# Title 41 — Uniform Commercial Code

## Chapter 41-09 — Secured Transactions

### § 41-09-01. (9-101) Short title.

This chapter may be cited as Uniform Commercial Code - Secured Transactions.
### § 41-09-02. (9-102) Definitions and index of definitions.

1. In this chapter:
a. "Accession" means goods that are physically united with other goods in such a
manner that the identity of the original goods is not lost.
b. "Account", except as used in "account for", "account statement", "account to",
"commodity account" in subdivision p, "customer's account", "deposit account" in
subdivision gg, "on account of", and "statement of account", means:
(1) A right to payment of a monetary obligation, regardless of whether earned
by performance:
(a) For property that has been or is to be sold, leased, licensed, assigned,
or otherwise disposed of;
(b) For services rendered or to be rendered;
(c) For a policy of insurance issued or to be issued;
(d) For a secondary obligation incurred or to be incurred;
(e) For energy provided or to be provided;
(f) For the use or hire of a vessel under a charter or other contract;
(g) Arising out of the use of a credit or charge card or information
contained on or for use with the card; or
(h) As winnings in a lottery or other game of chance operated or
sponsored by a state, governmental unit of a state, or person licensed
or authorized to operate the game by a state or governmental unit of a
state.
(2) The term includes controllable accounts and a health care insurance
receivable. The term does not include:
(a) Chattel paper;
(b) Commercial tort claim;
(c) Deposit account;
(d) Investment property;
(e) Letter-of-credit right or letters of credit;
(f) Right to payment for any money or fund advanced or sold, other than
a right arising out of the use of a credit or charge card or information
contained on or for use with the card;
(g) Certificate of deposit; or
(h) Rights to payment evidenced by an instrument.
c. "Account debtor" means a person obligated on an account, chattel paper, or
general intangible. The term does not include a person obligated to pay a
negotiable instrument, even if the negotiable instrument evidences chattel paper.
d. "Accounting", except as used in "accounting for", means a record:
(1) Signed by a secured party;
(2) Indicating the aggregate unpaid secured obligations as of a date not more
than thirty-five days earlier or thirty-five days later than the date of the
record; and
(3) Identifying the components of the obligations in reasonable detail.
e. "Agricultural lien" means an interest in farm products:
(1) That secures payment or performance of an obligation for:
(a) Goods or services furnished in connection with a debtor's farming
operation or in connection with processing, production, or entrustment
of the farm products; or
(b) Rent on real property leased by a debtor in connection with the
debtor's farming operation;

(2) That is created by statute in favor of a person that:
(a) Furnished goods or services in connection with processing,
production, or entrustment of the farm product or in the ordinary
course of that person's business furnished goods or services to a
debtor in connection with a debtor's farming operation; or
(b) Leased real property to a debtor in connection with the debtor's
farming operation; and
(3) Of which the effectiveness does not depend on the person's possession of
the personal property.
f. "As-extracted collateral" means:
(1) Oil, gas, or other mineral that is subject to a security interest that:
(a) Is created by a debtor having an interest in the mineral before
extraction; and
(b) Attaches to the mineral as extracted; or
(2) Accounts arising out of the sale at the wellhead or minehead of oil, gas, or
other mineral in which the debtor had an interest before extraction.
g. "Assignee", except as used in "assignee for benefit of creditors", means a person
in whose favor a security interest that secures an obligation is created or provided
for under a security agreement, whether or not the obligation is outstanding or to
which an account, chattel paper, payment intangible, or promissory note has
been sold. The term includes a person to which a security interest has been
transferred by a secured party.
h. "Assignor" means a person that under a security agreement creates or provides
for a security interest that secures an obligation or sells an account, chattel paper,
payment intangible, or promissory note. The term includes a secured party that
has transferred a security interest to another person.
i. "Bank" means an organization engaged in the business of banking. The term
includes a savings bank, savings and loan association, credit union, and trust
company.
j. "Cash proceeds" means proceeds that are money, checks, deposit accounts,
certificates of deposit, or the like.
k. "Certificate of deposit" means a bank record of a sum of money which has been
received by the bank and a promise made by the bank to repay the sum of
money. The term does not include a deposit account. A certificate of deposit may
be negotiable, non-negotiable, nontransferable, certificated, or uncertificated.
l. "Certificate of title" means a certificate of title with respect to which a statute
provides for the security interest in question to be indicated on the certificate as a
condition or result of the security interest's obtaining priority over the rights of a
lien creditor with respect to the collateral. The term includes another record
maintained as an alternative to a certificate of title by the governmental unit that
issues certificates of title if a statute permits the security interest in question to be
indicated on the record as a condition or result of the security interest's obtaining
priority over the rights of a lien creditor with respect to the collateral.
m. "Certificated certificate of deposit" means a certificate of deposit that is
represented by a certificate.
n. "Chattel paper":
(1) Means:
(a) A right to payment of a monetary obligation secured by specific goods,
if the right to payment and security agreement are evidenced by a
record; or
(b) A right to payment of a monetary obligation owed by a lessee under a
lease agreement with respect to specific goods and a monetary
obligation owed by the lessee in connection with the transaction giving
rise to the lease, if:
[1] The right to payment and lease agreement are evidenced by a
record; and

[2] The predominant purpose of the transaction giving rise to the
lease was to give the lessee the right to possession and use of
the goods.
(2) Does not include a right to payment arising out of a charter or other contract
involving the use or hire of a vessel or a right to payment arising out of the
use of a credit or charge card or information contained on or for use with the
card.
o. "Collateral" means the property subject to a security interest or agricultural lien.
The term includes:
(1) Proceeds to which a security interest attaches;
(2) Accounts, chattel paper, payment intangibles, and promissory notes that
have been sold; and
(3) Goods that are the subject of a consignment.
p. "Commercial tort claim" means a claim arising in tort with respect to which:
(1) The claimant is an organization; or
(2) The claimant is an individual and the claim:
(a) Arose in the course of the claimant's business or profession; and
(b) Does not include damages arising out of personal injury to or the
death of an individual.
q. "Commodity account" means an account maintained by a commodity
intermediary in which a commodity contract is carried for a commodity customer.
r. "Commodity contract" means a commodity futures contract, an option on a
commodity futures contract, a commodity option, or another contract if the
contract or option is:
(1) Traded on or subject to the rules of a board of trade that has been
designated as a contract market for such a contract pursuant to federal
commodities laws; or
(2) Traded on a foreign commodity board of trade, exchange, or market and is
carried on the books of a commodity intermediary for a commodity
customer.
s. "Commodity customer" means a person for which a commodity intermediary
carries a commodity contract on the intermediary's books.
t. "Commodity intermediary" means a person that:
(1) Is registered as a futures commission merchant under federal commodities
law; or
(2) In the ordinary course of the person's business provides clearance or
settlement services for a board of trade that has been designated as a
contract market pursuant to federal commodities law.
u. "Communicate" means:
(1) To send a written or other tangible record;
(2) To transmit a record by any means agreed upon by the persons sending and
receiving the record; or
(3) In the case of transmission of a record to or by a filing office, to transmit a
record by any means prescribed by filing-office rule.
v. "Consignee" means a merchant to which goods are delivered in a consignment.
w. "Consignment" means a transaction, regardless of form, in which a person
delivers goods to a merchant for the purpose of sale and:
(1) The merchant:
(a) Deals in goods of that kind under a name other than the name of the
person making delivery;
(b) Is not an auctioneer; and
(c) Is not generally known by its creditors to be substantially engaged in
selling the goods of others;
(2) With respect to each delivery, the aggregate value of the goods is one
thousand dollars or more at the time of delivery;
(3) The goods are not consumer goods immediately before delivery; and

(4) The transaction does not create a security interest that secures an
obligation.
x. "Consignor" means a person that delivers goods to a consignee in a
consignment.
y. "Consumer debtor" means a debtor in a consumer transaction.
z. "Consumer goods" means goods that are used or bought for use primarily for
personal, family, or household purposes.
aa. "Consumer-goods transaction" means a consumer transaction in which:
(1) An individual incurs an obligation primarily for personal, family, or household
purposes; and
(2) A security interest in consumer goods secures the obligation.
bb. "Consumer obligor" means an obligor who is an individual and who incurred the
obligation as part of a transaction entered into primarily for personal, family, or
household purposes.
cc. "Consumer transaction" means a transaction in which:
(1) An individual incurs an obligation primarily for personal, family, or household
purposes;
(2) A security interest secures the obligation; and
(3) The collateral is held or acquired primarily for personal, family, or household
purposes. The term includes consumer-goods transactions.
dd. "Continuation statement" means an amendment of a financing statement which:
(1) Identifies, by its file number, the initial financing statement to which it relates;
and
(2) Indicates that it is a continuation statement for, or that it is filed to continue
the effectiveness of, the identified financing statement.
ee. "Controllable account" means an account evidenced by a controllable electronic
record that provides that the account debtor undertakes to pay the person that
has control under section 41-12-05 of the controllable electronic record.
ff. "Controllable payment intangible" means a payment intangible evidenced by a
controllable electronic record that provides that the account debtor undertakes to
pay the person that has control under section 41-12-05 of the controllable
electronic record.
gg. "Debtor" means:
(1) A person having an interest, other than a security interest or other lien, in
the collateral, regardless of whether the person is an obligor;
(2) A seller of accounts, chattel paper, payment intangibles, or promissory
notes; or
(3) A consignee.
hh. "Deposit account" means a demand, time, savings, passbook, or similar account
maintained with a bank. The term does not include investment property, a United
States central bank digital currency, or an account evidenced by a certificate of
deposit or an instrument.
ii. "Document" means a document of title or a receipt of the type described in
subsection 2 of section 41-07-07.
jj. "Electronic money" means money in an electronic form.
kk. "Encumbrance" means a right, other than an ownership interest, in real property.
The term includes mortgages and other liens on real property.
ll. "Equipment" means goods other than inventory, farm products, or consumer
goods.
mm. "Farm products" means goods, other than standing timber, subject to a lien
created under chapter 35-17, 35-30, or 35-31, or with respect to which the debtor
is engaged in a farming operation and which are:
(1) Crops grown, growing, or to be grown, including:
(a) Crops produced on trees, vines, and bushes; and
(b) Aquatic goods produced in aquacultural operations;

(2) Livestock, born or unborn, including aquatic goods produced in aquacultural
operations;
(3) Supplies used or produced in a farming operation; or
(4) Products of crops or livestock in their unmanufactured states.
nn. "Farming operation" means raising, cultivating, propagating, fattening, grazing, or
any other farming, livestock, or aquacultural operation.
oo. "File number" means the number assigned to an initial financing statement
pursuant to subsection 1 of section 41-09-90.
pp. "Filing office" means an office designated in section 41-09-72 as the place to file
a financing statement.
qq. "Filing-office rule" means a rule adopted under section 41-09-97.
rr. "Financing statement" means a record composed of an initial financing statement
and any filed record relating to the initial financing statement.
ss. "Fixture filing" means the filing of a financing statement covering goods that are
or are to become fixtures and satisfying subsections 1 and 2 of section 41-09-73.
The term includes the filing of a financing statement covering goods of a
transmitting utility which are or are to become fixtures.
tt. "Fixtures" means goods that have become so related to particular real property
that an interest in them arises under real property law.
uu. "General intangible" means any personal property, including things in action,
other than accounts, certificates of deposit, chattel paper, commercial tort claims,
deposit accounts, documents, goods, instruments, investment property,
letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals
before extraction. The term includes controllable electronic records, payment
intangibles, and software.
vv. "Goods" means all things that are movable when a security interest attaches.
(1) The term includes:
(a) Fixtures;
(b) Standing timber that is to be cut and removed under a conveyance or
contract for sale;
(c) The unborn young of animals;
(d) Crops grown, growing, or to be grown, even if the crops are produced
on trees, vines, or bushes; and
(e) Manufactured homes.
(2) The term also includes a computer program embedded in goods and any
supporting information provided in connection with a transaction relating to
the program if:
(a) The program is associated with the goods in such a manner that the
program is customarily considered part of the goods; or
(b) By becoming the owner of the goods, a person acquires a right to use
the program in connection with the goods.
(3) The term does not include a computer program embedded in goods that
consist solely of the medium in which the program is embedded. The term
also does not include accounts, certificates of deposit, chattel paper,
commercial tort claims, deposit accounts, documents, general intangibles,
instruments, investment property, letter-of-credit rights, letters of credit,
money, or oil, gas, or other minerals before extraction.
ww. "Governmental unit" means a subdivision, agency, department, county, parish,
municipality, or other unit of the government of the United States, a state, or a
foreign country. The term includes an organization having a separate corporate
existence if the organization is eligible to issue debt on which interest is exempt
from income taxation under the laws of the United States.
xx. "Health care insurance receivable" means an interest in or claim under a policy of
insurance which is a right to payment of a monetary obligation for health care
goods or services provided or to be provided.

yy. "Instrument" means a negotiable instrument or any other writing that evidences a
right to the payment of a monetary obligation, is not itself a security agreement or
lease, and is of a type that in ordinary course of business is transferred by
delivery with any necessary indorsement or assignment. The term does not
include:
(1) Certificates of deposit;
(2) Investment property;
(3) Letters of credit;
(4) Writings that evidence a right to payment arising out of the use of a credit or
charge card or information contained on or for use with the card; or
(5) Writings that evidence chattel paper.
zz. "Inventory" means goods, other than farm products, that:
(1) Are leased by a person as lessor;
(2) Are held by a person for sale or lease or to be furnished under a contract of
service;
(3) Are furnished by a person under a contract of service; or
(4) Consist of raw materials, work in process, or materials used or consumed in
a business.
aaa. "Investment property" means a security, whether certificated or uncertificated,
security entitlement, securities account, commodity contract, or commodity
account.
bbb. "Jurisdiction of organization", with respect to a registered organization, means the
jurisdiction under whose law the organization is organized.
ccc. "Letter-of-credit right" means a right to payment or performance under a letter of
credit, regardless of whether the beneficiary has demanded or is at the time
entitled to demand payment or performance. The term does not include the right
of a beneficiary to demand payment or performance under a letter of credit.
ddd. "Lien creditor" means:
(1) A creditor that has acquired a lien on the property involved by attachment,
levy, or the like;
(2) An assignee for benefit of creditors from the time of assignment;
(3) A trustee in bankruptcy from the date of the filing of the petition; or
(4) A receiver in equity from the time of appointment.
eee. "Manufactured home" means a structure, transportable in one or more sections,
that, in the traveling mode, is eight body feet [2.44 meters] or more in width or
forty body feet [12.19 meters] or more in length, or, when erected on site, is three
hundred twenty square feet [29.73 square meters] or more, and which is built on
a permanent chassis and designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and includes the
plumbing, heating, air-conditioning, and electrical systems contained therein. The
term includes any structure that meets all of the requirements of this subdivision
except the size requirements and with respect to which the manufacturer
voluntarily files a certification required by the United States secretary of housing
and urban development and complies with the standards established under
title 42 of the United States Code.
fff. "Manufactured-home transaction" means a secured transaction:
(1) Which creates a purchase-money security interest in a manufactured home,
other than a manufactured home held as inventory; or
(2) In which a manufactured home, other than a manufactured home held as
inventory, is the primary collateral.
ggg. "Money" has the meaning in subsection 2 of section 41-01-09, but does not
include a deposit account or money in an electronic form that cannot be
subjected to control under section 41-09-05.1.
hhh. "Mortgage" means a consensual interest in real property, including fixtures, that
secures payment or performance of an obligation.

iii. "New debtor" means a person that becomes bound as debtor under subsection 4
of section 41-09-13 by a security agreement previously entered into by another
person.
jjj. "New value" means:
(1) Money;
(2) Money's worth in property, services, or new credit; or
(3) Release by a transferee of an interest in property previously transferred to
the transferee.
The term does not include an obligation substituted for another obligation.
kkk. "Noncash proceeds" means proceeds other than cash proceeds.
lll. "Non-negotiable certificate of deposit" means a bank record that contains an
acknowledgment that a sum of money has been received by the issuer and a
promise by the issuer to repay the sum of money other than a deposit account or
negotiable instrument.
mmm. "Nontransferable certificate of deposit" means a non-negotiable certificate of
deposit which may be transferred only on the books of the issuer, with the
consent of the issuer, or subject to other restrictions or considerations of the
issuer on transfer. The term does not include a deposit account.
nnn. "Obligor" means a person that, with respect to an obligation secured by a security
interest in or an agricultural lien on the collateral:
(1) Owes payment or other performance of the obligation;
(2) Has provided property other than the collateral to secure payment or other
performance of the obligation; or
(3) Is otherwise accountable in whole or in part for payment or other
performance of the obligation.
The term does not include issuers or nominated persons under a letter of credit.
ooo. "Original debtor", except as used in subsection 3 of section 41-09-30, means a
person that, as debtor, entered into a security agreement to which a new debtor
has become bound under subsection 4 of section 41-09-13.
ppp. "Payment intangible" means a general intangible under which the account
debtor's principal obligation is a monetary obligation. The term includes a
controllable payment intangible.
qqq. "Person related to", with respect to an individual, means:
(1) The spouse of the individual;
(2) A brother, brother-in-law, sister, or sister-in-law of the individual;
(3) An ancestor or lineal descendant of the individual or the individual's spouse;
or
(4) Any other relative, by blood or marriage, of the individual or the individual's
spouse who shares the same home with the individual.
rrr. "Person related to", with respect to an organization, means:
(1) A person directly or indirectly controlling, controlled by, or under common
control with the organization;
(2) An officer or director of, or a person performing similar functions with respect
to, the organization;
(3) An officer or director of, or a person performing similar functions with respect
to, a person described in paragraph 1;
(4) The spouse of an individual described in paragraph 1, 2, or 3; or
(5) An individual who is related by blood or marriage to an individual described
in paragraph 1, 2, 3, or 4 and shares the same home with the individual.
sss. "Proceeds", except as used in subsection 2 of section 41-09-106, means the
following property:
(1) Whatever is acquired upon the sale, lease, license, exchange, or other
disposition of collateral;
(2) Whatever is collected on, or distributed on account of, collateral;
(3) Rights arising out of collateral;

(4) To the extent of the value of collateral, claims arising out of the loss,
nonconformity, or interference with the use of, defects or infringement of
rights in, or damage to, the collateral; or
(5) To the extent of the value of collateral and to the extent payable to the
debtor or the secured party, insurance payable by reason of the loss or
nonconformity of, defects or infringement of rights in, or damage to, the
collateral.
ttt. "Promissory note" means an instrument that evidences a promise to pay a
monetary obligation, does not evidence an order to pay, and does not contain an
acknowledgment by a bank that the bank has received for deposit a sum of
money or funds.
uuu. "Proposal" means a record signed by a secured party which includes the terms
on which the secured party is willing to accept collateral in full or partial
satisfaction of the obligation it secures under sections 41-09-115 through
41-09-117.
vvv. "Public organic record" means a record that is available to the public for
inspection and which is:
(1) A record consisting of the record initially filed with or issued by a state or the
United States to form or organize an organization and any record filed with
or issued by the state or the United States which amends or restates the
initial record;
(2) An organic record of a business trust consisting of the record initially filed
with a state and any record filed with the state which amends or restates the
initial record, if a statute of the state governing business trusts requires that
the record be filed with the state; or
(3) A record consisting of legislation enacted by the legislature of a state or the
Congress of the United States which forms or organizes an organization,
any record amending the legislation, and any record filed with or issued by
the state or United States which amends or restates the name of the
organization.
www. "Pursuant to commitment", with respect to an advance made or other value given
by a secured party, means pursuant to the secured party's obligation, regardless
of whether a subsequent event of default or other event not within the secured
party's control has relieved or may relieve the secured party from the secured
party's obligation.
xxx. "Record", except as used in "for record", "of record", "record or legal title", and
"record owner", means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in perceivable
form.
yyy. "Registered organization" means an organization formed or organized solely
under the law of a single state or the United States by the filing of a public organic
record with, the issuance of a public organic record by, or the enactment of
legislation by the state or United States. The term includes a business trust that is
formed or organized under the law of a single state if a statute of the state
governing business trusts requires that the business trust's organic record be
filed with the state.
zzz. "Secondary obligor" means an obligor to the extent that:
(1) The obligor's obligation is secondary; or
(2) The obligor has a right of recourse with respect to an obligation secured by
collateral against the debtor, another obligor, or property of either.
aaaa. "Secured party" means:
(1) A person in whose favor a security interest is created or provided for under a
security agreement, regardless of whether any obligation to be secured is
outstanding;
(2) A person that holds an agricultural lien;
(3) A consignor;

