. Unless an agreement or other law says otherwise, the acknowledgment creates no duty and need not be confirmed to others.

Sponsors & Cosponsors

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

Effective date(s) 07/01/2026
4/24/2026
Pub. Ch. 704
4/24/2026
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
Passed H., Ayes 82, Nays 0, PNV 2
3/23/2026House
Subst. for comp. HB.
3/23/2026House
Rcvd. from S., held on H. desk.
3/5/2026House
Engrossed; ready for transmission to House
3/2/2026Senate
Passed Senate, Ayes 32, Nays 0
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

Enrolled / Public Chapter
PDF
Fiscal Note
PDF
Introduced
PDF

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