An act relating to the Uniform Commercial Code
Sponsored By: Michael J Marcotte (Republican)
Signed by Governor
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Bill Overview
Analyzed Economic Effects
29 provisions identified: 9 benefits, 0 costs, 20 mixed.
Existing collateral claims face transition deadlines
Beginning July 1, 2025, updated collateral rules generally cover existing transactions, with savings rules for earlier valid deals and proceedings. Previously perfected claims stay protected without further action when they meet the new requirements on that date. Otherwise, temporary protection generally ends when old-law protection expires or on the adjustment date, whichever comes first. Enforceable but unperfected claims must meet the new enforceability rules by the adjustment date; earlier actions and filings count only when they meet applicable new requirements. The adjustment date is July 1, 2026, or one year after effectiveness, whichever is later; changed digital-asset priorities replace earlier priorities then.
Borrowers keep notice and liability protections
Debtors and secondary obligors can waive notice of a collateral sale only through an agreement signed after default. Specified secured-transaction requests, claims, and notices also require signatures. For non-consumer goods, the notice form explains that disposal can include a lease or license and discloses any accounting charge. Certain lender liability limits do not apply when a lender knows controllable collateral or its records omit information about a debtor or obligor. That knowledge is measured at the later of obtaining control or when the security interest attaches.
Consumers get clearer collateral sale explanations
Before selling consumer goods used as collateral, lenders must give sale details and explain how to reinstate or redeem them. Notices must include contact information, a phone number for requesting an amount-owed explanation, and any stated fee for that explanation. Electronic records can provide the explanation and sale information. After a sale, lenders must explain how they calculated money left over or debt still owed. That explanation is due before or with payment of the surplus, or the first recorded demand for the remaining debt.
Debtors get ten-day collateral release deadlines
The law sets a 10-day deadline for required collateral releases or transfers after a debtor's signed demand. Covered transfers include electronic goods-payment records, title documents, money, and controllable records, to the debtor or their chosen recipient. Buyers of controllable accounts or payment rights need not transfer the record proving those purchased rights. After a signed debtor demand, lenders also have 10 days to send a signed release to previously notified assigned-account payors. That release ends those payors' further obligation to the lender.
Businesses can use signed credit records
Letters of credit and related changes, transfers, and cancellations can use signed records without the former extra authentication steps. Parties can choose governing law in a record signed by affected parties or in the relevant credit undertaking. Bank branches count as separate legal entities for jurisdiction, governing law, and recognition of interbranch letters of credit. This separate-branch rule does not apply to enforcing judgments. A branch's address in its undertaking determines its location; with multiple addresses, the issuing address controls.
Buyers gain protection from competing claims
Buyers can take specified assets free of unperfected lender claims by giving value without knowledge of the claim. Digital-record buyers must obtain control; chattel-paper buyers must receive authoritative paper copies and control electronic copies when those copies support control. Electronic title-document buyers must likewise control authoritative electronic copies when control is possible. Buyers of controllable records and payment rights also receive Article 12 protection when they obtain control for value, in good faith, without notice of competing claims. Buyers and lessees in ordinary business also gain protection against specified later loan advances.
Digital asset lenders gain control priority
Beginning July 1, 2025, Vermont recognizes control-based rights for controllable electronic records and linked payment rights. Control generally requires substantially all record benefits, exclusive powers to block others and transfer control, and an identifiable controller. Shared powers count only within the law's limits; another person can also acknowledge holding control on someone's behalf. Payment rights qualify when the record directs payment to its controller, and controlling that record also controls those rights. A lender with control has priority over a competing lender without control.
Digital record buyers gain claim protections
Buyers generally receive the rights their seller had or could transfer, limited to the interest purchased. A qualifying buyer takes a controllable digital record free of competing property claims. Qualification requires control, value given, good faith, and no notice of the claim. These protections also cover linked controllable payment rights and certain lawsuits based on claims in another digital record. Filing a secured-loan financing statement alone does not count as notice of a property claim.
Electronic signatures and clearer contract standards
Electronic symbols, sounds, or processes count as signatures when the signer intends to approve the linked record. Notices count as sent through usual channels to a reasonable address, or when received within the proper delivery time. Courts decide whether contract terms stand out by reviewing all circumstances, not a list of formatting examples.
Protected business series gain legal recognition
A protected business series counts as a person under Vermont's commercial code when another law establishes it. That law must limit, or conditionally limit, creditors' access to specified entity or protected-series assets. This recognizes qualifying series in commercial transactions; it does not itself create the asset protections.
Bank customers get updated transfer rules
Banks and customers can expressly agree in a record to limit bank recovery for certain unauthorized but legally effective transfers. Extra damages for late, improper, or failed transfers require the bank's express agreement in a record. Rejections, cancellations, and changes can be communicated orally or in a record. When a security procedure applies, cancellations and changes must pass that check or receive bank approval. Banks can prove notice about reliance on identifying numbers through a record signed before they accept the payment order.