(4) A person to which accounts, chattel paper, payment intangibles, or
promissory notes have been sold;
(5) A trustee, indenture trustee, agent, collateral agent, or other representative
in whose favor a security interest or agricultural lien is created or provided
for; or
(6) A person that holds a security interest arising under section 41-02-46,
section 41-02-53, subsection 3 of section 41-02-90, subsection 5 of section
41-02.1-56, section 41-04-22, or section 41-05-18.
bbbb. "Security agreement" means an agreement that creates or provides for a security
interest.
cccc. "Software" means a computer program and any supporting information provided
in connection with a transaction relating to the program. The term does not
include a computer program that is included in the definition of goods.
dddd. "State" means a state of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the United States Virgin Islands, or any territory
or insular possession subject to the jurisdiction of the United States.
eeee. "Supporting obligation" means a letter-of-credit right or secondary obligation that
supports the payment or performance of an account, chattel paper, a document, a
general intangible, an instrument, or investment property.
ffff. "Tangible money" means money in a tangible form.
gggg. "Termination statement" means an amendment of a financing statement which:
(1) Identifies, by the amendment's file number, the initial financing statement to
which it relates; and
(2) Indicates either that the amendment is a termination statement or that the
identified financing statement is no longer effective.
hhhh. "Transmitting utility" means a person primarily engaged in the business of:
(1) Operating a railroad, subway, street railway, or trolley bus;
(2) Transmitting communications electrically, electromagnetically, or by light;
(3) Transmitting goods by pipeline or sewer; or
(4) Transmitting or producing and transmitting electricity, steam, gas, or water.
iiii. "Uncertificated certificate of deposit" means an obligation of a bank to repay a
sum of money that it has received which is not represented by a certificate, but
only by an entry on the books of the bank and any documentation given to the
customer by the bank. The term does not include a deposit account.
2. "Control" as provided under section 41-07-06 and the following definitions in other
chapters apply to this chapter:
a. "Applicant". Section 41-05-02.
b. "Beneficiary". Section 41-05-02.
c. "Broker". Section 41-08-02.
d. "Certificated security". Section 41-08-02.
e. "Check". Section 41-03-04.
f. "Clearing corporation". Section 41-08-02.
g. "Contract for sale". Section 41-02-06.
h. "Controllable electronic record". Section 41-12-02.
i. "Customer". Section 41-04-04.
j. "Entitlement holder". Section 41-08-02.
k. "Financial asset". Section 41-08-02.
l. "Holder in due course". Section 41-03-28.
m. "Issuer" (with respect to a letter of credit or letter-of-credit right). Section
41-05-02.
n. "Issuer" (with respect to a security). Section 41-08-17.
o. "Issuer" (with respect to documents of title). Section 41-07-02.
p. "Lease". Section 41-02.1-03.
q. "Lease agreement". Section 41-02.1-03.
r. "Lease contract". Section 41-02.1-03.
s. "Leasehold interest". Section 41-02.1-03.

t. "Lessee". Section 41-02.1-03.
u. "Lessee in ordinary course of business". Section 41-02.1-03.
v. "Lessor". Section 41-02.1-03.
w. "Lessor's residual interest". Section 41-02.1-03.
x. "Letter of credit". Section 41-05-02.
y. "Merchant". Section 41-02-04.
z. "Negotiable instrument". Section 41-03-04.
aa. "Nominated person". Section 41-05-02.
bb. "Note". Section 41-03-04.
cc. "Proceeds of a letter of credit". Section 41-05-14.
dd. "Protected purchaser". Section 41-08-29.
ee. "Prove". Section 41-03-03.
ff. "Qualifying purchaser". Section 41-12-02.
gg. "Sale". Section 41-02-06.
hh. "Securities account". Section 41-08-41.
ii. "Securities intermediary". Section 41-08-02.
jj. "Security". Section 41-08-02.
kk. "Security certificate". Section 41-08-02.
ll. "Security entitlement". Section 41-08-02.
mm. "Uncertificated security". Section 41-08-02.
3. Chapter 41-01 contains general definitions and principles of construction and
interpretation applicable throughout this chapter.
### § 41-09-03. (9-103) Purchase-money security interest - Application of payments -

Burden of establishing.
1. In this section:
a. "Purchase-money collateral" means goods or software that secures a
purchase-money obligation incurred with respect to that collateral; and
b. "Purchase-money obligation" means an obligation of an obligor incurred as all or
part of the price of the collateral or for value given to enable the debtor to acquire
rights in or the use of the collateral if the value is in fact so used.
2. A security interest in goods is a purchase-money security interest:
a. To the extent that the goods are purchase-money collateral with respect to that
security interest;
b. If the security interest is in inventory that is or was purchase-money collateral,
also to the extent that the security interest secures a purchase-money obligation
incurred with respect to other inventory in which the secured party holds or held a
purchase-money security interest; and
c. Also to the extent that the security interest secures a purchase-money obligation
incurred with respect to software in which the secured party holds or held a
purchase-money security interest.
3. A security interest in software is a purchase-money security interest to the extent that
the security interest also secures a purchase-money obligation incurred with respect to
goods in which the secured party holds or held a purchase-money security interest if:
a. The debtor acquired its interest in the software in an integrated transaction in
which the debtor acquired an interest in the goods; and
b. The debtor acquired its interest in the software for the principal purpose of using
the software in the goods.
4. The security interest of a consignor in goods that are the subject of a consignment is a
purchase-money security interest in inventory.
5. If the extent to which a security interest is a purchase-money security interest depends
on the application of a payment to a particular obligation, the payment must be
applied:
a. In accordance with any reasonable method of application to which the parties
agree;

b. In the absence of the parties' agreement to a reasonable method, in accordance
with any intention of the obligor manifested at or before the time of payment; or
c. In the absence of an agreement to a reasonable method and a timely
manifestation of the obligor's intention, in the following order:
(1) To obligations that are not secured; and
(2) If more than one obligation is secured, to obligations secured by
purchase-money security interests in the order in which those obligations
were incurred.
6. A purchase-money security interest does not lose its status as such, even if:
a. The purchase-money collateral also secures an obligation that is not a
purchase-money obligation;
b. Collateral that is not purchase-money collateral also secures the purchase-money
obligation; or
c. The purchase-money obligation has been renewed, refinanced, consolidated, or
restructured.
7. A secured party claiming a purchase-money security interest has the burden of
establishing the extent to which the security interest is a purchase-money security
interest.
### § 41-09-04. (9-104) Control of deposit account or uncertificated certificate of deposit.

1. A secured party has control of a deposit account or uncertificated certificate of deposit
if:
a. The secured party is the bank with which the deposit account or uncertificated
certificate of deposit is maintained;
b. The debtor, secured party, and bank have agreed in a signed record that the bank
will comply with instructions originated by the secured party directing disposition
of the funds in the deposit account or uncertificated certificate of deposit without
further consent by the debtor;
c. The secured party becomes the bank's customer with respect to the deposit
account or uncertificated certificate of deposit; or
d. Another person, other than the debtor:
(1) Has control of the deposit account and acknowledges that it has control on
behalf of the secured party; or
(2) Obtains control of the deposit account after having acknowledged that it will
obtain control of the deposit account on behalf of the secured party.
2. A secured party that has satisfied subsection 1 has control, even if the debtor retains
the right to direct the disposition of funds from the deposit account or uncertificated
certificate of deposit.
### § 41-09-05. (9-105) Control of electronic copy of record evidencing chattel paper.

1. A purchaser has control of an authoritative electronic copy of a record evidencing
chattel paper if a system employed for evidencing the assignment of interests in the
chattel paper reliably establishes the purchaser as the person to which the
authoritative electronic copy was assigned.
2. A system satisfies subsection 1 if the record or records evidencing the chattel paper
are created, stored, and assigned in such a manner that:
a. A single authoritative copy of the record or records exists which is unique,
identifiable, and, except as otherwise provided in subdivisions d, e, and f,
unalterable;
b. The authoritative copy identifies the purchaser as the assignee of the record or
records;
c. The authoritative copy is communicated to and maintained by the purchaser or its
designated custodian;
d. Copies or amendments that add or change an identified assignee of the
authoritative copy can be made only with the consent of the purchaser;

e. Each copy of the authoritative copy and any copy of a copy is readily identifiable
as a copy that is not the authoritative copy; and
f. Any amendment of the authoritative copy is readily identifiable as authorized or
unauthorized.
3. A system satisfies subsection 1, and a purchaser has control of an authoritative
electronic copy of a record evidencing chattel paper, if the electronic copy, a record
attached to or logically associated with the electronic copy, or a system in which the
electronic copy is recorded:
a. Enables the purchaser readily to identify each electronic copy as either an
authoritative copy or a nonauthoritative copy;
b. Enables the purchaser readily to identify itself in any way, including by name,
identifying number, cryptographic key, office, or account number, as the assignee
of the authoritative electronic copy; and
c. Gives the purchaser exclusive power, subject to subsection 4, to:
(1) Prevent others from adding or changing an identified assignee of the
authoritative electronic copy; and
(2) Transfer control of the authoritative electronic copy.
4. Subject to subsection 5, a power is exclusive under subdivision c of subsection 3 even
if:
a. The authoritative electronic copy, a record attached to or logically associated with
the authoritative electronic copy, or a system in which the authoritative electronic
copy is recorded limits the use of the authoritative electronic copy or has a
protocol programmed to cause a change, including a transfer or loss of control; or
b. The power is shared with another person.
5. A power of a purchaser is not shared with another person under subdivision b of
subsection 4 and the purchaser's power is not exclusive if:
a. The purchaser can exercise the power only if the power also is exercised by the
other person; and
b. The other person:
(1) Can exercise the power without exercise of the power by the purchaser; or
(2) Is the transferor to the purchaser of an interest in the chattel paper.
6. If a purchaser has the powers specified in subdivision c of subsection 3, the powers
are presumed to be exclusive.
7. A purchaser has control of an authoritative electronic copy of a record evidencing
chattel paper if another person, other than the transferor to the purchaser of an
interest in the chattel paper:
a. Has control of the authoritative electronic copy and acknowledges that it has
control on behalf of the purchaser; or
b. Obtains control of the authoritative electronic copy after having acknowledged
that it will obtain control of the electronic copy on behalf of the purchaser.
### § 41-09-05.1. (9-105A) Control of electronic money.

1. A person has control of electronic money if:
a. The electronic money, a record attached to or logically associated with the
electronic money, or a system in which the electronic money is recorded gives the
person:
(1) Power to avail itself of substantially all the benefit from the electronic money;
and
(2) Exclusive power, subject to subsection 2, to:
(a) Prevent others from availing themselves of substantially all the benefit
from the electronic money; and
(b) Transfer control of the electronic money to another person or cause
another person to obtain control of other electronic money as a result
of the transfer of the electronic money; and
b. The electronic money, a record attached to or logically associated with the
electronic money, or a system in which the electronic money is recorded enables

the person readily to identify itself in any way, including by name, identifying
number, cryptographic key, office, or account number, as having the powers
under subdivision a.
2. Subject to subsection 3, a power is exclusive under paragraph 2 of subdivision a of
subsection 1 even if:
a. The electronic money, a record attached to or logically associated with the
electronic money, or a system in which the electronic money is recorded limits the
use of the electronic money or has a protocol programmed to cause a change,
including a transfer or loss of control; or
b. The power is shared with another person.
3. A power of a person is not shared with another person under subdivision b of
subsection 2 and the person's power is not exclusive if:
a. The person can exercise the power only if the power also is exercised by the
other person; and
b. The other person:
(1) Can exercise the power without exercise of the power by the person; or
(2) Is the transferor to the person of an interest in the electronic money.
4. If a person has the powers specified in paragraph 2 of subdivision a of subsection 1,
the powers are presumed to be exclusive.
5. A person has control of electronic money if another person, other than the transferor to
the person of an interest in the electronic money:
a. Has control of the electronic money and acknowledges that it has control on
behalf of the person; or
b. Obtains control of the electronic money after having acknowledged that it will
obtain control of the electronic money on behalf of the person.
### § 41-09-06. (9-106) Control of investment property.

1. A person has control of a certificated security, uncertificated security, or security
entitlement as provided in section 41-08-06.
2. A secured party has control of a commodity contract if:
a. The secured party is the commodity intermediary with which the commodity
contract is carried; or
b. The commodity customer, secured party, and commodity intermediary have
agreed that the commodity intermediary will apply any value distributed on
account of the commodity contract as directed by the secured party without
further consent by the commodity customer.
3. A secured party having control of all security entitlements or commodity contracts
carried in a securities account or commodity account has control over the securities
account or commodity account.
### § 41-09-07. (9-107) Control of letter-of-credit right.

A secured party has control of a letter-of-credit right to the extent of any right to payment or
performance by the issuer or any nominated person if the issuer or nominated person has
consented to an assignment of proceeds of the letter of credit under subsection 3 of section
### § 41-09-07.1. (9-107A) Control of controllable electronic record, controllable account, or

controllable payment intangible.
1. A secured party has control of a controllable electronic record as provided in section
41-12-05.
2. A secured party has control of a controllable account or controllable payment
intangible if the secured party has control of the controllable electronic record that
evidences the controllable account or controllable payment intangible.

### § 41-09-07.2. (9-107B) No requirement to acknowledge or confirm - No duties.

1. A person that has control under section 41-09-04, 41-09-05, or 41-09-05.1 is not
required to acknowledge that it has control on behalf of another person.
2. If a person acknowledges that it has or will obtain control on behalf of another person,
unless the person otherwise agrees or law other than this chapter otherwise provides,
the person does not owe any duty to the other person and is not required to confirm
the acknowledgment to any other person.
### § 41-09-08. (9-108) Sufficiency of description.

1. Except as otherwise provided in subsections 3 through 5, a description of personal or
real property is sufficient, regardless of whether the description is specific, if the
description reasonably identifies what is described.
2. Except as otherwise provided in subsection 4, a description of collateral reasonably
identifies the collateral if it identifies the collateral by:
a. Specific listing;
b. Category;
c. Except as otherwise provided in subsection 5, a type of collateral defined in the
Uniform Commercial Code;
d. Quantity;
e. Computational or allocational formula or procedure; or
f. Except as otherwise provided in subsection 3, any other method, if the identity of
the collateral is objectively determinable.
3. A description of collateral as "all the debtor's assets" or "all the debtor's personal
property" or using words of similar import does not reasonably identify the collateral.
4. Except as otherwise provided in subsection 5, a description of a security entitlement,
securities account, or commodity account is sufficient if the description describes:
a. The collateral by those terms or as investment property; or
b. The underlying financial asset or commodity contract.
5. A description only by type of collateral defined in the Uniform Commercial Code is an
insufficient description of:
a. A commercial tort claim; or
b. A security entitlement, a securities account, or a commodity account.
### § 41-09-09. (9-109) Scope.

1. Except as otherwise provided in subsections 3 and 4, this chapter applies to:
a. A transaction, regardless of its form, that creates a security interest in personal
property or fixtures by contract;
b. An agricultural lien;
c. A sale of accounts, chattel paper, payment intangibles, or promissory notes;
d. A consignment;
e. A security interest arising under section 41-02-46, section 41-02-53, subsection 3
of section 41-02-90, or subsection 5 of section 41-02.1-56, as provided in section
41-09-10; and
f. A security interest arising under section 41-04-22 or 41-05-18.
2. Except as provided in section 47-19-41, the application of this chapter to a security
interest in a secured obligation is not affected by the fact that the obligation is itself
secured by a transaction or interest to which this chapter does not apply.
3. This chapter does not apply to the extent that:
a. A statute, regulation, or treaty of the United States preempts this chapter;
b. A statute of another state, a foreign country, or a governmental unit of another
state or a foreign country, other than a statute generally applicable to security
interests, expressly governs creation, perfection, priority, or enforcement of a
security interest created by the state, country, or governmental unit; or
c. The rights of a transferee beneficiary or nominated person under a letter of credit
are independent and superior under section 41-05-14.
4. This chapter does not apply to:

a. A landlord's lien, other than an agricultural lien;
b. A lien, other than an agricultural lien, given by statute or other rule of law for
services or materials, but section 41-09-53 applies with respect to priority of the
lien;
c. An assignment of a claim for wages, salary, or other compensation of an
employee;
d. A sale of accounts, chattel paper, payment intangibles, or promissory notes as
part of a sale of the business out of which they arose;
e. An assignment of accounts, chattel paper, payment intangibles, or promissory
notes which is for the purpose of collection only;
f. An assignment of a right to payment under a contract to an assignee that is also
obligated to perform under the contract;
g. An assignment of a single account, payment intangible, or promissory note to an
assignee in full or partial satisfaction of a pre-existing indebtedness;
h. A transfer of an interest in or an assignment of a claim under a policy of
insurance, other than an assignment by or to a health care provider of a health
care insurance receivable and any subsequent assignment of the right to
payment, but sections 41-09-35 and 41-09-42 apply with respect to proceeds and
priorities in proceeds;
i. An assignment of a right represented by a judgment, other than a judgment taken
on a right to payment that was collateral;
j. A right of recoupment or setoff, but:
(1) Section 41-09-60 applies with respect to the effectiveness of rights of
recoupment or setoff against deposit accounts or certificates of deposit; and
(2) Section 41-09-66 applies with respect to defenses or claims of an account
debtor;
k. The creation or transfer of an interest in or lien on real property, including a lease
or rents thereunder, except to the extent that provision is made for:
(1) Liens on real property in sections 41-09-13 and 41-09-28;
(2) Fixtures in section 41-09-54;
(3) Fixture filings in sections 41-09-72, 41-09-73, 41-09-87, and 41-09-90; and
(4) Security agreements covering personal and real property in section
41-09-101;
l. An assignment of a claim arising in tort, other than a commercial tort claim, but
sections 41-09-35 and 41-09-42 apply with respect to proceeds and priorities in
proceeds; or
m. A transfer by this state or a governmental unit of this state.
### § 41-09-10. (9-110) Security interests arising under chapter 41-02 or 41-02.

1.
A security interest arising under section 41-02-46, section 41-02-53, subsection 3 of section
41-02-90, or subsection 5 of section 41-02.1-56 is subject to this chapter. However, until the
debtor obtains possession of the goods:
1. The security interest is enforceable, even if subdivision c of subsection 2 of section
2. Filing is not required to perfect the security interest;
3. The rights of the secured party after default by the debtor are governed by chapter
41-02 or 41-02.1; and
4. The security interest has priority over a conflicting security interest created by the
debtor.
### § 41-09-11. (9-201) General effectiveness of security agreement.

