National Conference of Commissioners on Uniform State Laws

211 E. Ontario St., Suite 1300, Chicago, IL 60611
tel 312-915-0195, fax 312-915-0187

For Immediate Release

STATES UNIFORMLY ENACT UCC9 REVISIONS

July 2, 2001 — As the result of a massive two-year coast-to-coast legislative effort, every state and the District of Columbia have adopted Revised Article 9 of the Uniform Commercial Code (UCC) prior to the July 1 deadline, when the new rules take effect.

Article 9 governs the granting of credit secured by personal property, establishing rules for how personal property collateral agreements must be created, documented, filed and enforced. Hundreds of millions of dollars of commercial and consumer credit are granted every year in “secured” transactions under Article 9 of the UCC. The rules come into play, for example, when a manufacturer finances the acquisition of machinery, a retailer finances inventory, or a consumer finances home furnishings.

Until recent weeks, New York, New Jersey and Massachusetts were not among the 47 states on board. New York and New Jersey legislatures adopted the new rules on June 21st; Massachusetts signed on just before the deadline, on June 29th. "It's an amazing success story attributable to a lot of hard work by dedicated professionals around the country," said William M. Burke, chair of the drafting committee to revise Article 9. "The revised rules will serve both debtors and secured creditors well, as the new UCC9 takes commercial law into the 21st century."

With this first comprehensive overhaul of UCC Article 9 since 1972, lawyers, bankers and lenders nationwide are now preparing for the changes in state law that will affect millions of daily business transactions across the country. The revisions were necessary to reflect modern lending practices and new technology, and to streamline existing rules.

The new UCC rules, drafted by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American Law Institute, were approved in 1998 to take effect on July 1, 2001, pending adoption by the 50 states and the District of Columbia. Because Article 9 is a lengthy and complex law, many said it couldn't be done.

The legislative process, requiring an intensive educational component, was a collaborative effort that began in 1999. A Joint Task Force, spearheaded by members of the American Bar Association Business Law Section and the American College of Commercial Finance Lawyers, served in an ongoing advisory capacity to NCCUSL's Legislative Committee, working in every state to answer inquiries, negotiate with the business community to work out problems unique to specific states, and talk to local commercial bar groups and other interested parties. A second five-member Task Force worked closely with state filing offices and the International Association of Corporate Administrators, providing technical assistance to help implement the vastly changed filing system that has been centralized and simplified, and that promotes electronic filings. NCCUSL’s legislative staff and Uniform Law Commissioners throughout the country were integral to the legislative process.

The learning curve is ongoing. As one advisor puts it, "July 1 is a very aggressive effective date, requiring many lawyers and paralegals to get up to speed on the new regulations very quickly.” A Task Force member who travels around the country speaking about the new rules noted attendance rising as the effective date neared.

The transition may be a bit rough, but most believe that the Article 9 revision ultimately will greatly streamline the process of secured lending.

While UCC9 has been adopted in all the states and the District of Columbia, Connecticut's law has an effective date of October 1, 2001, and three other states — Alabama, Florida and Mississippi — have an effective date of January 1, 2002.

The National Conference of Commissioners on Uniform State Laws is now in its 110th year. The organization comprises more than 300 lawyers, judges, and law professors, appointed by the states as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, to draft proposals for uniform and model laws and work toward their enactment in their legislatures. Since its inception in 1892, the group has promulgated more than 200 acts, among them such bulwarks of state statutory law as the Uniform Commercial Code, the Uniform Probate Code, and the Uniform Partnership Act.

For further information, please contact John McCabe or Katie Robinson at 312-915-0195, or Gabrielle Bamberger at 212-333-5222.