Bank transfer safeguards and customer liability
Bank payment orders can be oral or recorded and must direct a fixed or determinable amount to a beneficiary. Banks and customers can agree to checks using codes, biometrics, encryption, or callbacks. A signature comparison or known email address, internet address, or phone number alone is not a qualifying security procedure. An unauthorized order can bind a customer when the agreed procedure is commercially reasonable and the bank proves good-faith compliance. A record can show acceptance of a customer-chosen procedure after the bank offers a commercially reasonable alternative.
Businesses gain clearer electronic document control
Systems can establish control of electronic title documents by identifying authoritative copies and the people holding them. Holders must have the required powers to protect holder designations and transfer control, with shared-control arrangements recognized. Similar rules cover electronic records of payment rights secured by goods or arising from qualifying goods leases. For leases, the main purpose must be giving the lessee possession and use of specific goods. A person acknowledging title-document control for another generally owes no duty unless an agreement or another law creates one.
Digital asset rules limit legal choices
Money includes government-authorized exchange media and specified intergovernmental units of account. It excludes electronic exchange records whose transfer system operated before government authorization or adoption. Article 12 sets the governing law for controllable records, using record or system designations and a District of Columbia default. Parties can choose different law only as the designated law allows. Special rules in Articles 6 and 12 also override the general rule for giving value, alongside Articles 3, 4, and 5.
Digital records determine governing legal rules
A controllable digital record's jurisdiction generally supplies the law for record rights and linked payment duties. Express terms in the record, an associated record, or system rules identify that jurisdiction, followed by stated governing-law terms. The District of Columbia is the default when those sources do not identify a jurisdiction. A permitted agreement can choose different law for payment-discharge matters. The record's jurisdiction generally governs lender protection and priority, but debtor location governs filing and automatic protection for sales of controllable payment rights.
Electronic checks keep payment duties intact
A drawer can issue a check by first sending its image and related information when the payee agrees. The transmission must let the receiving bank collect it as an electronic check under federal law. Destroying the paper check during image processing does not, by itself, end the duty to pay. Payment promises can also name a governing law or dispute forum without losing their status as negotiable instruments.
Electronic money recipients gain claim protections
Electronic money has new control standards for holders, recipients, and lenders. Control requires substantially all benefits, exclusive powers to block others and transfer control, and an identifiable controller. Joint powers are not exclusive when the other person can act independently or transferred an interest to the controller. Electronic money that cannot meet this standard is excluded from the secured-transactions definition of money. Recipients who obtain control take free of a lender's security claim unless they collude with the debtor to violate lender rights.
Farm financing gains priority with notice
Qualifying crop-production lenders gain priority over competing claims on the same crops and generally their identifiable proceeds. The lender must file when it first provides new value to enable crop production. When a competing lender filed first, notice must arrive through the required process 10 to 30 days before new value is provided. The notice must describe the crops and state the expected crop-production security claim. Among multiple qualifying claims, priority generally follows filing time, with added rules for the same lender and overlapping agricultural liens.
Financial transactions follow assigned jurisdiction rules
Covered securities matters follow the issuer's or intermediary's jurisdiction, even without a connection to that place. Deposit-account lender protection and priority follow the bank's jurisdiction; specified investment-property rules also apply without local ties. Electronic records of goods-secured or goods-lease payments use record or system jurisdiction terms, otherwise the debtor's location. For tangible-only records, the authoritative copy's location governs possession-based lender protection and priority. The debtor's location governs protection through filing for those tangible-only records.
Investors gain another securities control route
A purchaser can control rights held through a securities intermediary when another person acknowledges holding control for that purchaser. That person cannot be the seller transferring the interest. No one must acknowledge control, and acknowledgment alone generally creates no duties unless an agreement or another law requires them. Controllable digital records and related payment rights generally do not count as financial assets under securities law. The law retains a stated exception to that exclusion.
Lenders and buyers must hold official copies
For chattel paper—records of secured payments or goods leases—lenders can protect claims by holding every authoritative paper copy and controlling every authoritative electronic copy. That protection begins only after both requirements are met and lasts only while they remain met. Purchasers gain priority by giving new value, holding and controlling those copies, and acting in good faith in ordinary business. Inventory-proceeds claims require copies without another named assignee; other competing claims require no knowledge that the purchase violates lender rights. Paper delivery means voluntary transfer of possession; electronic title-document control gives holder status, except for control under section 7-106(g).
Lenders gain digital collateral filing options
Lenders can protect claims on controllable accounts, electronic records, and payment rights through filing or control. Control also protects claims on deposit accounts, electronic title documents, investment property, and letter-of-credit rights. Electronic money requires control; tangible money requires possession, and control-based protection lasts only while control is retained. Signing or becoming bound by a security agreement authorizes filings covering its collateral. Qualifying claims can remain protected after governing law changes, until the earlier transition event set by Vermont law.
Lenders gain routes to enforce collateral
An enforceable collateral claim requires value given and debtor rights in the property or power to transfer those rights. A debtor-signed agreement describing collateral, or the law's applicable control or possession route, must also support the claim. Limits on later-acquired consumer goods and commercial legal claims do not block claims in qualifying proceeds or commingled consumer goods. The law also establishes duties to debtors or people owing payment when specified digital collateral omits information about them. This applies when the lender knows of that omission at the later of obtaining control or the claim becoming enforceable.