1. Except as otherwise provided in this title, a security agreement is effective according to
the security agreement's terms between the parties, against purchasers of the
collateral, and against creditors.
2. A transaction, although subject to this chapter, is also subject to section 47-19-41 and
chapters 13-04.1, 35-05, 49-09, and 51-13. In the case of conflict between this chapter

and any of those statutes, the provisions of those statutes control. Failure to comply
with any applicable statute has only the effect that is specified therein.
3. In case of conflict between this chapter and a rule of law, statute, or regulation
described in subsection 2, the rule of law, statute, or regulation controls. Failure to
comply with a statute or regulation described in subsection 2 has only the effect the
statute or regulation specifies. In no event is the failure of a secured party to comply
with a statute or rule other than this chapter a failure to comply with any provision of
this chapter.
4. This chapter does not:
a. Validate any rate, charge, agreement, or practice that violates a rule of law,
statute, or regulation described in subsection 2; or
b. Extend the application of the rule of law, statute, or regulation to a transaction not
otherwise subject to it.
### § 41-09-12. (9-202) Title to collateral immaterial.

Except as otherwise provided with respect to consignments or sales of accounts, chattel
paper, payment intangibles, or promissory notes, the provisions of this chapter with regard to
rights and obligations apply whether title to collateral is in the secured party or the debtor.
### § 41-09-13. (9-203) Attachment and enforceability of security interest - Proceeds -

Supporting obligations - Formal requisites.
1. A security interest attaches to collateral when the security interest becomes
enforceable against the debtor with respect to the collateral, unless an agreement
expressly postpones the time of attachment.
2. Except as otherwise provided in subsections 3 through 9, a security interest is
enforceable against the debtor and third parties with respect to the collateral only if:
a. Value has been given;
b. The debtor has rights in the collateral or the power to transfer rights in the
collateral to a secured party; and
c. One of the following conditions is met:
(1) The debtor has signed a security agreement that provides a description of
the collateral and, if the security interest covers timber to be cut, a
description of the land concerned;
(2) The collateral is not a certificated security and is in the possession of the
secured party under section 41-09-33 pursuant to the debtor's security
agreement;
(3) The collateral is a certificated security in registered form and the security
certificate has been delivered to the secured party under section 41-08-27
pursuant to the debtor's security agreement;
(4) The collateral is controllable accounts, controllable electronic records,
controllable payment intangibles, deposit accounts, electronic documents,
electronic money, investment property, letter-of-credit rights, or
uncertificated certificates of deposit, and the secured party has control
under section 41-07-06, 41-09-04, 41-09-05, 41-09-05.1, 41-09-06,
41-09-07, or 41-09-07.1 pursuant to the debtor's security agreement; or
(5) The collateral is chattel paper and the secured party has possession and
control under section 41-09-34.1 pursuant to the debtor's security
agreement.
3. Subsection 2 is subject to section 41-04-22 on the security interest of a collecting
bank, section 41-05-18 on the security interest of a letter-of-credit issuer or nominated
person, section 41-09-10 on a security interest arising under chapter 41-02 or 41-02.1,
and section 41-09-16 on security interests in investment property.
4. A person becomes bound as debtor by a security agreement entered into by another
person if, by operation of law other than this chapter or by contract:
a. The security agreement becomes effective to create a security interest in the
person's property; or

b. The person becomes generally obligated for the obligations of the other person,
including the obligation secured under the security agreement, and acquires or
succeeds to all or substantially all of the assets of the other person.
5. If a new debtor becomes bound as debtor by a security agreement entered into by
another person:
a. The agreement satisfies subdivision c of subsection 2 with respect to existing or
after-acquired property of the new debtor to the extent the property is described
in the agreement; and
b. Another agreement is not necessary to make a security interest in the property
enforceable.
6. The attachment of a security interest in collateral gives the secured party the rights to
proceeds provided by section 41-09-35 and is also attachment of a security interest in
a supporting obligation for the collateral.
7. Except as provided in section 47-19-41, the attachment of a security interest in a right
to payment or performance secured by a security interest or other lien on personal or
real property is also attachment of a security interest in the security interest, mortgage,
or other lien.
8. The attachment of a security interest in a securities account is also attachment of a
security interest in the security entitlements carried in the securities account.
9. The attachment of a security interest in a commodity account is also attachment of a
security interest in the commodity contracts carried in the commodity account.
### § 41-09-14. (9-204) After-acquired property - Future advances.

1. Except as otherwise provided in subsection 2, a security agreement may create or
provide for a security interest in after-acquired collateral.
2. Subject to subsection 4, a security interest does not attach under a term constituting
an after-acquired property clause to:
a. Consumer goods, other than an accession if given as additional security, unless
the debtor acquires rights in the consumer goods within ten days after the
secured party gives value; or
b. A commercial tort claim.
3. A security agreement may provide that collateral secures, or that accounts, chattel
paper, payment intangibles, or promissory notes are sold in connection with, future
advances or other value, regardless of whether the advances or value is given
pursuant to commitment.
4. Subsection 2 does not prevent a security interest from attaching:
a. To consumer goods as proceeds under subsection 1 of section 41-09-35 or
commingled goods under subsection 3 of section 41-09-56;
b. To a commercial tort claim as proceeds under subsection 1 of section 41-09-35;
or
c. Under an after-acquired property clause to property that is proceeds of consumer
goods or a commercial tort claim.
### § 41-09-15. (9-205) Use or disposition of collateral permissible.

1. A security interest is not invalid or fraudulent against creditors solely because:
a. The debtor has the right or ability to:
(1) Use, commingle, or dispose of all or part of the collateral, including returned
or repossessed goods;
(2) Collect, compromise, enforce, or otherwise deal with collateral;
(3) Accept the return of collateral or make repossessions; or
(4) Use, commingle, or dispose of proceeds; or
b. The secured party fails to require the debtor to account for proceeds or replace
collateral.
2. This section does not relax the requirements of possession if attachment, perfection,
or enforcement of a security interest depends upon possession of the collateral by the
secured party.

### § 41-09-16. (9-206) Security interest arising in purchase or delivery of financial asset.

1. A security interest in favor of a securities intermediary attaches to a person's security
entitlement if:
a. The person buys a financial asset through the securities intermediary in a
transaction in which the person is obligated to pay the purchase price to the
securities intermediary at the time of the purchase; and
b. The securities intermediary credits the financial asset to the buyer's securities
account before the buyer pays the securities intermediary.
2. The security interest described in subsection 1 secures the person's obligation to pay
for the financial asset.
3. A security interest in favor of a person that delivers a certificated security or other
financial asset represented by a writing attaches to the security or other financial asset
if:
a. The security or other financial asset:
(1) In the ordinary course of business is transferred by delivery with any
necessary indorsement or assignment; and
(2) Is delivered under an agreement between persons in the business of
dealing with such securities or financial assets; and
b. The agreement calls for delivery against payment.
4. The security interest described in subsection 3 secures the obligation to make
payment for the delivery.
### § 41-09-17. (9-207) Rights and duties of secured party having possession or control of

collateral.
1. Except as otherwise provided in subsection 4, a secured party shall use reasonable
care in the custody and preservation of collateral in the secured party's possession. In
the case of chattel paper or an instrument, reasonable care includes taking necessary
steps to preserve rights against prior parties unless otherwise agreed.
2. Except as otherwise provided in subsection 4, if a secured party has possession of
collateral:
a. Reasonable expenses, including the cost of insurance and payment of taxes or
other charges, incurred in the custody, preservation, use, or operation of the
collateral are chargeable to the debtor and are secured by the collateral;
b. The risk of accidental loss or damage is on the debtor to the extent of a
deficiency in any effective insurance coverage;
c. The secured party shall keep the collateral identifiable, but fungible collateral may
be commingled; and
d. The secured party may use or operate the collateral:
(1) For the purpose of preserving the collateral or the collateral's value;
(2) As permitted by an order of a court having competent jurisdiction; or
(3) Except in the case of consumer goods, in the manner and to the extent
agreed by the debtor.
3. Except as otherwise provided in subsection 4, a secured party having possession of
collateral or control of collateral under section 41-07-06, 41-09-04, 41-09-05,
41-09-5.1, 41-09-06, 41-09-07, or 41-09-07.1:
a. May hold as additional security any proceeds, except money or funds, received
from the collateral;
b. Shall apply money or funds received from the collateral to reduce the secured
obligation, unless remitted to the debtor; and
c. May create a security interest in the collateral.
4. If the secured party is a buyer of accounts, chattel paper, payment intangibles, or
promissory notes or a consignor:
a. Subsection 1 does not apply unless the secured party is entitled under an
agreement:
(1) To charge back uncollected collateral; or

(2) Otherwise to full or limited recourse against the debtor or a secondary
obligor based on the nonpayment or other default of an account debtor or
other obligor on the collateral; and
b. Subsections 2 and 3 do not apply.
### § 41-09-18. (9-208) Additional duties of secured party having control of collateral.

1. This section applies to cases in which there is no outstanding secured obligation and
the secured party is not committed to make advances, incur obligations, or otherwise
give value.
2. Within ten days after receiving a signed demand by the debtor:
a. A secured party having control of a deposit account or an uncertificated certificate
of deposit under subdivision b of subsection 1 of section 41-09-04 shall send to
the bank with which the deposit account or uncertificated certificate of deposit is
maintained a signed record that releases the bank from any further obligation to
comply with instructions originated by the secured party;
b. A secured party having control of a deposit account or an uncertificated certificate
of deposit under subdivision c of subsection 1 of section 41-09-04 shall:
(1) Pay the debtor the balance on deposit in the deposit account or
uncertificated certificate of deposit; or
(2) Transfer the balance on deposit into a deposit account or an uncertificated
certificate of deposit in the debtor's name;
c. A secured party, other than a buyer, having control under section 41-09-05 of an
authoritative electronic copy of a record evidencing chattel paper shall transfer
control of the electronic copy to the debtor or a person designated by the debtor;
d. A secured party having control of investment property under subdivision b of
subsection 4 of section 41-08-06 or subsection 2 of section 41-09-06 shall send
to the securities intermediary or commodity intermediary with which the security
entitlement or commodity contract is maintained a signed record that releases the
securities intermediary or commodity intermediary from any further obligation to
comply with entitlement orders or directions originated by the secured party;
e. A secured party having control of a letter-of-credit right under section 41-09-07
shall send to each person having an unfulfilled obligation to pay or deliver
proceeds of the letter of credit to the secured party a signed release from any
further obligation to pay or deliver proceeds of the letter of credit to the secured
party;
f. A secured party having control under section 41-07-06 of an authoritative
electronic copy of an electronic document of title shall transfer control of the
electronic copy to the debtor or a person designated by the debtor;
g. A secured party having control under section 41-09-05.1 of electronic money shall
transfer control of the electronic money to the debtor or a person designated by
the debtor; and
h. A secured party having control under section 41-12-05 of a controllable electronic
record, other than a buyer of a controllable account or controllable payment
intangible evidenced by the controllable electronic record, shall transfer control of
the controllable electronic record to the debtor or a person designated by the
debtor.
### § 41-09-19. (9-209) Duties of secured party if account debtor has been notified of

assignment.
1. Except as otherwise provided in subsection 3, this section applies if:
a. There is no outstanding secured obligation; and
b. The secured party is not committed to make advances, incur obligations, or
otherwise give value.
2. Within ten days after receiving a signed demand by the debtor, a secured party shall
send to an account debtor that has received notification under subsection 1 of section

assignee a signed record that releases the account debtor from any further obligation
to the secured party.
3. This section does not apply to an assignment constituting the sale of an account,
chattel paper, or payment intangible.
### § 41-09-20. (9-210) Request for accounting - Request regarding list of collateral or

statement of account.
1. In this section:
a. "Request" means a record of a type described in subdivision b, c, or d.
b. "Request for an accounting" means a record signed by a debtor requesting that
the recipient provide an accounting of the unpaid obligations secured by collateral
and reasonably identifying the transaction or relationship that is the subject of the
request.
c. "Request regarding a list of collateral" means a record signed by a debtor
requesting that the recipient approve or correct a list of what the debtor believes
to be the collateral securing an obligation and reasonably identifying the
transaction or relationship that is the subject of the request.
d. "Request regarding a statement of account" means a record signed by a debtor
requesting that the recipient approve or correct a statement indicating what the
debtor believes to be the aggregate amount of unpaid obligations secured by
collateral as of a specified date and reasonably identifying the transaction or
relationship that is the subject of the request.
2. Subject to subsections 3 through 6, a secured party, other than a buyer of accounts,
chattel paper, payment intangibles, or promissory notes or a consignor, shall comply
with a request within fourteen days after receipt:
a. In the case of a request for an accounting, by signing and sending to the debtor
an accounting; and
b. In the case of a request regarding a list of collateral or a request regarding a
statement of account, by signing and sending to the debtor an approval or
correction.
3. A secured party that claims a security interest in all of a particular type of collateral
owned by the debtor may comply with a request regarding a list of collateral by
sending to the debtor a signed record, including a statement to that effect within
fourteen days after receipt.
4. A person that receives a request regarding a list of collateral, claims no interest in the
collateral when that person receives the request, and claimed an interest in the
collateral at an earlier time shall comply with the request within fourteen days after
receipt by sending to the debtor a signed record:
a. Disclaiming any interest in the collateral; and
b. If known to the recipient, providing the name and mailing address of any assignee
of or successor to the recipient's interest in the collateral.
5. A person that receives a request for an accounting or a request regarding a statement
of account, claims no interest in the obligations when it receives the request, and
claimed an interest in the obligations at an earlier time shall comply with the request
within fourteen days after receipt by sending to the debtor a signed record:
a. Disclaiming any interest in the obligations; and
b. If known to the recipient, providing the name and mailing address of any assignee
of or successor to the recipient's interest in the obligations.
6. A debtor is entitled without charge to one response to a request under this section
during any six-month period. The secured party may require payment of a charge not
exceeding twenty-five dollars for each additional response.
### § 41-09-21. (9-301) Law governing perfection and priority of security interests.

Except as otherwise provided in sections 41-09-23 through 41-09-26.2, the following rules
determine the law governing perfection, the effect of perfection or nonperfection, and the priority
of a security interest in collateral:

1. Except as otherwise provided in this section, while a debtor is located in a jurisdiction,
the local law of that jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in collateral.
2. While collateral is located in a jurisdiction, the local law of that jurisdiction governs
perfection, the effect of perfection or nonperfection, and the priority of a possessory
security interest in that collateral.
3. Except as otherwise provided in subsection 4, while negotiable tangible documents,
goods, instruments, or tangible money is located in a jurisdiction, the local law of that
jurisdiction governs:
a. Perfection of a security interest in the goods by filing a fixture filing;
b. Perfection of a security interest in timber to be cut; and
c. The effect of perfection or nonperfection and the priority of a nonpossessory
security interest in the collateral.
4. The local law of the jurisdiction in which the wellhead or minehead is located governs
perfection, the effect of perfection or nonperfection, and the priority of a security
interest in as-extracted collateral.
### § 41-09-22. (9-302) Law governing perfection and priority of agricultural liens.

While farm products are located in a jurisdiction, the local law of that jurisdiction governs
perfection, the effect of perfection or nonperfection, and the priority of an agricultural lien on the
farm products.
### § 41-09-23. (9-303) Law governing perfection and priority of security interests in goods

covered by a certificate of title.
1. This section applies to goods covered by a certificate of title, even if there is no other
relationship between the jurisdiction under whose certificate of title the goods are
covered and the goods or the debtor.
2. Goods become covered by a certificate of title when a valid application for the
certificate of title and the applicable fee are delivered to the appropriate authority.
Goods cease to be covered by a certificate of title at the earlier of the time the
certificate of title ceases to be effective under the law of the issuing jurisdiction or the
time the goods become covered subsequently by a certificate of title issued by another
jurisdiction.
3. The local law of the jurisdiction under whose certificate of title the goods are covered
governs perfection, the effect of perfection or nonperfection, and the priority of a
security interest in goods covered by a certificate of title from the time the goods
become covered by the certificate of title until the goods cease to be covered by the
certificate of title.
### § 41-09-24. (9-304) Law governing perfection and priority of security interests in

deposit accounts or certificates of deposit.
1. The local law of a bank's jurisdiction governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in a deposit account or certificate
of deposit maintained with that bank even if the transaction does not bear any relation
to the bank's jurisdiction.
2. The following rules determine a bank's jurisdiction for purposes of this part:
a. If an agreement between the bank and its customer governing the deposit
account or certificate of deposit expressly provides that a particular jurisdiction is
the bank's jurisdiction for purposes of this part, this chapter, or this title, that
jurisdiction is the bank's jurisdiction.
b. If subdivision a does not apply and an agreement between the bank and its
customer governing the deposit account or certificate of deposit expressly
provides that the agreement is governed by the law of a particular jurisdiction,
that jurisdiction is the bank's jurisdiction.

c. If neither subdivision a nor b applies and an agreement between the bank and the
bank's customer governing the deposit account or certificate of deposit expressly
provides that the deposit account or certificate of deposit is maintained at an
office in a particular jurisdiction, that jurisdiction is the bank's jurisdiction.
d. If none of the preceding subdivisions applies, the bank's jurisdiction is the
jurisdiction in which the office identified in an account statement as the office
serving the customer's account is located.
e. If none of the preceding subdivisions applies, the bank's jurisdiction is the
jurisdiction in which the chief executive office of the bank is located.
### § 41-09-25. (9-305) Law governing perfection and priority of security interests in

investment property.
1. Except as otherwise provided in subsection 3, the following rules apply:
a. While a security certificate is located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or nonperfection, and the
priority of a security interest in the certificated security represented thereby.
b. The local law of the issuer's jurisdiction as specified in subsection 4 of section
priority of a security interest in an uncertificated security.
c. The local law of the securities intermediary's jurisdiction as specified in
subsection 5 of section 41-08-10 governs perfection, the effect of perfection or
nonperfection, and the priority of a security interest in a security entitlement or
securities account.
d. The local law of the commodity intermediary's jurisdiction governs perfection, the
effect of perfection or nonperfection, and the priority of a security interest in a
commodity contract or commodity account.
e. Subdivisions b, c, and d apply even if the transaction does not bear any relation
to the jurisdiction.
2. The following rules determine a commodity intermediary's jurisdiction for purposes of
sections 41-09-21 through 41-09-62:
a. If an agreement between the commodity intermediary and commodity customer
governing the commodity account expressly provides that a particular jurisdiction
is the commodity intermediary's jurisdiction for purposes of sections 41-09-21
through 41-09-62, this chapter, or this title, that jurisdiction is the commodity
intermediary's jurisdiction.
b. If subdivision a does not apply and an agreement between the commodity
intermediary and commodity customer governing the commodity account
expressly provides that the agreement is governed by the law of a particular
jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
c. If neither subdivision a nor b applies and an agreement between the commodity
intermediary and commodity customer governing the commodity account
expressly provides that the commodity account is maintained at an office in a
particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
d. If none of the preceding subdivisions applies, the commodity intermediary's
jurisdiction is the jurisdiction in which the office identified in an account statement
as the office serving the commodity customer's account is located.
e. If none of the preceding subdivisions applies, the commodity intermediary's
jurisdiction is the jurisdiction in which the chief executive office of the commodity
intermediary is located.
3. The local law of the jurisdiction in which the debtor is located governs:
a. Perfection of a security interest in investment property by filing;
b. Automatic perfection of a security interest in investment property created by a
broker or securities intermediary; and
c. Automatic perfection of a security interest in a commodity contract or commodity
account created by a commodity intermediary.

### § 41-09-26. (9-306) Law governing perfection and priority of security interests in

letter-of-credit rights.
1. Subject to subsection 3, the local law of the issuer's jurisdiction or a nominated
person's jurisdiction governs perfection, the effect of perfection or nonperfection, and
the priority of a security interest in a letter-of-credit right if the issuer's jurisdiction or
nominated person's jurisdiction is a state.
2. For purposes of this part, an issuer's jurisdiction or nominated person's jurisdiction is
the jurisdiction whose law governs the liability of the issuer or nominated person with
respect to the letter-of-credit right as provided in section 41-05-16.
3. This section does not apply to a security interest that is perfected only under
subsection 4 of section 41-09-28.
### § 41-09-26.1. (9-306A) Law governing perfection and priority of security interests in

chattel paper.
1. Except as provided in subsection 4, if chattel paper is evidenced only by an
authoritative electronic copy of the chattel paper or is evidenced by an authoritative
electronic copy and an authoritative tangible copy, the local law of the chattel paper's
jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority
of a security interest in the chattel paper, even if the transaction does not bear any
relation to the chattel paper's jurisdiction.
2. The following rules determine the chattel paper's jurisdiction under this section:
a. If the authoritative electronic copy of the record evidencing chattel paper, or a
record attached to or logically associated with the electronic copy and readily
available for review, expressly provides that a particular jurisdiction is the chattel
paper's jurisdiction for purposes of this section, this chapter, or this title, that
jurisdiction is the chattel paper's jurisdiction.
b. If subdivision a does not apply and the rules of the system in which the
authoritative electronic copy is recorded are readily available for review and
expressly provide that a particular jurisdiction is the chattel paper's jurisdiction for
purposes of this section, this chapter, or this title, that jurisdiction is the chattel
paper's jurisdiction.
c. If subdivisions a and b do not apply and the authoritative electronic copy, or a
record attached to or logically associated with the electronic copy and readily
available for review, expressly provides that the chattel paper is governed by the
law of a particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction.
d. If subdivisions a, b, and c do not apply and the rules of the system in which the
authoritative electronic copy is recorded are readily available for review and
expressly provide that the chattel paper or the system is governed by the law of a
particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction.
e. If subdivisions a, b, c, and d do not apply, the chattel paper's jurisdiction is the
jurisdiction in which the debtor is located.
3. If an authoritative tangible copy of a record evidences chattel paper and the chattel
paper is not evidenced by an authoritative electronic copy, while the authoritative
tangible copy of the record evidencing chattel paper is located in a jurisdiction, the
local law of that jurisdiction governs:
a. Perfection of a security interest in the chattel paper by possession under section
41-09-34.1; and
b. The effect of perfection or nonperfection and the priority of a security interest in
the chattel paper.
4. The local law of the jurisdiction in which the debtor is located governs perfection of a
security interest in chattel paper by filing.

### § 41-09-26.2. (9-306B) Law governing perfection and priority of security interests in

controllable accounts, controllable electronic records, and controllable payment
intangibles.
1. Except as provided in subsection 2, the local law of the controllable electronic record's
jurisdiction specified in subsections 3 and 4 of section 41-12-07 governs perfection,
the effect of perfection or nonperfection, and the priority of a security interest in a
controllable electronic record and a security interest in a controllable account or
controllable payment intangible evidenced by the controllable electronic record.
2. The local law of the jurisdiction in which the debtor is located governs:
a. Perfection of a security interest in a controllable account, controllable electronic
record, or controllable payment intangible by filing; and
b. Automatic perfection of a security interest in a controllable payment intangible
created by a sale of the controllable payment intangible.
### § 41-09-27. (9-307) Location of debtor.

1. In this section, "place of business" means a place where a debtor conducts its affairs.
2. Except as otherwise provided in this section, the following rules determine a debtor's
location:
a. A debtor who is an individual is located at the individual's principal residence.
b. A debtor that is an organization and has only one place of business is located at
its place of business.
c. A debtor that is an organization and has more than one place of business is
located at its chief executive office.
3. Subsection 2 applies only if a debtor's residence, place of business, or chief executive
office, as applicable, is located in a jurisdiction whose law generally requires
information concerning the existence of a nonpossessory security interest to be made
generally available in a filing, recording, or registration system as a condition or result
of the security interest's obtaining priority over the rights of a lien creditor with respect
to the collateral. If subsection 2 does not apply, the debtor is located in the District of
Columbia.
4. A person that ceases to exist, have a residence, or have a place of business continues
to be located in the jurisdiction specified by subsections 2 and 3.
5. A registered organization that is organized under the law of a state is located in that
state.
6. Except as otherwise provided in subsection 9, a registered organization that is
organized under the law of the United States and a branch or agency of a bank that is
not organized under the law of the United States or a state are located:
a. In the state that the law of the United States designates, if the law designates a
state of location;
b. In the state that the registered organization, branch, or agency designates, if the
law of the United States authorizes the registered organization, branch, or agency
to designate its state of location, including by designation its main office, home
office, or other comparable office; or
c. In the District of Columbia, if neither subdivision a nor b applies.
7. A registered organization continues to be located in the jurisdiction specified by
subsection 5 or 6 notwithstanding:
a. The suspension, revocation, forfeiture, or lapse of the registered organization's
status as such in its jurisdiction of organization; or
b. The dissolution, winding up, or cancellation of the existence of the registered
organization.
8. The United States is located in the District of Columbia.
9. A branch or agency of a bank that is not organized under the law of the United States
or a state is located in the state in which the branch or agency is licensed, if all
branches and agencies of the bank are licensed in only one state.

10. A foreign air carrier under the Federal Aviation Act of 1958, as amended, [Pub. L.
85-726; 72 Stat. 731] is located at the designated office of the agent upon which
service of process may be made on behalf of the carrier.
11. This section applies only for purposes of this part.
### § 41-09-28. (9-308) When security interest or agricultural lien is perfected - Continuity of

perfection.
1. Except as otherwise provided in this section and section 41-09-29, a security interest
is perfected if it has attached and all of the applicable requirements for perfection in
sections 41-09-30 through 41-09-36 have been satisfied. A security interest is
perfected when it attaches if the applicable requirements are satisfied before the
security interest attaches.
2. An agricultural lien is perfected if it has become effective and all of the applicable
requirements for perfection in section 41-09-30 have been satisfied. An agricultural lien
is perfected when it becomes effective if the applicable requirements are satisfied
before the agricultural lien becomes effective.
3. A security interest or agricultural lien is perfected continuously if it is originally
perfected by one method under this chapter and is later perfected by another method
under this chapter, without an intermediate period when it was unperfected.
4. Perfection of a security interest in collateral also perfects a security interest in a
supporting obligation for the collateral.
5. Perfection of a security interest in a right to payment or performance also perfects a
security interest in a security interest, mortgage, or other lien on personal or real
property securing the right.
6. Perfection of a security interest in a securities account also perfects a security interest
in the security entitlements carried in the securities account.
7. Perfection of a security interest in a commodity account also perfects a security
interest in the commodity contracts carried in the commodity account.
### § 41-09-29. (9-309) Security interest perfected upon attachment.

The following security interests are perfected when they attach:
1. A purchase-money security interest in consumer goods, except as otherwise provided
in subsection 2 of section 41-09-31 with respect to consumer goods that are subject to
a statute or treaty described in subsection 1 of section 41-09-31;
2. An assignment of accounts or payment intangibles which does not by itself or in
conjunction with other assignments to the same assignee transfer a significant part of
the assignor's outstanding accounts or payment intangibles;
3. A sale of a payment intangible;
4. A sale of a promissory note;
5. A security interest created by the assignment of a health care insurance receivable to
the provider of the health care goods or services;
6. A security interest arising under section 41-02-46, section 41-02-53, subsection 3 of
section 41-02-90, or subsection 5 of section 41-02.1-56, until the debtor obtains
possession of the collateral;
7. A security interest of a collecting bank arising under section 41-04-22;
8. A security interest of an issuer or nominated person arising under section 41-05-18;
9. A security interest arising in the delivery of a financial asset under subsection 3 of
section 41-09-16;
10. A security interest in investment property created by a broker or securities
intermediary;
11. A security interest in a commodity contract or a commodity account created by a
commodity intermediary;
12. An assignment for the benefit of all creditors of the transferor and subsequent
transfers by the assignee thereunder;
13. A security interest created by an assignment of a beneficial interest in a decedent's
estate; and

14. A sale by an individual of an account that is a right to payment of winnings in a lottery
or other game of chance.
### § 41-09-30. (9-310) When filing required to perfect security interest or agricultural lien -

Security interests and agricultural liens to which filing provisions do not apply.
1. Except as otherwise provided in subsection 2 and subsection 2 of section 41-09-32, a
financing statement must be filed to perfect all security interests and agricultural liens.
2. The filing of a financing statement is not necessary to perfect a security interest:
a. That is perfected under subsection 4, 5, 6, or 7 of section 41-09-28;
b. That is perfected under section 41-09-29 when it attaches;
c. In property subject to a statute, regulation, or treaty described in subsection 1 of
section 41-09-31;
d. In goods in possession of a bailee which is perfected under subdivision a or b of
subsection 4 of section 41-09-32;
e. In certificated securities, documents, goods, or instruments which is perfected
without filing, control, or possession under subsection 5, 6, or 7 of section
41-09-32;
f. In collateral in the secured party's possession under section 41-09-33;
g. In a certificated security which is perfected by delivery of the security certificate to
the secured party under section 41-09-33;
h. In controllable accounts, controllable electronic records, controllable payment
intangibles, deposit accounts, electronic documents, investment property,
letter-of-credit rights, or uncertificated certificates of deposit, which is perfected by
control under section 41-09-34;
i. In chattel paper which is perfected by possession and control under section
41-09-34.1;
j. In proceeds which is perfected under section 41-09-35;
k. That is perfected under section 41-09-36; or
l. In agricultural liens created by chapter 35-17, 35-30, or 35-31.
3. If a secured party assigns a perfected security interest or agricultural lien, a filing
under this chapter is not required to continue the perfected status of the security
interest against creditors of and transferees from the original debtor.
### § 41-09-31. (9-311) Perfection of security interests in property subject to certain

statutes, regulations, and treaties.
1. Except as otherwise provided in subsection 4, the filing of a financing statement is not
necessary or effective to perfect a security interest in property subject to:
a. A statute, regulation, or treaty of the United States whose requirements for a
security interest's obtaining priority over the rights of a lien creditor with respect to
the property preempt subsection 1 of section 41-09-30;
b. Section 35-01-05.1; or
c. A statute of another jurisdiction which provides for a security interest to be
indicated on a certificate of title as a condition or result of the security interest's
obtaining priority over the rights of a lien creditor with respect to the property.
2. Compliance with the requirements of a statute, regulation, or treaty described in
subsection 1 for obtaining priority over the rights of a lien creditor is equivalent to the
filing of a financing statement under this chapter. Except as otherwise provided in
subsection 4 and section 41-09-33 and subsections 4 and 5 of section 41-09-36 for
goods covered by a certificate of title, a security interest in property subject to a
statute, regulation, or treaty described in subsection 1 may be perfected only by
compliance with those requirements, and a security interest so perfected remains
perfected notwithstanding a change in the use or transfer of possession of the
collateral.
3. Except as otherwise provided in subsection 4 and subsections 4 and 5 of section
41-09-36, duration and renewal of perfection of a security interest perfected by
compliance with the requirements prescribed by a statute, regulation, or treaty

described in subsection 1 are governed by the statute, regulation, or treaty. In other
respects, the security interest is subject to this chapter.
4. During any period in which collateral subject to a statute specified in subdivision b of
subsection 1 is inventory held for sale or lease by a person or leased by that person as
lessor and that person is in the business of selling goods of that kind, this section does
not apply to a security interest in that collateral created by that person.
### § 41-09-32. (9-312) Perfection of security interests in chattel paper, controllable

accounts, controllable electronic records, controllable payment intangibles, deposit
accounts, documents, goods covered by documents, instruments, investment property,
letter-of-credit rights, money, and uncertificated certificates of deposit - Perfection by
permissive filing - Temporary perfection without filing or transfer of possession.
1. A security interest in chattel paper, controllable accounts, controllable electronic
records, controllable payment intangibles, instruments, investment property, or
negotiable documents may be perfected by filing.
2. Except as otherwise provided in subsections 3 and 4 of section 41-09-35 for proceeds:
a. A security interest in a deposit account or an uncertificated certificate of deposit
may be perfected only by control under section 41-09-34;
b. Except as otherwise provided in subsection 4 of section 41-09-28, a security
interest in a letter-of-credit right may be perfected only by control under section
41-09-34;
c. A security interest in tangible money or a certificated certificate of deposit may be
perfected only by the secured party's taking possession under section 41-09-33;
and
d. A security interest in electronic money may be perfected only by control under
section 41-09-34.
3. While goods are in the possession of a bailee that has issued a negotiable document
covering the goods:
a. A security interest in the goods may be perfected by perfecting a security interest
in the document; and
b. A security interest perfected in the document has priority over any security
interest that becomes perfected in the goods by another method during that time.
4. While goods are in the possession of a bailee that has issued a non-negotiable
document covering the goods, a security interest in the goods may be perfected by:
a. Issuance of a document in the name of the secured party;
b. The bailee's receipt of notification of the secured party's interest; or
c. Filing as to the goods.
5. A security interest in certificated certificates of deposit, certificated securities,
negotiable documents, or instruments is perfected without filing or the taking of
possession or control for a period of twenty days from the time it attaches to the extent
that it arises for new value given under a signed security agreement.
6. A perfected security interest in a negotiable document or goods in possession of a
bailee, other than one that has issued a negotiable document for the goods, remains
perfected for twenty days without filing if the secured party makes available to the
debtor the goods or documents representing the goods for the purpose of:
a. Ultimate sale or exchange; or
b. Loading, unloading, storing, shipping, trans-shipping, manufacturing, processing,
or otherwise dealing with them in a manner preliminary to their sale or exchange.
7. A perfected security interest in a certificated certificate of deposit, certificated security,
or instrument remains perfected for twenty days without filing if the secured party
delivers the security certificate, certificated certificate of deposit, or instrument to the
debtor for the purpose of:
a. Ultimate sale or exchange; or
b. Presentation, collection, enforcement, renewal, or registration of transfer.
8. After the twenty-day period specified in subsection 5, 6, or 7 expires, perfection
depends upon compliance with this chapter.

### § 41-09-33. (9-313) When possession by or delivery to secured party perfects security

interest without filing.
1. Except as otherwise provided in subsection 2, a secured party may perfect a security
interest in certificated certificates of deposit, goods, instruments, negotiable tangible
documents, or tangible money by taking possession of the collateral. A secured party
may perfect a security interest in certificated securities by taking delivery of the
certificated securities under section 41-08-27.
2. With respect to goods covered by a certificate of title issued by this state, a secured
party may perfect a security interest in the goods by taking possession of the goods
only in the circumstances described in subsection 4 of section 41-09-36.
3. With respect to collateral other than certificated securities and goods covered by a
document, a secured party takes possession of collateral in the possession of a
person other than the debtor, the secured party, or a lessee of the collateral from the
debtor in the ordinary course of the debtor's business, when:
a. The person in possession signs a record acknowledging that it holds possession
of the collateral for the secured party's benefit; or
b. The person takes possession of the collateral after having signed a record
acknowledging that it will hold possession of the collateral for the secured party's
benefit.
4. If perfection of a security interest depends upon possession of the collateral by a
secured party, perfection occurs not earlier than the time the secured party takes
possession and continues only while the secured party retains possession.
5. A security interest in a certificated security in registered form is perfected by delivery
when delivery of the certificated security occurs under section 41-08-27 and remains
perfected by delivery until the debtor obtains possession of the security certificate.
6. A person in possession of collateral is not required to acknowledge that it holds
possession for a secured party's benefit.
7. If a person acknowledges that it holds possession for the secured party's benefit:
a. The acknowledgment is effective under subsection 3 or subsection 1 of section
41-09-21, even if the acknowledgment violates the rights of a debtor; and
b. Unless the person otherwise agrees or law other than this chapter otherwise
provides, the person does not owe any duty to the secured party and is not
required to confirm the acknowledgment to another person.
8. A secured party having possession of collateral does not relinquish possession by
delivering the collateral to a person other than the debtor or a lessee of the collateral
from the debtor in the ordinary course of the debtor's business if the person was
instructed before the delivery or is instructed contemporaneously with the delivery:
a. To hold possession of the collateral for the secured party's benefit; or
b. To redeliver the collateral to the secured party.
9. A secured party does not relinquish possession, even if a delivery under subsection 8
violates the rights of a debtor. A person to which collateral is delivered under
subsection 8 does not owe any duty to the secured party and is not required to confirm
the delivery to another person unless the person otherwise agrees or law other than
this chapter otherwise provides.
### § 41-09-34. (9-314) Perfection by control.

1. A security interest in controllable accounts, controllable electronic records, controllable
payment intangibles, deposit accounts, uncertificated certificates of deposit, electronic
documents, electronic money, investment property, or letter-of-credit rights may be
perfected by control of the collateral under section 41-07-06, 41-09-04, 41-09-05.1,
41-09-06, 41-09-07, or 41-09-07.1.
2. A security interest in controllable accounts, controllable electronic records, controllable
payment intangibles, deposit accounts, electronic documents, uncertificated
certificates of deposit, electronic money, or letter-of-credit rights is perfected by control
under section 41-07-06, 41-09-04, 41-09-05.1, 41-09-07, or 41-09-07.1 not earlier than

the time the secured party obtains control and remains perfected by control only while
the secured party retains control.
3. A security interest in investment property is perfected by control under section
perfected by control until:
a. The secured party does not have control; and
b. One of the following occurs:
(1) If the collateral is a certificated security, the debtor has or acquires
possession of the security certificate;
(2) If the collateral is an uncertificated security, the issuer has registered or
registers the debtor as the registered owner; or
(3) If the collateral is a security entitlement, the debtor is or becomes the
entitlement holder.
### § 41-09-34.1. (9-314A) Perfection by possession and control of chattel paper.

1. A secured party may perfect a security interest in chattel paper by taking possession of
each authoritative tangible copy of the record evidencing the chattel paper and
obtaining control of each authoritative electronic copy of the electronic record
evidencing the chattel paper.
2. A security interest is perfected under subsection 1 not earlier than the time the secured
party takes possession and obtains control and remains perfected under subsection 1
only while the secured party retains possession and control.
3. Subsections 3 and 6 through 9 of section 41-09-33 applies to perfection by possession
of an authoritative tangible copy of a record evidencing chattel paper.
### § 41-09-35. (9-315) Secured party's rights on disposition of collateral and in proceeds.

1. Except as otherwise provided in this chapter and in subsection 2 of section 41-02-48:
a. A security interest or agricultural lien continues in collateral notwithstanding sale,
lease, license, exchange, or other disposition thereof unless the secured party
authorized the disposition free of the security interest or agricultural lien; and
b. A security interest attaches to any identifiable proceeds of collateral.
2. Proceeds that are commingled with other property are identifiable proceeds:
a. If the proceeds are goods, to the extent provided by section 41-09-56; and
b. If the proceeds are not goods, to the extent that the secured party identifies the
proceeds by a method of tracing, including application of equitable principles, that
is permitted under law other than this chapter with respect to commingled
property of the type involved.
3. A security interest in proceeds is a perfected security interest if the security interest in
the original collateral was perfected.
4. A perfected security interest in proceeds becomes unperfected on the twenty-first day
after the security interest attaches to the proceeds unless:
a. The following conditions are satisfied:
(1) A filed financing statement covers the original collateral;
(2) The proceeds are collateral in which a security interest may be perfected by
filing in the office in which the financing statement has been filed; and
(3) The proceeds are not acquired with cash proceeds;
b. The proceeds are identifiable cash proceeds; or
c. The security interest in the proceeds is perfected other than under subsection 3
when the security interest attaches to the proceeds or within twenty days
thereafter.
5. If a filed financing statement covers the original collateral, a security interest in
proceeds which remains perfected under subdivision a of subsection 4 becomes
unperfected at the later of:
a. When the effectiveness of the filed financing statement lapses under section
b. The twenty-first day after the security interest attaches to the proceeds.