Secured lenders use agents and signatures
A lender can control a deposit account through someone other than the debtor who acknowledges holding control for the lender. A bank agreement to follow lender instructions without further debtor consent requires signatures from the debtor, lender, and bank. Lenders must also sign accountings and proposals to accept collateral as payment of a debt. People holding control under the listed deposit-account, goods-payment-record, and electronic-money rules need not acknowledge control for others. An acknowledgment alone creates no duty or requirement to confirm it to others unless an agreement or another law says otherwise.
Transfer notices change who debtors pay
Special rules replace specified assignment-payment rules for controllable accounts and payment rights. A signed transfer notice must identify the debt and new controller, state the control transfer, and give a commercially reasonable payment method. The debtor and prior controller must first agree in a signed record on a reasonable method for providing transfer proof. After a valid notice, paying the former controller generally does not clear the debt, but missing timely requested proof permits that payment. Notices cannot override effective payment restrictions or require divided, partial, or multiple-method payments; other law can set different household-debt rules.
New record rules for goods leases
Electronic records can meet goods-lease requirements for contracts, final agreements, firm offers, and signed limits on changes. A required contract record must be signed by the party being held to it or that party's authorized agent. It must show a lease and describe the goods and lease term; enforcement cannot exceed the stated quantity or term. For mixed deals, lease rules apply broadly when the goods lease predominates, with special treatment for finance leases.
New record rules for goods sales
Electronic records can meet goods-sale contract requirements, including final agreements and signed limits on changes. For sales of $500 or more, a signed record must show a contract; enforcement cannot exceed its stated quantity. A merchant confirmation can bind a merchant who knows its contents and does not object within 10 days after receipt. A merchant's signed firm offer stays open without an exchange of value for no more than three months. For deals mixing goods with services or other property, sales rules apply broadly only when the goods sale predominates.
Receivable transfers ease, ownership limits remain
Some legal restrictions cannot block transfers of accounts or chattel paper, or their use as collateral. This includes specified consent requirements and rules that treat the transfer as a default. Exceptions remain for health care insurance receivables and other listed transactions. These overrides do not displace transfer restrictions on partnership or limited liability company ownership interests used as collateral. For these rules, a negotiable instrument evidencing chattel paper also counts as a promissory note.
Signed waivers can end contract claims
Parties can use a signed record to settle or give up all or part of an alleged contract-breach claim. No payment or other exchange is required. For a lease default or warranty breach, the party giving up the claim must deliver the signed waiver.
Sponsors & Cosponsors
Sponsor
Michael J Marcotte
Republican • House
Cosponsors
Edye Graning
Democratic • House
Kirk White
Democratic • House
Roll Call Votes
No roll call votes available for this bill.
Actions Timeline
House message: Governor approved bill on May 13, 2025
5/14/2025HouseSigned by Governor on May 13, 2025
5/13/2025HouseDelivered to Governor on May 7, 2025
5/7/2025HouseHouse message: House concurred in Senate proposal of amendment
4/30/2025HouseSenate proposal of amendment concurred in
4/29/2025HouseAction Calendar: Unfinished Business
4/29/2025HouseAction Calendar: Senate Proposal of Amendment
4/28/2025HouseNotice Calendar: Senate Proposal of Amendment
4/25/2025HouseSenate Message: Passed in concurrence with proposal of amendment
4/24/2025SenateRead 3rd time & passed in concurrence with proposal of amendment
4/23/2025SenatePending third reading, Senator Cummings, Beck, Brock, Chittenden, Gulick, Hardy, and Mattos proposal of amendment, agreed to
4/23/2025SenateProposal of amendment to be offered by Senator(s) Cummings, Beck, Brock, Chittenden, Gulick, Hardy, and Mattos
4/23/2025SenateNew Business/Third Reading
4/23/2025SenateReported favorably by Senator Cummings for Committee on Finance, read 2nd time and 3rd reading ordered
4/22/2025SenateFavorable report by Committee on Finance
4/22/2025SenateSecond Reading
4/22/2025SenateSecond Reading
4/18/2025SenateFavorable report by Committee on Finance
4/18/2025SenateEntered on Notice Calendar
4/18/2025SenateRead 1st time & referred to Committee on Finance
3/19/2025SenateRead third time and passed
3/14/2025HouseAction Calendar: Third Reading
3/14/2025HouseThird Reading ordered
3/13/2025HouseReport of Committee on Commerce and Economic Development agreed to
3/13/2025HouseRep. Olson of Starksboro reported for the Committee on Commerce and Economic Development
3/13/2025House
Bill Text
As Enacted (ACT 17)Opens in a new window
5/20/2025
As Passed by Both Chambers
5/13/2025
As Passed by Both Chambers (Unofficial)
5/13/2025
Senate Proposal of Amendment
4/25/2025
Senate Proposal of Amendment (Unofficial)
4/25/2025
As Passed by the House
3/18/2025
As Passed by the House (Unofficial)
3/18/2025
As Introduced
2/12/2025
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