### § 41-09-36. (9-316) Effect of change in governing law.

1. A security interest perfected pursuant to the law of the jurisdiction designated in
subsection 1 of section 41-09-21, subsection 3 of section 41-09-25, subsection 4 of
section 41-09-26.1, or subsection 2 of section 41-09-26.2 remains perfected until the
earliest of:
a. The time perfection would have ceased under the law of that jurisdiction;
b. The expiration of four months after a change of the debtor's location to another
jurisdiction; or
c. The expiration of one year after a transfer of collateral to a person that thereby
becomes a debtor and is located in another jurisdiction.
2. If a security interest described in subsection 1 becomes perfected under the law of the
other jurisdiction before the earliest time or event described in that subsection, it
remains perfected thereafter. If the security interest does not become perfected under
the law of the other jurisdiction before the earliest time or event, it becomes
unperfected and is deemed never to have been perfected as against a purchaser of
the collateral for value.
3. A possessory security interest in collateral, other than goods covered by a certificate of
title and as-extracted collateral consisting of goods, remains continuously perfected if:
a. The collateral is located in one jurisdiction and subject to a security interest
perfected under the law of that jurisdiction;
b. Thereafter the collateral is brought into another jurisdiction; and
c. Upon entry into the other jurisdiction, the security interest is perfected under the
law of the other jurisdiction.
4. Except as otherwise provided in subsection 5, a security interest in goods covered by
a certificate of title which is perfected by any method under the law of another
jurisdiction when the goods become covered by a certificate of title from this state
remains perfected until the security interest would have become unperfected under the
law of the other jurisdiction had the goods not become so covered.
5. A security interest described in subsection 4 becomes unperfected as against a
purchaser of the goods for value and is deemed never to have been perfected as
against a purchaser of the goods for value if the applicable requirements for perfection
under subsection 2 of section 41-09-31 or section 41-09-33 are not satisfied before the
earlier of:
a. The time the security interest would have become unperfected under the law of
the other jurisdiction had the goods not become covered by a certificate of title
from this state; or
b. The expiration of four months after the goods had become so covered.
6. A security interest in chattel paper, controllable accounts, controllable electronic
records, controllable payment intangibles, deposit accounts, certificates of deposit,
letter-of-credit rights, or investment property which is perfected under the law of the
chattel paper's jurisdiction, the controllable electronic record's jurisdiction, the bank's
jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, the securities
intermediary's jurisdiction, or the commodity intermediary's jurisdiction, as applicable,
remains perfected until the earlier of:
a. The time the security interest would have become unperfected under the law of
that jurisdiction; or
b. The expiration of four months after a change of the applicable jurisdiction to
another jurisdiction.
7. If a security interest described in subsection 6 becomes perfected under the law of the
other jurisdiction before the earlier of the time or the end of the period described in that
subsection, it remains perfected thereafter. If the security interest does not become
perfected under the law of the other jurisdiction before the earlier of that time or the
end of that period, it becomes unperfected and is deemed never to have been
perfected as against a purchaser of the collateral for value.
8. The following rules apply to collateral to which a security interest attaches within four
months after the debtor changes its location to another jurisdiction:

a. A financing statement filed before the change pursuant to the law of the
jurisdiction designated in subsection 1 of section 41-09-21 or subsection 3 of
section 41-09-25 is effective to perfect a security interest in the collateral if the
financing statement would have been effective to perfect a security interest in the
collateral if the debtor had not changed its location.
b. If a security interest that is perfected by a financing statement that is effective
under subdivision a becomes perfected under the law of the other jurisdiction
before the earlier of the time the financing statement would have become
ineffective under the law of the jurisdiction designated in subsection 1 of section
period, it remains perfected thereafter. If the security interest does not become
perfected under the law of the other jurisdiction before the earlier time or event, it
becomes unperfected and is deemed never to have been perfected as against a
purchaser of the collateral for value.
9. If a financing statement naming an original debtor is filed pursuant to the law of the
jurisdiction designated in subsection 1 of section 41-09-21 or subsection 3 of section
apply:
a. The financing statement is effective to perfect a security interest in collateral in
which the new debtor has or acquires rights before or within four months after the
new debtor becomes bound under subsection 4 of section 41-09-13, if the
financing statement would have been effective to perfect a security interest in the
collateral if the collateral had been acquired by the original debtor.
b. A security interest that is perfected by the financing statement and which
becomes perfected under the law of the other jurisdiction before the earlier of the
expiration of the four-month period or the time the financing statement would
have become ineffective under the law of the jurisdiction designated in
subsection 1 of section 41-09-21 or subsection 3 of section 41-09-25 remains
perfected thereafter. A security interest that is perfected by the financing
statement but which does not become perfected under the law of the other
jurisdiction before the earlier time or event becomes unperfected and is deemed
never to have been perfected as against a purchaser of the collateral for value.
### § 41-09-37. (9-317) Interests that take priority over or take free of security interest or

agricultural lien.
1. A security interest or an agricultural lien is subordinate to the rights of:
a. A person entitled to priority under section 41-09-42; and
b. Except as otherwise provided in subsection 5, a person that becomes a lien
creditor before the earlier of the time:
(1) The security interest or agricultural lien is perfected; or
(2) One of the conditions specified in subdivision c of subsection 2 of section
2. Except as otherwise provided in subsection 5, a buyer, other than a secured party, of
goods, instruments, tangible documents, or a certificated security takes free of a
security interest or agricultural lien if the buyer gives value and receives delivery of the
collateral without knowledge of the security interest or agricultural lien and before it is
perfected.
3. Except as otherwise provided in subsection 5, a lessee of goods takes free of a
security interest or agricultural lien if the lessee gives value and receives delivery of
the collateral without knowledge of the security interest or agricultural lien and before it
is perfected.
4. Subject to subsections 6 through 9, a licensee of a general intangible or a buyer, other
than a secured party, of collateral other than electronic money, goods, instruments,
tangible documents, or a certificated security takes free of a security interest if the
licensee or buyer gives value without knowledge of the security interest and before it is
perfected.

5. Except as otherwise provided in sections 41-09-40 and 41-09-41, if a person files a
financing statement with respect to a purchase-money security interest before or within
twenty days after the debtor receives delivery of the collateral, the security interest
takes priority over the rights of a buyer, lessee, or lien creditor which arise between the
time the security interest attaches and the time of filing.
6. A buyer, other than a secured party, of chattel paper takes free of a security interest if,
without knowledge of the security interest and before it is perfected, the buyer gives
value and:
a. Receives delivery of each authoritative tangible copy of the record evidencing the
chattel paper; and
b. If each authoritative electronic copy of the record evidencing the chattel paper
can be subjected to control under section 41-09-05, obtains control of each
authoritative electronic copy.
7. A buyer of an electronic document takes free of a security interest if, without
knowledge of the security interest and before it is perfected, the buyer gives value and,
if each authoritative electronic copy of the document can be subjected to control under
section 41-07-06, obtains control of each authoritative electronic copy.
8. A buyer of a controllable electronic record takes free of a security interest if, without
knowledge of the security interest and before it is perfected, the buyer gives value and
obtains control of the controllable electronic record.
9. A buyer, other than a secured party, of a controllable account or a controllable
payment intangible takes free of a security interest if, without knowledge of the security
interest and before it is perfected, the buyer gives value and obtains control of the
controllable account or controllable payment intangible.
### § 41-09-38. (9-318) No interest retained in right to payment that is sold - Rights and title

of seller of account or chattel paper with respect to creditors and purchasers.
1. A debtor that has sold an account, chattel paper, payment intangible, or promissory
note does not retain a legal or equitable interest in the collateral sold.
2. For purposes of determining the rights of creditors of, and purchasers for value of an
account or chattel paper from, a debtor that has sold an account or chattel paper, while
the buyer's security interest is unperfected, the debtor is deemed to have rights and
title to the account or chattel paper identical to those the debtor sold.
### § 41-09-39. (9-319) Rights and title of consignee with respect to creditors and

purchasers.
1. Except as otherwise provided in subsection 2, for purposes of determining the rights of
creditors of, and purchasers for value of goods from, a consignee, while the goods are
in the possession of the consignee, the consignee is deemed to have rights and title to
the goods identical to those the consignor had or had power to transfer.
2. For purposes of determining the rights of a creditor of a consignee, law other than this
chapter determines the rights and title of a consignee while goods are in the
consignee's possession if, under this part, a perfected security interest held by the
consignor would have priority over the rights of the creditor.
### § 41-09-40. (9-320) Buyer of goods.

1. Except as otherwise provided in subsection 5, a buyer in ordinary course of business,
other than a person buying farm products from a person engaged in farming
operations, takes free of a security interest created by the buyer's seller, even if the
security interest is perfected and the buyer knows of its existence. A crop or livestock
buyer is a buyer in the ordinary course of business as to security interests and
agricultural liens if the buyer qualifies under subsection 9. As used in this section, a
crop or livestock buyer is a person who buys crops or livestock from, or who sells
crops or livestock on a fee or commission for, a person engaged in farming operations.

2. Except as otherwise provided in subsection 5, a buyer of goods from a person who
used or bought the goods for use primarily for personal, family, or household purposes
takes free of a security interest, even if perfected, if the buyer buys:
a. Without knowledge of the security interest;
b. For value;
c. Primarily for the buyer's personal, family, or household purposes; and
d. Before the filing of a financing statement covering the goods.
3. To the extent that it affects the priority of a security interest over a buyer of goods
under subsection 2, the period of effectiveness of a filing made in the jurisdiction in
which the seller is located is governed by subsections 1 and 2 of section 41-09-36.
4. A buyer in ordinary course of business buying oil, gas, or other minerals at the
wellhead or minehead or after extraction takes free of an interest arising out of an
encumbrance.
5. Subsections 1 and 2 do not affect a security interest in goods in the possession of the
secured party under section 41-09-33.
6. If a secured party who has perfected a security interest in crops or livestock, or if a
lienholder who has created a lien by statute or otherwise, which includes agricultural
liens, intends to impose liability for the security interest or lien against a crop or
livestock buyer, the name of the secured party or lienholder must appear on the most
current list distributed by the secretary of state pursuant to section 54-09-10. In order
to appear on the list, secured parties or lienholders must file with the secretary of state
or in the office of the recorder in any county in this state a form prescribed by the
secretary of state which contains the information prescribed by the secretary of state
under section 41-09-92 or contained on a form prescribed by the secretary of state
under section 35-17-04, 35-30-02, or 35-31-02.
7. When a crop or livestock buyer issues a check or draft to a person engaged in farming
operations in payment for crops or livestock in order to take free of security interests or
liens against such crops or livestock, the crop or livestock buyer must issue the check
or draft for payment jointly to the person engaged in farming operations and those
secured parties or lienholders who have a security interest or lien in the crops or
livestock sold and whose names appear on the most current list or lists distributed by
the secretary of state at the time the check or draft is issued. A claim for relief may not
be commenced by a secured party or lienholder against a crop or livestock buyer for a
loss incurred as a result of issuing a check or draft after January 1, 1986, which does
not include the name of a secured party or lienholder under this section more than
eighteen months after the date of the check or draft unless within the eighteen-month
period the secured party or lienholder sends a notice as provided under this section,
but in no event can the action be commenced more than five years after the date of
the check or draft. The notice must:
a. Be sent by certified mail to, or personally served upon, the crop or livestock
buyer;
b. Name the person engaged in farming operations and the date of the check or
draft that gives rise to the claim;
c. State the intention of the secured party or lienholder to make a claim;
d. State the amount the secured party or lienholder is claiming;
e. Give a description of and the amount of crops or livestock upon which the claim is
based; and
f. State that the secured party or lienholder has commenced an action seeking
judgment against the person engaged in farming operations or such person has
filed or has been placed in bankruptcy or receivership proceedings under chapter
32-10.
8. A complaint by a secured party or lienholder may not be filed or served against a crop
or livestock buyer for collection of any loss sustained by the secured party or
lienholder through any transaction filed pursuant to subsection 6 until:
a. A judgment has been obtained and a good-faith effort made to collect that
judgment against the person engaged in farming operations, or that proceedings

against the person engaged in farming operations were stayed by federal
bankruptcy proceedings, or that receivership proceedings have been commenced
under chapter 32-10;
b. Within eighteen months following the date of the check or draft, the notice
required to be sent pursuant to subsection 7 was served upon the crop or
livestock buyer and reciting or incorporating by reference all the information
contained in that notice; and
c. A list is made of any other collateral taken by the secured party or lienholder as
security on the same debt from the person engaged in farming operations,
including a statement of value, status, and plans for application of such collateral
to the indebtedness of the person engaged in farming operations.
9. A crop or livestock buyer takes free of any security interest created by, or any lien
against crops or livestock of, the person engaged in farming operations if:
a. The crop or livestock buyer has complied with the requirements of subsection 7;
b. Evidence of security interests or liens does not appear on the most current list
prepared and distributed by the secretary of state pursuant to sections 54-09-09
and 54-09-10; or
c. The name of the person represented to be the seller of the crops or livestock
does not appear on the most current list prepared and distributed pursuant to
sections 54-09-09 and 54-09-10.
### § 41-09-41. (9-321) Licensee of general intangible and lessee of goods in ordinary

course of business.
1. In this section, "licensee in ordinary course of business" means a person that becomes
a licensee of a general intangible in good faith, without knowledge that the license
violates the rights of another person in the general intangible, and in the ordinary
course from a person in the business of licensing general intangibles of that kind. A
person becomes a licensee in the ordinary course if the license to the person
comports with the usual or customary practices in the kind of business in which the
licensor is engaged or with the licensor's own usual or customary practices.
2. A licensee in ordinary course of business takes its rights under a nonexclusive license
free of a security interest in the general intangible created by the licensor, even if the
security interest is perfected and the licensee knows of its existence.
3. A lessee in ordinary course of business takes its leasehold interest free of a security
interest in the goods created by the lessor, even if the security interest is perfected and
the lessee knows of its existence.
### § 41-09-42. (9-322) Priorities among conflicting security interests in and agricultural

liens on same collateral.
1. Except as otherwise provided in this section, priority among conflicting security
interests and agricultural liens in the same collateral is determined according to the
following rules:
a. Conflicting perfected security interests and agricultural liens rank according to
priority in time of filing or perfection. Priority dates from the earlier of the time a
filing covering the collateral is first made or the security interest or agricultural lien
is first perfected, if there is no period thereafter when there is neither filing nor
perfection.
b. A perfected security interest or agricultural lien has priority over a conflicting
unperfected security interest or agricultural lien.
c. The first security interest or agricultural lien to attach or become effective has
priority if conflicting security interests and agricultural liens are unperfected.
2. For the purposes of subdivision a of subsection 1:
a. The time of filing or perfection as to a security interest in collateral is also the time
of filing or perfection as to a security interest in proceeds; and

b. The time of filing or perfection as to a security interest in collateral supported by a
supporting obligation is also the time of filing or perfection as to a security interest
in the supporting obligation.
3. Except as otherwise provided in subsection 6, a security interest in collateral which
qualifies for priority over a conflicting security interest under section 41-09-47,
41-09-48, 41-09-49, 41-09-50, or 41-09-51 also has priority over a conflicting security
interest in:
a. Any supporting obligation for the collateral; and
b. Proceeds of the collateral if:
(1) The security interest in proceeds is perfected;
(2) The proceeds are cash proceeds or of the same type as the collateral; and
(3) In the case of proceeds that are proceeds of proceeds, all intervening
proceeds are cash proceeds, proceeds of the same type as the collateral, or
an account relating to the collateral.
4. Subject to subsection 5 and except as otherwise provided in subsection 6, if a security
interest in chattel paper, deposit accounts, negotiable documents, instruments,
investment property, or letter-of-credit rights is perfected by a method other than filing,
conflicting perfected security interests in proceeds of the collateral rank according to
priority in time of filing.
5. Subsection 4 applies only if the proceeds of the collateral are not cash proceeds,
chattel paper, negotiable documents, instruments, investment property, or
letter-of-credit rights.
6. Subsections 1 through 5 are subject to:
a. Subsection 7 and the other provisions of this part;
b. Section 41-04-22 with respect to a security interest of a collecting bank;
c. Section 41-05-18 with respect to a security interest of an issuer or nominated
person; and
d. Section 41-09-10 with respect to a security interest arising under chapter 41-02 or
41-02.1.
7. A perfected agricultural lien on collateral has priority over the conflicting rights of a lien
creditor and over a conflicting security interest in or agricultural lien on the same
collateral if the statute creating the agricultural lien so provides.
### § 41-09-43. (9-323) Future advances.

1. Except as otherwise provided in subsection 3, for purposes of determining the priority
of a perfected security interest under subdivision a of subsection 1 of section
41-09-42, perfection of the security interest dates from the time an advance is made to
the extent that the security interest secures an advance that:
a. Is made while the security interest is perfected only:
(1) Under section 41-09-29 when it attaches; or
(2) Temporarily under subsection 5, 6, or 7 of section 41-09-32; and
b. Is not made pursuant to a commitment entered into before or while the security
interest is perfected by a method other than under section 41-09-29 or
subsection 5, 6, or 7 of section 41-09-32.
2. Except as otherwise provided in subsection 3, a security interest is subordinate to the
rights of a person that becomes a lien creditor to the extent that the security interest
secures an advance made more than forty-five days after the person becomes a lien
creditor unless the advance is made:
a. Without knowledge of the lien; or
b. Pursuant to a commitment entered into without knowledge of the lien.
3. Subsections 1 and 2 do not apply to a security interest held by a secured party that is
a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a
consignor.
4. Except as otherwise provided in subsection 5, a buyer of goods takes free of a security
interest to the extent that it secures advances made after the earlier of:
a. The time the secured party acquires knowledge of the buyer's purchase; or

b. Forty-five days after the purchase.
5. Subsection 4 does not apply if the advance is made pursuant to a commitment entered
into without knowledge of the buyer's purchase and before the expiration of the
forty-five-day period.
6. Except as otherwise provided in subsection 7, a lessee of goods takes the leasehold
interest free of a security interest to the extent that it secures advances made after the
earlier of:
a. The time the secured party acquires knowledge of the lease; or
b. Forty-five days after the lease contract becomes enforceable.
7. Subsection 6 does not apply if the advance is made pursuant to a commitment entered
into without knowledge of the lease and before the expiration of the forty-five-day
period.
### § 41-09-44. (9-324) Priority of purchase-money security interests.

1. Except as otherwise provided in subsection 7, a perfected purchase-money security
interest in goods other than inventory or livestock has priority over a conflicting
security interest in the same goods, and, except as otherwise provided in section
41-09-47, a perfected security interest in its identifiable proceeds also has priority, if
the purchase-money security interest is perfected when the debtor receives
possession of the collateral or within twenty days thereafter.
2. Subject to subsection 3 and except as otherwise provided in subsection 7, a perfected
purchase-money security interest in inventory has priority over a conflicting security
interest in the same inventory, has priority over a conflicting security interest in chattel
paper or an instrument constituting proceeds of the inventory and in proceeds of the
chattel paper, if so provided in section 41-09-50, and, except as otherwise provided in
section 41-09-47, also has priority in identifiable cash proceeds of the inventory to the
extent the identifiable cash proceeds are received on or before the delivery of the
inventory to a buyer, if:
a. The purchase-money security interest is perfected when the debtor receives
possession of the inventory;
b. The purchase-money secured party sends a signed notification to the holder of
the conflicting security interest;
c. The holder of the conflicting security interest receives the notification within five
years before the debtor receives possession of the inventory; and
d. The notification states that the person sending the notification has or expects to
acquire a purchase-money security interest in inventory of the debtor and
describes the inventory.
3. Subdivisions b through d of subsection 2 apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of inventory:
a. If the purchase-money security interest is perfected by filing, before the date of
the filing; or
b. If the purchase-money security interest is temporarily perfected without filing or
possession under subsection 6 of section 41-09-32, before the beginning of the
twenty-day period thereunder.
4. Subject to subsection 5 and except as otherwise provided in subsection 7, a perfected
purchase-money security interest in livestock that are farm products has priority over a
conflicting security interest in the same livestock, and, except as otherwise provided in
section 41-09-47, a perfected security interest in their identifiable proceeds and
identifiable products in their unmanufactured states also has priority, if:
a. The purchase-money security interest is perfected when the debtor receives
possession of the livestock;
b. The purchase-money secured party sends a signed notification to the holder of
the conflicting security interest;
c. The holder of the conflicting security interest receives the notification within six
months before the debtor receives possession of the livestock; and

d. The notification states that the person sending the notification has or expects to
acquire a purchase-money security interest in livestock of the debtor and
describes the livestock.
5. Subdivisions b through d of subsection 4 apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of livestock:
a. If the purchase-money security interest is perfected by filing, before the date of
the filing; or
b. If the purchase-money security interest is temporarily perfected without filing or
possession under subsection 6 of section 41-09-32, before the beginning of the
twenty-day period thereunder.
6. Except as otherwise provided in subsection 7, a perfected purchase-money security
interest in software has priority over a conflicting security interest in the same
collateral, and, except as otherwise provided in section 41-09-47, a perfected security
interest in its identifiable proceeds also has priority, to the extent that the
purchase-money security interest in the goods in which the software was acquired for
use has priority in the goods and proceeds of the goods under this section.
7. If more than one security interest qualifies for priority in the same collateral under
subsection 1, 2, 3, or 4:
a. A security interest securing an obligation incurred as all or part of the price of the
collateral has priority over a security interest securing an obligation incurred for
value given to enable the debtor to acquire rights in or the use of collateral; and
b. In all other cases, subsection 1 of section 41-09-42 applies to the qualifying
security interests.
### § 41-09-45. (9-325) Priority of security interests in transferred collateral.

1. Except as otherwise provided in subsection 2, a security interest created by a debtor is
subordinate to a security interest in the same collateral created by another person if:
a. The debtor acquired the collateral subject to the security interest created by the
other person;
b. The security interest created by the other person was perfected when the debtor
acquired the collateral; and
c. There is no period thereafter when the security interest is unperfected.
2. Subsection 1 subordinates a security interest only if the security interest:
a. Otherwise would have priority solely under subsection 1 of section 41-09-42 or
section 41-09-44; or
b. Arose solely under subsection 3 of section 41-02-90 or subsection 5 of section
41-02.1-56.
### § 41-09-46. (9-326) Priority of security interests created by new debtor.

1. Subject to subsection 2, a security interest that is created by a new debtor in collateral
in which the new debtor has or acquired rights and perfected by a filed financing
statement that would be ineffective to perfect the security interest but for the
application of section 41-09-79 or of section 41-09-79 and subdivision a of
subsection 9 of section 41-09-36 is subordinate to a security interest in the same
collateral which is perfected other than by such a filed financing statement.
2. The other provisions of this part determine the priority among conflicting security
interests in the same collateral perfected by filed financing statements described in
subsection 1. However, if the security agreements to which a new debtor became
bound as debtor were not entered into by the same original debtor, the conflicting
security interests rank according to priority in time of the new debtor's having become
bound.

### § 41-09-46.1. (9-326A) Priority of security interest in controllable account, controllable

electronic record, and controllable payment intangible.
A security interest in a controllable account, controllable electronic record, or controllable
payment intangible held by a secured party having control of the account, electronic record, or
payment intangible has priority over a conflicting security interest held by a secured party that
does not have control.
### § 41-09-47. (9-327) Priority of security interests in deposit account and uncertificated

certificate of deposit.
The following rules govern priority among conflicting security interests in the same deposit
account or uncertificated certificate of deposit:
1. A security interest held by a secured party having control of the deposit account or
uncertificated certificate of deposit under section 41-09-04 has priority over a
conflicting security interest held by a secured party that does not have control.
2. Except as otherwise provided in subsections 3 and 4, security interests perfected by
control under section 41-09-34 rank according to priority in time of obtaining control.
3. Except as otherwise provided in subsection 4, a security interest held by the bank with
which the deposit account or uncertificated certificate of deposit is maintained has
priority over a conflicting security interest held by another secured party.
4. A security interest perfected by control under subdivision c of subsection 1 of section
account or uncertificated certificate of deposit is maintained.
### § 41-09-48. (9-328) Priority of security interests in investment property.

The following rules govern priority among conflicting security interests in the same
investment property:
1. A security interest held by a secured party having control of investment property under
section 41-09-06 has priority over a security interest held by a secured party that does
not have control of the investment property.
2. Except as otherwise provided in subsections 3 and 4, conflicting security interests held
by secured parties each of which has control under section 41-09-06 rank according to
priority in time of:
a. If the collateral is a security, obtaining control;
b. If the collateral is a security entitlement carried in a securities account and:
(1) If the secured party obtained control under subdivision a of subsection 4 of
section 41-08-06, the secured party's becoming the person for which the
securities account is maintained;
(2) If the secured party obtained control under subdivision b of subsection 4 of
section 41-08-06, the securities intermediary's agreement to comply with the
secured party's entitlement orders with respect to security entitlements
carried or to be carried in the securities account; or
(3) If the secured party obtained control through another person under
subdivision c of subsection 4 of section 41-08-06, the time on which priority
would be based under this subsection if the other person were the secured
party; or
c. If the collateral is a commodity contract carried with a commodity intermediary,
the satisfaction of the requirement for control specified in subdivision b of
subsection 2 of section 41-09-06 with respect to commodity contracts carried or
to be carried with the commodity intermediary.
3. A security interest held by a securities intermediary in a security entitlement or a
securities account maintained with the securities intermediary has priority over a
conflicting security interest held by another secured party.
4. A security interest held by a commodity intermediary in a commodity contract or a
commodity account maintained with the commodity intermediary has priority over a
conflicting security interest held by another secured party.

5. A security interest in a certificated security in registered form which is perfected by
taking delivery under subsection 1 of section 41-09-33 and not by control under
section 41-09-34 has priority over a conflicting security interest perfected by a method
other than control.
6. Conflicting security interests created by a broker, securities intermediary, or commodity
intermediary which are perfected without control under section 41-09-06 rank equally.
7. In all other cases, priority among conflicting security interests in investment property is
governed by sections 41-09-42 and 41-09-43.
### § 41-09-49. (9-329) Priority of security interests in letter-of-credit right.

The following rules govern priority among conflicting security interests in the same
letter-of-credit right:
1. A security interest held by a secured party having control of the letter-of-credit right
under section 41-09-07 has priority to the extent of its control over a conflicting
security interest held by a secured party that does not have control.
2. Security interests perfected by control under section 41-09-34 rank according to
priority in time of obtaining control.
### § 41-09-50. (9-330) Priority of purchaser of chattel paper or instrument.

1. A purchaser of chattel paper has priority over a security interest in the chattel paper
which is claimed merely as proceeds of inventory subject to a security interest if:
a. In good faith and in the ordinary course of the purchaser's business, the
purchaser gives new value, takes possession of each authoritative tangible copy
of the record evidencing the chattel paper, and obtains control under section
paper; and
b. The authoritative copies of the record evidencing the chattel paper do not indicate
that the chattel paper has been assigned to an identified assignee other than the
purchaser.
2. A purchaser of chattel paper has priority over a security interest in the chattel paper
which is claimed other than merely as proceeds of inventory subject to a security
interest if the purchaser gives new value, takes possession of each authoritative
tangible copy of the record evidencing the chattel paper, and obtains control under
section 41-09-05 of each authoritative electronic copy of the record evidencing the
chattel paper in good faith, in the ordinary course of the purchaser's business, and
without knowledge that the purchase violates the rights of the secured party.
3. Except as otherwise provided in section 41-09-47, a purchaser having priority in
chattel paper under subsection 1 or 2 also has priority in proceeds of the chattel paper
to the extent that:
a. Section 41-09-42 provides for priority in the proceeds; or
b. The proceeds consist of the specific goods covered by the chattel paper or cash
proceeds of the specific goods, even if the purchaser's security interest in the
proceeds is unperfected.
4. Except as otherwise provided in subsection 1 of section 41-09-51, a purchaser of an
instrument has priority over a security interest in the instrument perfected by a method
other than possession if the purchaser gives value and takes possession of the
instrument in good faith and without knowledge that the purchase violates the rights of
the secured party.
5. For purposes of subsections 1 and 2, the holder of a purchase-money security interest
in inventory gives new value for chattel paper constituting proceeds of the inventory.
6. For purposes of subsections 2 and 4, if the authoritative copies of the record
evidencing chattel paper or an instrument indicate that the chattel paper or instrument
has been assigned to an identified secured party other than the purchaser, a
purchaser of the chattel paper or instrument has knowledge that the purchase violates
the rights of the secured party.

### § 41-09-51. (9-331) Priority of rights of purchasers of controllable accounts,

controllable electronic records, controllable payment intangibles, documents,
instruments, and securities under other articles - Priority of interests in financial assets
and security entitlements and protection against assertion of claim under chapters 41-08
and 41-12.
1. This chapter does not limit the rights of a holder in due course of a negotiable
instrument, a holder to which a negotiable document of title has been duly negotiated,
a protected purchaser of a security, or a qualifying purchaser of a controllable account,
controllable electronic record, or controllable payment intangible. These holders or
purchasers take priority over an earlier security interest, even if perfected, to the extent
provided in chapters 41-03, 41-07, 41-08, and 41-12.
2. This chapter does not limit the rights of or impose liability on a person to the extent
that the person is protected against the assertion of a claim under chapters 41-08 and
41-12.
3. Filing under this chapter does not constitute notice of a claim or defense to the
holders, purchasers, or persons described in subsections 1 and 2.
### § 41-09-52. (9-332) Transfer of money - Transfer of funds from deposit account.

1. A transferee of tangible money takes the money free of a security interest if the
transferee receives possession of the money without acting in collusion with the debtor
in violating the rights of the secured party.
2. A transferee of funds from a deposit account takes the funds free of a security interest
in the deposit account if the transferee receives the funds without acting in collusion
with the debtor in violating the rights of the secured party.
3. A transferee of electronic money takes the money free of a security interest if the
transferee obtains control of the money without acting in collusion with the debtor in
violating the rights of the secured party.
### § 41-09-53. (9-333) Priority of certain liens arising by operation of law.

1. In this section, "possessory lien" means an interest, other than a security interest or an
agricultural lien:
a. Which secures payment or performance of an obligation for services or materials
furnished with respect to goods by a person in the ordinary course of the person's
business;
b. Which is created by statute or rule of law in favor of the person; and
c. Whose effectiveness depends on the person's possession of the goods.
2. A possessory lien on goods has priority over a security interest in the goods unless the
lien is created by a statute that expressly provides otherwise.
### § 41-09-54. (9-334) Priority of security interests in fixtures and crops.

1. A security interest under this chapter may be created in goods that are fixtures or may
continue in goods that become fixtures. A security interest does not exist under this
chapter in ordinary building materials incorporated into an improvement on land.
2. This chapter does not prevent creation of an encumbrance upon fixtures under
real-property law.
3. In cases not governed by subsections 4 through 8, a security interest in fixtures is
subordinate to a conflicting interest of an encumbrancer or owner of the related real
property other than the debtor.
4. Except as otherwise provided in subsection 8, a perfected security interest in fixtures
has priority over a conflicting interest of an encumbrancer or owner of the real property
if the debtor has an interest of record in or is in possession of the real property and:
a. The security interest is a purchase-money security interest;
b. The interest of the encumbrancer or owner arises before the goods become
fixtures; and

c. The security interest is perfected by a fixture filing before the goods become
fixtures or within twenty days thereafter.
5. A perfected security interest in fixtures has priority over a conflicting interest of an
encumbrancer or owner of the real property if:
a. The debtor has an interest of record in the real property or is in possession of the
real property and the security interest:
(1) Is perfected by a fixture filing before the interest of the encumbrancer or
owner is of record; and
(2) Has priority over any conflicting interest of a predecessor in title of the
encumbrancer or owner;
b. Before the goods become fixtures, the security interest is perfected by any
method permitted by this chapter and the fixtures are readily removable:
(1) Factory or office machines;
(2) Equipment that is not primarily used or leased for use in the operation of the
real property; or
(3) Replacements of domestic appliances that are consumer goods;
c. The conflicting interest is a lien on the real property obtained by legal or equitable
proceedings after the security interest was perfected by any method permitted by
this chapter; or
d. The security interest is:
(1) Created in a manufactured home in a manufactured-home transaction; and
(2) Perfected pursuant to a statute described in subdivision b of subsection 1 of
section 41-09-31.
6. A security interest in fixtures, whether or not perfected, has priority over a conflicting
interest of an encumbrancer or owner of the real property if:
a. The encumbrancer or owner has, in a signed record, consented to the security
interest or disclaimed an interest in the goods as fixtures; or
b. The debtor has a right to remove the goods as against the encumbrancer or
owner.
7. The priority of the security interest under subdivision b of subsection 6 continues for a
reasonable time if the debtor's right to remove the goods as against the encumbrancer
or owner terminates.
8. A mortgage is a construction mortgage to the extent that it secures an obligation
incurred for the construction of an improvement on land, including the acquisition cost
of the land, if a recorded record of the mortgage so indicates. Except as otherwise
provided in subsections 5 and 6, a security interest in fixtures is subordinate to a
construction mortgage if a record of the mortgage is recorded before the goods
become fixtures and the goods become fixtures before the completion of the
construction. A mortgage has this priority to the same extent as a construction
mortgage to the extent that it is given to refinance a construction mortgage.
9. A perfected security interest in crops growing on real property has priority over a
conflicting interest of an encumbrancer or owner of the real property if the debtor has
an interest of record in or is in possession of the real property.
10. Subsection 9 prevails over any inconsistent provisions of section 47-16-03.
### § 41-09-55. (9-335) Accessions.

1. A security interest may be created in an accession and continues in collateral that
becomes an accession.
2. If a security interest is perfected when the collateral becomes an accession, the
security interest remains perfected in the collateral.
3. Except as otherwise provided in subsection 4, the other provisions of this part
determine the priority of a security interest in an accession.
4. A security interest in an accession is subordinate to a security interest in the whole
which is perfected by compliance with the requirements of a certificate-of-title statute
under subsection 2 of section 41-09-51.

5. After default, subject to sections 41-09-98 through 41-09-123, a secured party may
remove an accession from other goods if the security interest in the accession has
priority over the claims of every person having an interest in the whole.
6. A secured party that removes an accession from other goods under subsection 5 shall
promptly reimburse any holder of a security interest or other lien on, or owner of, the
whole or of the other goods, other than the debtor, for the cost of repair of any physical
injury to the whole or the other goods. The secured party need not reimburse the
holder or owner for any diminution in value of the whole or the other goods caused by
the absence of the accession removed or by any necessity for replacing it. A person
entitled to reimbursement may refuse permission to remove until the secured party
gives adequate assurance for the performance of the obligation to reimburse.
### § 41-09-56. (9-336) Commingled goods.

1. In this section, "commingled goods" means goods that are physically united with other
goods in such a manner that their identity is lost in a product or mass.
2. A security interest does not exist in commingled goods as such. However, a security
interest may attach to a product or mass that results when goods become commingled
goods.
3. If collateral becomes commingled goods, a security interest attaches to the product or
mass.
4. If a security interest in collateral is perfected before the collateral becomes
commingled goods, the security interest that attaches to the product or mass under
subsection 3 is perfected.
5. Except as otherwise provided in subsection 6, the other provisions of this part
determine the priority of a security interest that attaches to the product or mass under
subsection 3.
6. If more than one security interest attaches to the product or mass under subsection 3,
the following rules determine priority:
a. A security interest that is perfected under subsection 4 has priority over a security
interest that is unperfected at the time the collateral becomes commingled goods.
b. If more than one security interest is perfected under subsection 4, the security
interests rank equally in proportion to the value of the collateral at the time it
became commingled goods.
### § 41-09-57. (9-337) Priority of security interests in goods covered by certificate of title.

If, while a security interest in goods is perfected by any method under the law of another
jurisdiction, this state issues a certificate of title that does not show that the goods are subject to
the security interest or contain a statement that they may be subject to security interests not
shown on the certificate:
1. A buyer of the goods, other than a person in the business of selling goods of that kind,
takes free of the security interest if the buyer gives value and receives delivery of the
goods after issuance of the certificate and without knowledge of the security interest;
and
2. The security interest is subordinate to a conflicting security interest in the goods that
attaches, and is perfected under subsection 2 of section 41-09-31, after issuance of
the certificate and without the conflicting secured party's knowledge of the security
interest.
### § 41-09-58. (9-338) Priority of security interest perfected by filed financing statement

providing certain incorrect information.
If a security interest is perfected by a filed financing statement providing information
described in subdivision e of subsection 2 of section 41-09-87 which is incorrect at the time the
financing statement is filed:

1. The security interest is subordinate to a conflicting perfected security interest in the
collateral to the extent that the holder of the conflicting security interest gives value in
reasonable reliance upon the incorrect information; and
2. A purchaser, other than a secured party, of the collateral takes free of the security
interest to the extent that, in reasonable reliance upon the incorrect information, the
purchaser gives value and, in the case of tangible chattel paper, tangible documents,
goods, instruments, or a security certificate, receives delivery of the collateral.
### § 41-09-59. (9-339) Priority subject to subordination.

This chapter does not preclude subordination by agreement by a person entitled to priority.
### § 41-09-60. (9-340) Effectiveness of right of recoupment or setoff against deposit

account or certificate of deposit.
1. Except as otherwise provided in subsection 3, a bank with which a deposit account or
certificate of deposit is maintained may exercise any right of recoupment or setoff
against a secured party that holds a security interest in the deposit account or
certificate of deposit.
2. Except as otherwise provided in subsection 3, the application of this chapter to a
security interest in a deposit account or certificate of deposit does not affect a right of
recoupment or setoff of the secured party as to a deposit account or certificate of
deposit maintained with the secured party.
3. The exercise by a bank of a setoff against a deposit account or certificate of deposit is
ineffective against a secured party that holds a security interest in the deposit account
or certificate of deposit which is perfected by control under subdivision c of
subsection 1 of section 41-09-04, if the setoff is based on a claim against the debtor.
### § 41-09-61. (9-341) Bank's rights and duties with respect to deposit account or

certificate of deposit.
Except as otherwise provided in subsection 3 of section 41-09-60, and unless the bank
otherwise agrees in a signed record, a bank's rights and duties with respect to a deposit
account or certificate of deposit maintained with the bank are not terminated, suspended, or
modified by:
1. The creation, attachment, or perfection of a security interest in the deposit account or
certificate of deposit;
2. The bank's knowledge of the security interest; or
3. The bank's receipt of instructions from the secured party.
### § 41-09-62. (9-342) Bank's right to refuse to enter into or disclose existence of control

agreement.
This chapter does not require a bank to enter into an agreement of the kind described in
subdivision b of subsection 1 of section 41-09-04, even if its customer so requests or directs. A
bank that has entered into such an agreement is not required to confirm the existence of the
agreement to another person unless requested to do so by its customer.
### § 41-09-63. (9-401) Alienability of debtor's rights.

1. Except as otherwise provided in subsection 2 and sections 41-09-68 through
41-09-71, whether a debtor's rights in collateral may be voluntarily or involuntarily
transferred is governed by law other than this chapter.
2. An agreement between the debtor and secured party which prohibits a transfer of the
debtor's rights in collateral or makes the transfer a default does not prevent the
transfer from taking effect.

### § 41-09-64. (9-402) Secured party not obligated on contract of debtor or in tort.

The existence of a security interest, agricultural lien, or authority given to a debtor to
dispose of or use collateral, without more, does not subject a secured party to liability in contract
or tort for the debtor's acts or omissions.
### § 41-09-65. (9-403) Agreement not to assert defenses against assignee.

1. In this section, "value" has the meaning provided in subsection 1 of section 41-03-29.
2. Except as otherwise provided in this section, an agreement between an account
debtor and an assignor not to assert against an assignee any claim or defense that the
account debtor may have against the assignor is enforceable by an assignee that
takes an assignment:
a. For value;
b. In good faith;
c. Without notice of a claim of a property or possessory right to the property
assigned; and
d. Without notice of a defense or claim in recoupment of the type that may be
asserted against a person entitled to enforce a negotiable instrument under
subsection 1 of section 41-03-31.
3. Subsection 2 does not apply to defenses of a type that may be asserted against a
holder in due course of a negotiable instrument under subsection 2 of section
41-03-31.
4. In a consumer transaction, if a record evidences the account debtor's obligation, law
other than this chapter requires that the record include a statement to the effect that
the rights of an assignee are subject to claims or defenses that the account debtor
could assert against the original obligee, and the record does not include such a
statement:
a. The record has the same effect as if the record included such a statement; and
b. The account debtor may assert against an assignee those claims and defenses
that would have been available if the record included such a statement.
5. This section is subject to law other than this chapter which establishes a different rule
for an account debtor who is an individual and who incurred the obligation primarily for
personal, family, or household purposes.
6. Except as otherwise provided in subsection 4, this section does not displace law other
than this chapter which gives effect to an agreement by an account debtor not to
assert a claim or defense against an assignee.
### § 41-09-66. (9-404) Rights acquired by assignee - Claims and defenses against

assignee.
1. Unless an account debtor has made an enforceable agreement not to assert defenses
or claims, and subject to subsections 2 through 5, the rights of an assignee are subject
to:
a. All terms of the agreement between the account debtor and assignor and any
defense or claim in recoupment arising from the transaction that gave rise to the
contract; and
b. Any other defense or claim of the account debtor against the assignor which
accrues before the account debtor receives a notification of the assignment
signed by the assignor or the assignee.
2. Subject to subsection 3 and except as otherwise provided in subsection 4, the claim of
an account debtor against an assignor may be asserted against an assignee under
subsection 1 only to reduce the amount the account debtor owes.
3. This section is subject to law other than this chapter which establishes a different rule
for an account debtor who is an individual and who incurred the obligation primarily for
personal, family, or household purposes.
4. In a consumer transaction, if a record evidences the account debtor's obligation, law
other than this chapter requires that the record include a statement to the effect that
the account debtor's recovery against an assignee with respect to claims and defenses

against the assignor may not exceed amounts paid by the account debtor under the
record, and the record does not include such a statement, the extent to which a claim
of an account debtor against the assignor may be asserted against an assignee is
determined as if the record included such a statement.
5. This section does not apply to an assignment of a health care insurance receivable.
### § 41-09-67. (9-405) Modification of assigned contract.

1. A modification of or substitution for an assigned contract is effective against an
assignee if made in good faith. The assignee acquires corresponding rights under the
modified or substituted contract. The assignment may provide that the modification or
substitution is a breach of contract by the assignor. This subsection is subject to
subsections 2 through 4.
2. Subsection 1 applies to the extent that:
a. The right to payment or a part thereof under an assigned contract has not been
fully earned by performance; or
b. The right to payment or a part thereof has been fully earned by performance and
the account debtor has not received notification of the assignment under
subsection 1 of section 41-09-68.
3. This section is subject to law other than this chapter which establishes a different rule
for an account debtor who is an individual and who incurred the obligation primarily for
personal, family, or household purposes.
4. This section does not apply to an assignment of a health care insurance receivable.
### § 41-09-68. (9-406) Discharge of account debtor - Notification of assignment -

Identification and proof of assignment - Restrictions on assignment of accounts, chattel
paper, payment intangibles, and promissory notes ineffective.
1. Subject to subsections 2 through 9 and 12, an account debtor on an account, chattel
paper, or a payment intangible may discharge its obligation by paying the assignor
until, but not after, the account debtor receives a notification, signed by the assignor or
the assignee, that the amount due or to become due has been assigned and that
payment is to be made to the assignee. After receipt of the notification, the account
debtor may discharge its obligation by paying the assignee and may not discharge the
obligation by paying the assignor.
2. Subject to subsections 8 and 12, notification is ineffective under subsection 1:
a. If it does not reasonably identify the rights assigned;
b. To the extent that an agreement between an account debtor and a seller of a
payment intangible limits the account debtor's duty to pay a person other than the
seller and the limitation is effective under law other than this chapter; or
c. At the option of an account debtor, if the notification notifies the account debtor to
make less than the full amount of any installment or other periodic payment to the
assignee, even if:
(1) Only a portion of the account, chattel paper, or payment intangible has been
assigned to that assignee;
(2) A portion has been assigned to another assignee; or
(3) The account debtor knows that the assignment to that assignee is limited.
3. Subject to subsections 8 and 12, if requested by the account debtor, an assignee shall
seasonably furnish reasonable proof that the assignment has been made. Unless the
assignee complies, the account debtor may discharge its obligation by paying the
assignor, even if the account debtor has received a notification under subsection 1.
4. In this subsection, "promissory note" includes a negotiable instrument that evidences
chattel paper. Except as otherwise provided in subsections 5 and 11 and sections
between an account debtor and an assignor or in a promissory note is ineffective to
the extent that it:
a. Prohibits, restricts, or requires the consent of the account debtor or person
obligated on the promissory note to the assignment or transfer of, or the creation,

attachment, perfection, or enforcement of a security interest in, the account,
chattel paper, payment intangible, or promissory note; or
b. Provides that the assignment or transfer or the creation, attachment, perfection,
or enforcement of the security interest may give rise to a default, breach, right of
recoupment, claim, defense, termination, right of termination, or remedy under
the account, chattel paper, payment intangible, or promissory note.
5. Subsection 4 does not apply to the sale of a payment intangible or promissory note,
other than a sale pursuant to a disposition under section 41-09-107 or an acceptance
of collateral under section 41-09-115.
6. Except as otherwise provided in subsection 11 and sections 41-02.1-33 and 41-09-69
and subject to subsections 8 and 9, a rule of law, statute, or regulation that prohibits,
restricts, or requires the consent of a government, governmental body or official, or
account debtor to the assignment or transfer of, or creation of a security interest in, an
account or chattel paper is ineffective to the extent that the rule of law, statute, or
regulation:
a. Prohibits, restricts, or requires the consent of the government, governmental body
or official, or account debtor to the assignment or transfer of, or the creation,
attachment, perfection, or enforcement of a security interest in the account or
chattel paper; or
b. Provides that the assignment, transfer, creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right of
recoupment, claim, defense, termination, right of termination, or remedy under
the account or chattel paper.
7. Subject to subsections 8 and 12, an account debtor may not waive or vary its option
under subdivision c of subsection 2.
8. This section is subject to law other than this chapter which establishes a different rule
for an account debtor who is an individual and who incurred the obligation primarily for
personal, family, or household purposes.
9. This section does not apply to an assignment of a health care insurance receivable.
10. This section prevails over any inconsistent statute, rule, or regulation.
11. Subsections 4, 6, and 10 do not apply to a security interest in an ownership interest in
a general partnership, limited partnership, or limited liability company.
12. Subsections 1, 2, 3, and 7 do not apply to a controllable account or controllable
payment intangible.
### § 41-09-69. (9-407) Restrictions on creation or enforcement of security interest in

leasehold interest or in lessor's residual interest.
1. Except as otherwise provided in subsection 2, a term in a lease agreement is
ineffective to the extent that the term:
a. Prohibits, restricts, or requires the consent of a party to the lease to the
assignment, transfer, creation, attachment, perfection, or enforcement of a
security interest in an interest of a party under the lease contract or in the lessor's
residual interest in the goods; or
b. Provides that the assignment, transfer, creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right of
recoupment, claim, defense, termination, right of termination, or remedy under
the lease.
2. Except as otherwise provided in subsection 6 of section 41-02.1-33, a term described
in subdivision b of subsection 1 is effective to the extent that there is:
a. A transfer by the lessee of the lessee's right of possession or use of the goods in
violation of the term; or
b. A delegation of a material performance of either party to the lease contract in
violation of the term.
3. The creation, attachment, perfection, or enforcement of a security interest in the
lessor's interest under the lease contract or the lessor's residual interest in the goods
is not a transfer that materially impairs the lessee's prospect of obtaining return

performance or materially changes the duty of or materially increases the burden or
risk imposed on the lessee within the purview of subsection 4 of section 41-02.1-33
unless, and then only to the extent that, enforcement actually results in a delegation of
material performance of the lessor.
### § 41-09-70. (9-408) Restrictions on assignment of promissory notes, health care

insurance receivables, and certain general intangibles ineffective.
1. Except as otherwise provided in subsections 2 and 6, a term in a promissory note or in
an agreement between an account debtor and a debtor which relates to a health care
insurance receivable or a general intangible, including a contract, permit, license, or
franchise, and which term prohibits, restricts, or requires the consent of the person
obligated on the promissory note or the account debtor to, the assignment or transfer
of, or creation, attachment, or perfection of a security interest in, the promissory note,
health care insurance receivable, or general intangible, is ineffective to the extent that
the term:
a. Would impair the creation, attachment, or perfection of a security interest; or
b. Provides that the assignment, transfer, creation, attachment, or perfection of the
security interest may give rise to a default, breach, right of recoupment, claim,
defense, termination, right of termination, or remedy under the promissory note,
health care insurance receivable, or general intangible.
2. Subsection 1 applies to a security interest in a payment intangible or promissory note
only if the security interest arises out of a sale of the payment intangible or promissory
note, other than a sale pursuant to a disposition under section 41-09-107 or an
acceptance of collateral under section 41-09-115.
3. Except as otherwise provided in subsection 6, a rule of law, statute, or regulation that
prohibits, restricts, or requires the consent of a government, governmental body or
official, person obligated on a promissory note, or account debtor to the assignment or
transfer of, or creation of a security interest in, a promissory note, health care
insurance receivable, or general intangible, including a contract, permit, license, or
franchise between an account debtor and a debtor, is ineffective to the extent that the
rule of law, statute, or regulation:
a. Would impair the creation, attachment, or perfection of a security interest; or
b. Provides that the assignment, transfer, creation, attachment, or perfection of the
security interest may give rise to a default, breach, right of recoupment, claim,
defense, termination, right of termination, or remedy under the promissory note,
health care insurance receivable, or general intangible.
4. To the extent that a term in a promissory note or in an agreement between an account
debtor and a debtor which relates to a health care insurance receivable or general
intangible or a rule of law, statute, or regulation described in subsection 3 would be
effective under law other than this chapter but is ineffective under subsection 1 or 3,
the creation, attachment, or perfection of a security interest in the promissory note,
health care insurance receivable, or general intangible:
a. Is not enforceable against the person obligated on the promissory note or the
account debtor;
b. Does not impose a duty or obligation on the person obligated on the promissory
note or the account debtor;
c. Does not require the person obligated on the promissory note or the account
debtor to recognize the security interest, pay or render performance to the
secured party, or accept payment or performance from the secured party;
d. Does not entitle the secured party to use or assign the debtor's rights under the
promissory note, health care insurance receivable, or general intangible,
including any related information or materials furnished to the debtor in the
transaction giving rise to the promissory note, health care insurance receivable,
or general intangible;

e. Does not entitle the secured party to use, assign, possess, or have access to any
trade secrets or confidential information of the person obligated on the
promissory note or the account debtor; and
f. Does not entitle the secured party to enforce the security interest in the
promissory note, health care insurance receivable, or general intangible.
5. This section prevails over any inconsistent statute, rule, or regulation.
6. This section does not apply to a security interest in an ownership interest in a general
partnership, limited partnership, or limited liability company.
7. In this section, "promissory note" includes a negotiable instrument that evidences
chattel paper.
### § 41-09-71. (9-409) Restrictions on assignment of letter-of-credit rights ineffective.

1. A term in a letter of credit or a rule of law, statute, regulation, custom, or practice
applicable to the letter of credit which prohibits, restricts, or requires the consent of an
applicant, issuer, or nominated person to a beneficiary's assignment of or creation of a
security interest in a letter-of-credit right is ineffective to the extent that the term or rule
of law, statute, regulation, custom, or practice:
a. Would impair the creation, attachment, or perfection of a security interest in the
letter-of-credit right; or
b. Provides that the assignment, creation, attachment, or perfection of the security
interest may give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination, or remedy under the letter-of-credit right.
2. To the extent that a term in a letter of credit is ineffective under subsection 1 but would
be effective under law other than this chapter or a custom or practice applicable to the
letter of credit, to the transfer of a right to draw or otherwise demand performance
under the letter of credit, or to the assignment of a right to proceeds of the letter of
credit, the creation, attachment, or perfection of a security interest in the letter-of-credit
right:
a. Is not enforceable against the applicant, issuer, nominated person, or transferee
beneficiary;
b. Imposes no duties or obligations on the applicant, issuer, nominated person, or
transferee beneficiary; and
c. Does not require the applicant, issuer, nominated person, or transferee
beneficiary to recognize the security interest, pay or render performance to the
secured party, or accept payment or other performance from the secured party.
### § 41-09-72. (9-501) Filing office.

1. Except as otherwise provided in subsection 2, if the local law of this state governs
perfection of a security interest or agricultural lien, the office in which to file a financing
statement to perfect the security interest or agricultural lien is:
a. The office designated for the filing or recording of a record of a mortgage on the
related real property, if:
(1) The collateral is as-extracted collateral or timber to be cut; or
(2) The financing statement is filed as a fixture filing and the collateral is goods
that are or are to become fixtures; or
b. The office of the recorder in any county in this state or in the office of the
secretary of state, in all other cases, including a case in which the collateral is
goods that are or are to become fixtures and the financing statement is not filed
as a fixture filing.
2. The office in which to file a financing statement to perfect a security interest in
collateral, including fixtures, of a transmitting utility is the office of the secretary of
state. The financing statement also constitutes a fixture filing as to the collateral
indicated in the financing statement which is or is to become fixtures.
3. The secretary of state shall provide an electronic means for filing any record required
or permitted to be filed by this title. This may include use of business-to-business

methods using a common data format and must include a web-based application. Any
record that is not filed electronically must be rejected.
### § 41-09-73. (9-502) Contents of financing statement - Record of mortgage as financing

statement - Time of filing financing statement - Amending financing statement.
1. Subject to subsection 2, a financing statement is sufficient only if the statement:
a. Provides the name of the debtor;
b. Provides the name of the secured party or a representative of the secured party;
c. Indicates the collateral covered by the financing statement; and
d. If it is a financing statement that is to be filed to gain protection under the central
notice system, includes a reasonable description of the property, including the
county in which the property is located, and any other additional information
required by the Food Security Act of 1985 [Pub. L. 99-198; Stat. 1535; 7 U.S.C.
1631], as prescribed by the secretary of state, and, to be sufficient a financing
statement must include the name and address of the secured party; and unless
electronically filed, the signatures of the debtor and secured parties.
2. Except as otherwise provided in subsection 2 of section 41-09-72, to be sufficient, a
financing statement that covers as-extracted collateral or timber to be cut, or which is
filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy
subsection 1 and also:
a. Indicate that it covers this type of collateral;
b. Indicate that it is to be filed for record in the real property records;
c. Provide a description of the real property to which the collateral is related
sufficient to give constructive notice of a mortgage under the law of this state if
the description were contained in a record of the mortgage of the real property;
and
d. If the debtor does not have an interest of record in the real property, provide the
name of a record owner.
3. A record of a mortgage is effective, from the date of recording, as a financing
statement filed as a fixture filing or as a financing statement covering as-extracted
collateral or timber to be cut only if:
a. The record indicates the goods or accounts that it covers;
b. The goods are or are to become fixtures related to the real property described in
the record or the collateral is related to the real property described in the record
and is as-extracted collateral or timber to be cut;
c. The record satisfies the requirements for a financing statement in this section,
but:
(1) The record need not indicate that it is to be filed in the real property records;
(2) The record sufficiently provides the name of a debtor who is an individual if
the record provides the individual name of the debtor or the surname and
first personal name of the debtor, even if the debtor is an individual to whom
subdivision d of subsection 1 of section 41-09-74 applies; and
(3) The mortgage may not include a social security number or internal revenue
service taxpayer identification number; and
d. The record is duly recorded.
4. A financing statement may be filed before a security agreement is made or a security
interest otherwise attaches.
5. A financing statement filed to gain protection under the central notice system must be
amended within three months of a material change to reflect that change. The
amended financing statement must be signed by both the debtor and secured party
and filed in the same manner as the original financing statement. An electronically filed
amendment does not need to be signed.
6. a. Any social security number or internal revenue service taxpayer identification
number submitted on a financing statement filed pursuant to this chapter as a
central indexing filing is an exempt record as defined by subsection 5 of section

section 41-09-94 or 41-09-96 or as part of a copy of the record. A filing office or
an officer or employee of the filing office may not be held civilly or criminally liable
for the inadvertent disclosure of a social security or internal revenue service
taxpayer identification number if the filer has placed the number in an improper
field on the form prescribed by the secretary of state or the filer submitted a filing
other than on the form prescribed by the secretary of state.
b. A debtor's social security number or internal revenue service taxpayer
identification number may not be recorded in the real property records as
provided for under section 11-18-23.2.
### § 41-09-74. (9-503) Name of debtor and secured party.

1. A financing statement sufficiently provides the name of the debtor:
a. Except as otherwise provided in subdivision c, if the debtor is a registered
organization, or the collateral is held in a trust that is a registered organization,
only if the financing statement provides the name that is stated to be the
registered organization's name on the public organic record most recently filed
with or issued or enacted by the registered organization's jurisdiction of
organization which purports to state, amend, or restate the registered
organization's name;
b. Subject to subsection 6, if the collateral is being administered by the personal
representative of a decedent, only if the financing statement provides, as the
name of the debtor, the name of the decedent and, in a separate part of the
financing statement, indicates that the collateral is being administered by a
personal representative;
c. If the collateral is held in a trust that is not a registered organization, only if the
financing statement:
(1) Provides, as the name of the debtor:
(a) If the organic record of the trust specifies a name for the trust, the
name so specified; or
(b) If the organic record of the trust does not specify a name for the trust,
the name of the settlor or testator; and
(2) In a separate part of the financing statement:
(a) If the name is provided in accordance with subparagraph a of
paragraph 1, indicates that the collateral is held in a trust; or
(b) If the name is provided in accordance with subparagraph b of
paragraph 1, provides additional information sufficient to distinguish
the trust from other trusts having one or more of the same settlors or
the same testator and indicates that the collateral is held in a trust,
unless the additional information so indicates;
d. Subject to subsection 7, if the debtor is an individual to whom this state has
issued a driver's license or identity card that has not expired, only if the financing
statement provides the name of the individual which is indicated on the driver's
license or identity card;
e. If the debtor is an individual to whom subdivision d does not apply, only if the
financing statement provides the individual name of the debtor or the surname
and first personal name of the debtor; and
f. In other cases:
(1) If the debtor has a name, only if the financing statement provides the
organizational name of the debtor; and
(2) If the debtor does not have a name, only if the financing statement provides
the names of the partners, members, associates, or other persons
comprising the debtor, in a manner that each name provided would be
sufficient if the person named were the debtor.
2. A financing statement that provides the name of the debtor in accordance with
subsection 1 is not rendered ineffective by the absence of:
a. A trade name or other name of the debtor; or

b. Unless required under paragraph 2 of subdivision f of subsection 1, names of
partners, members, associates, or other persons comprising the debtor.
3. A financing statement that provides only the debtor's trade name does not sufficiently
provide the name of the debtor.
4. Failure to indicate the representative capacity of a secured party or representative of a
secured party does not affect the sufficiency of a financing statement.
5. A financing statement may provide the name of more than one debtor and the name of
more than one secured party.
6. The name of the decedent indicated on the order appointing the personal
representative of the decedent issued by the court having jurisdiction over the
collateral is sufficient as the "name of the decedent" under subdivision b of
subsection 1.
7. If this state has issued to an individual more than one driver's license or identity card of
a kind described in subdivision d of subsection 1, the one that was issued most
recently is the one to which subdivision d of subsection 1 refers.
8. The "name of the settlor or testator" means:
a. If the settlor is a registered organization, the name of the registered organization
indicated on the public organic record filed with or issued or enacted by the
registered organization's jurisdiction of organization; or
b. In other cases, the name of the settlor or testator indicated in the trust's organic
record.
### § 41-09-75. (9-504) Indication of collateral.

A financing statement sufficiently indicates the collateral that it covers if the financing
statement provides:
1. A description of the collateral pursuant to section 41-09-08; or
2. An indication that the financing statement covers all assets or all personal property.
### § 41-09-76. (9-505) Filing and compliance with other statutes and treaties for

consignments, leases, other bailments, and other transactions.
1. A consignor, lessor, or other bailor of goods, a licensor, or a buyer of a payment
intangible or promissory note may file a financing statement, or may comply with a
statute or treaty described in subsection 1 of section 41-09-31, using the terms
"consignor", "consignee", "lessor", "lessee", "bailor", "bailee", "licensor", "licensee",
"owner", "registered owner", "buyer", "seller", or words of similar import, instead of the
terms "secured party" and "debtor".
2. This part applies to the filing of a financing statement under subsection 1 and, as
appropriate, to compliance that is equivalent to filing a financing statement under
subsection 2 of section 41-09-31, but the filing or compliance is not of itself a factor in
determining whether the collateral secures an obligation. If it is determined for another
reason that the collateral secures an obligation, a security interest held by the
consignor, lessor, bailor, licensor, owner, or buyer which attaches to the collateral is
perfected by the filing or compliance.
### § 41-09-77. (9-506) Effect of errors or omissions.

1. A financing statement substantially satisfying the requirements of this part is effective,
even if the financing statement has minor errors or omissions, unless the errors or
omissions make the financing statement seriously misleading.
2. Except as otherwise provided in subsection 3, a financing statement that fails
sufficiently to provide the name of the debtor in accordance with subsection 1 of
section 41-09-74 is seriously misleading.
3. If a search of the records of the filing office under the debtor's correct name, using the
filing office's standard search logic, if any, would disclose a financing statement that
fails sufficiently to provide the name of the debtor in accordance with subsection 1 of

section 41-09-74, the name provided does not make the financing statement seriously
misleading.
4. For purposes of subsection 2 of section 41-09-79, the "debtor's correct name" in
subsection 3 means the correct name of the new debtor.
### § 41-09-78. (9-507) Effect of certain events on effectiveness of financing statement.

1. A filed financing statement remains effective with respect to collateral that is sold,
exchanged, leased, licensed, or otherwise disposed of and in which a security interest
or agricultural lien continues, even if the secured party knows of or consents to the
disposition.
2. Except as otherwise provided in subsection 3 and section 41-09-79, a financing
statement is not rendered ineffective if, after the financing statement is filed, the
information provided in the financing statement becomes seriously misleading under
section 41-09-77.
3. If the name that a filed financing statement provides for a debtor becomes insufficient
as the name of the debtor under subsection 1 of section 41-09-74 so that the financing
statement becomes seriously misleading under section 41-09-77:
a. The financing statement is effective to perfect a security interest in collateral
acquired by the debtor before, or within four months after, the filed financing
statement becomes seriously misleading; and
b. The financing statement is not effective to perfect a security interest in collateral
acquired by the debtor more than four months after the filed financing statement
becomes seriously misleading, unless an amendment to the financing statement
which renders the financing statement not seriously misleading is filed within four
months after that event.
### § 41-09-79. (9-508) Effectiveness of financing statement if new debtor becomes bound

by security agreement.
1. Except as otherwise provided in this section, a filed financing statement naming an
original debtor is effective to perfect a security interest in collateral in which a new
debtor has or acquires rights to the extent that the financing statement would have
been effective had the original debtor acquired rights in the collateral.
2. If the difference between the name of the original debtor and that of the new debtor
causes a filed financing statement that is effective under subsection 1 to be seriously
misleading under section 41-09-77:
a. The financing statement is effective to perfect a security interest in collateral
acquired by the new debtor before, and within four months after, the new debtor
becomes bound under subsection 4 of section 41-09-13; and
b. The financing statement is not effective to perfect a security interest in collateral
acquired by the new debtor more than four months after the new debtor becomes
bound under subsection 4 of section 41-09-13 unless an initial financing
statement providing the name of the new debtor is filed before the expiration of
that time.
3. This section does not apply to collateral as to which a filed financing statement
remains effective against the new debtor under subsection 1 of section 41-09-78.
### § 41-09-80. (9-509) Persons entitled to file a record.

1. A person may file an initial financing statement, amendment that adds collateral
covered by a financing statement, or amendment that adds a debtor to a financing
statement only if:
a. The debtor authorizes the filing in a signed record or pursuant to subsection 2
or 3; or
b. The person holds an agricultural lien that has become effective at the time of
filing and the financing statement covers only collateral in which the person holds
an agricultural lien.

2. By signing or becoming bound as debtor by a security agreement, a debtor or new
debtor authorizes the filing of an initial financing statement, and an amendment,
covering:
a. The collateral described in the security agreement; and
b. Property that becomes collateral under subdivision b of subsection 1 of section
41-09-35, regardless of whether the security agreement expressly covers
proceeds.
3. By acquiring collateral in which a security interest or agricultural lien continues under
subdivision a of subsection 1 of section 41-09-35, a debtor authorizes the filing of an
initial financing statement, and an amendment, covering the collateral and property
that becomes collateral under subdivision b of subsection 1 of section 41-09-35.
4. A person may file an amendment other than an amendment that adds collateral
covered by a financing statement or an amendment that adds a debtor to a financing
statement only if:
a. The secured party of record authorizes the filing; or
b. The amendment is a termination statement for a financing statement as to which
the secured party of record has failed to file or send a termination statement as
required under section 41-09-84, the debtor authorizes the filing, and the
termination statement indicates that the debtor authorized it to be filed. The filing
office shall notify the secured party of a filing under this subsection.
5. If there is more than one secured party of record for a financing statement, each
secured party of record may authorize the filing of an amendment under subsection 4.
### § 41-09-81. (9-510) Effectiveness of filed record.

1. A filed record is effective only to the extent that it was filed by a person that may file it
under section 41-09-80.
2. A record authorized by one secured party of record does not affect the financing
statement with respect to another secured party of record.
3. A continuation statement that is not filed within the six-month period prescribed by
subsection 4 of section 41-09-86 is ineffective.
### § 41-09-82. (9-511) Secured party of record.

1. A secured party of record with respect to a financing statement is a person whose
name is provided as the name of the secured party or a representative of the secured
party in an initial financing statement that has been filed. If an initial financing
statement is filed under subsection 1 of section 41-09-85, the assignee named in the
initial financing statement is the secured party of record with respect to the financing
statement.
2. If an amendment of a financing statement which provides the name of a person as a
secured party or a representative of a secured party is filed, the person named in the
amendment is a secured party of record. If an amendment is filed under subsection 2
of section 41-09-85, the assignee named in the amendment is a secured party of
record.
3. A person remains a secured party of record until the filing of an amendment of the
financing statement which deletes the person.
### § 41-09-83. (9-512) Amendment of financing statement.

1. Subject to section 41-09-80, a person may add or delete collateral covered by,
continue or terminate the effectiveness of, or, subject to subsection 5, otherwise
amend the information provided in, a financing statement by filing an amendment that:
a. Identifies, by its file number, the initial financing statement to which the
amendment relates; and
b. If the amendment relates to an initial financing statement filed or recorded in a
filing office described in subdivision a of subsection 1 of section 41-09-72,
provides the information specified in subsection 2 of section 41-09-73.

2. Except as otherwise provided in section 41-09-86, the filing of an amendment does not
extend the period of effectiveness of the financing statement.
3. A financing statement that is amended by an amendment that adds collateral is
effective as to the added collateral only from the date of the filing of the amendment.
4. A financing statement that is amended by an amendment that adds a debtor is
effective as to the added debtor only from the date of the filing of the amendment.
5. An amendment is ineffective to the extent it:
a. Purports to delete all debtors and fails to provide the name of a debtor to be
covered by the financing statement; or
b. Purports to delete all secured parties of record and fails to provide the name of a
new secured party of record.
### § 41-09-84. (9-513) Termination statement - Remedies - Fees.

1. If a financing statement covering consumer goods is filed after December 31, 1973,
then within one month or within ten days following written demand by the debtor after
there is no outstanding secured obligation and no commitment to make advances,
incur obligations, or otherwise give value, the secured party shall file electronically in
the central indexing system, a termination statement to the effect that the secured
party no longer claims a security interest under the financing statement, which must be
identified by file number. In other cases when there is no outstanding secured
obligation and no written commitment between the secured party and the debtor to
make advances, incur obligations, or otherwise give value, the secured party, unless
requested by the debtor in writing to continue the filing, shall file electronically a
termination statement to the effect that the secured party no longer claims a security
interest under the financing statement nor under the central notice system, which shall
be identified by file number. If the affected secured party fails to file a termination
statement as required by this subsection within sixty days of when the secured
obligation is fully satisfied, and the debtor has not requested in writing that the filing be
continued, then under section 41-09-120 the secured party is liable to the debtor for
one hundred dollars and for any loss caused to the debtor by such failure. The debtor's
written request for a filing to be continued may be made at any time and be effective
under this section. If the affected secured party fails to file a termination statement
within ten days after proper written demand by the debtor, then under section
loss caused to the debtor by such failure.
2. Except as otherwise provided in section 41-09-81, upon the filing of a termination
statement, the financing statement to which the termination statement relates ceases
to be effective. Except as provided in section 41-09-81, for purposes of subsection 7 of
section 41-09-90, subsection 1 of section 41-09-93, and subsection 2 of section
41-09-94, the electronic filing of a termination statement relating to a financing
statement that indicates that the debtor is a transmitting utility also causes the
effectiveness of the financing statement to lapse.
3. The fee for filing and indexing a termination statement is included in the fee for filing
the financing statement.
### § 41-09-85. (9-514) Assignment of powers of secured party of record.

1. Except as otherwise provided in subsection 3, an initial financing statement may reflect
an assignment of all of the secured party's power to authorize an amendment to the
financing statement by providing the name and mailing address of the assignee as the
name and address of the secured party.
2. Except as otherwise provided in subsection 3, a secured party of record may assign of
record all or part of its power to authorize an amendment to a financing statement by
filing in the filing office an amendment of the financing statement which:
a. Identifies, by its file number, the initial financing statement to which it relates;
b. Provides the name of the assignor; and
c. Provides the name and mailing address of the assignee.

3. An assignment of record of a security interest in a fixture covered by a record of a
mortgage which is effective as a financing statement filed as a fixture filing under
subsection 3 of section 41-09-73 may be made only by an assignment of record of the
mortgage in the manner provided by law of this state other than this title.
### § 41-09-86. (9-515) Duration and effectiveness of financing statement - Effect of lapsed

financing statement.
1. Except as otherwise provided in subsections 5, 6, and 7, a financing statement filed in
the personal property records or recorded in real property records is effective for a
period of five years after the date of filing.
2. Except as otherwise provided in subsections 5, 6, and 7, a financing statement
recorded as a fixture filing against real property is effective for a period of five years
after the date of recording.
3. The effectiveness of a filed financing statement lapses on the expiration of the period
of its effectiveness unless before the lapse a continuation statement is filed pursuant to
subsection 4. Upon lapse, a financing statement ceases to be effective and any
security interest or agricultural lien that was perfected by the financing statement
becomes unperfected, unless the security interest is perfected otherwise. If the
security interest or agricultural lien becomes unperfected upon lapse, it is deemed
never to have been perfected as against a purchaser of the collateral for value.
4. A continuation statement may be filed only within six months before the expiration of
the five-year period specified in subsection 1.
5. Except as otherwise provided in section 41-09-81, upon timely filing of a continuation
statement, the effectiveness of the initial financing statement continues for a period of
five years commencing on the day on which the financing statement would have
become ineffective in the absence of the filing. Upon the expiration of the five-year
period, the financing statement lapses in the same manner as provided in
subsection 3, unless, before the lapse, another continuation statement is filed pursuant
to subsection 4. Succeeding continuation statements may be filed in the same manner
to continue the effectiveness of the initial financing statement.
6. If a debtor is a transmitting utility and a filed initial financing statement so indicates, the
financing statement is effective until a termination statement is filed.
7. A record of a mortgage that is effective as a financing statement filed as a fixture filing
under subsection 3 of section 41-09-73 remains effective as a financing statement filed
as a fixture filing until the mortgage is released or satisfied of record or its
effectiveness otherwise terminates as to the real property.
### § 41-09-87. (9-516) What constitutes filing - Effectiveness of filing.

1. Except as otherwise provided in subsection 2, communication of a record to a filing
office and tender of the filing fee or acceptance of the record by the filing office
constitutes filing.
2. Filing does not occur with respect to a record that a filing office refuses to accept
because:
a. The record is not communicated by a method or medium of communication
authorized by the filing office;
b. An amount equal to or greater than the applicable filing fee is not tendered;
c. The filing office is unable to index the record because:
(1) In the case of an initial financing statement, the record does not provide a
name for the debtor;
(2) In the case of an amendment or information statement, the record:
(a) Does not identify the initial financing statement as required by section
(b) Identifies an initial financing statement whose effectiveness has
lapsed under section 41-09-86;
(3) In the case of an initial financing statement that provides the name of a
debtor identified as an individual or an amendment that provides a name of

a debtor identified as an individual which was not previously provided in the
financing statement to which the record relates, the record does not identify
the debtor's surname; or
(4) In the case of a record filed or recorded in the filing office described in
subdivision a of subsection 1 of section 41-09-72, the record does not
provide a sufficient description of the real property to which it relates;
d. In the case of an initial financing statement or an amendment that adds a secured
party of record, the record does not provide a name and mailing address for the
secured party of record;
e. In the case of an initial financing statement or an amendment that provides a
name of a debtor which was not previously provided in the financing statement to
which the amendment relates, the record does not:
(1) Provide a mailing address for the debtor; or
(2) Indicate whether the name provided as the name of the debtor is an
individual or an organization;
f. In the case of an assignment reflected in an initial financing statement under
subsection 1 of section 41-09-85 or an amendment filed under subsection 2 of
section 41-09-85, the record does not provide a name and mailing address for the
assignee;
g. In the case of a continuation statement, the record is not filed within the six-month
period prescribed by subsection 4 of section 41-09-86; or
h. In the case of filings entered in the secretary of state's online filing system, the
record does not contain the social security number or the internal revenue service
taxpayer identification number of the debtor.
3. For purposes of subsection 2:
a. A record does not provide information if the filing office is unable to read or
decipher the information; and
b. A record that does not indicate that it is an amendment or identify an initial
financing statement to which it relates, as required by section 41-09-83, 41-09-85,
or 41-09-89, is an initial financing statement.
4. A record that is communicated to the filing office with tender of the filing fee, but which
the filing office refuses to accept for a reason other than one set forth in subsection 2,
is effective as a filed record except as against a purchaser of the collateral which gives
value in reasonable reliance upon the absence of the record from the files.
### § 41-09-88. (9-517) Effect of indexing errors.

The failure of the filing office to index a record correctly does not affect the effectiveness of
the filed record.
### § 41-09-89. (9-518) Claim concerning inaccurate or wrongfully filed record.

1. A person may file in the filing office an information statement with respect to a record
indexed there under the person's name if the person believes that the record is
inaccurate or was wrongfully filed.
2. An information statement under subsection 1 must:
a. Identify the record to which it relates by the file number assigned to the initial
financing statement to which the record relates;
b. Indicate that it is an information statement; and
c. Provide the basis for the person's belief that the record is inaccurate and indicate
the manner in which the person believes the record should be amended to cure
any inaccuracy or provide the basis for the person's belief that the record was
wrongfully filed.
3. A person may file in the filing office an information statement with respect to a record
filed there if the person is a secured party of record with respect to the financing
statement to which the record relates and believes that the person that filed the record
was not entitled to do so under subsection 4 of section 41-09-80.
4. An information statement under subsection 3 must:

a. Identify the record to which the information statement relates by the file number
assigned to the initial financing statement to which the record relates;
b. Indicate that it is an information statement; and
c. Provide the basis for the person's belief that the person that filed the record was
not entitled to do so under subsection 4 of section 41-09-80.
5. The filing of an information statement does not affect the effectiveness of an initial
financing statement or other filed record.
### § 41-09-90. (9-519) Numbering, maintaining, and indexing records - Communicating

information provided in records.
1. For each record filed in a filing office, the filing office shall:
a. Assign a unique number to the filed record;
b. Create a record that bears the number assigned to the filed record and the date
and time of filing;
c. Maintain the filed record for public inspection; and
d. Index the filed record in accordance with subsections 3 through 5.
2. A file number assigned after January 1, 2002, must include a digit that:
a. Is mathematically derived from or related to the other digits of the file number;
and
b. Aids the filing office in determining whether a number communicated as the file
number includes a single-digit or transpositional error.
3. Except as otherwise provided in subsections 4 and 5, the filing office shall:
a. Index an initial financing statement according to the name of the debtor and index
all filed records relating to the initial financing statement in a manner that
associates with one another an initial financing statement and all filed records
relating to the initial financing statement; and
b. Index a record that provides a name of a debtor which was not previously
provided in the financing statement to which the record relates also according to
the name that was not previously provided.
4. If a financing statement is filed as a fixture filing or covers as-extracted collateral or
timber to be cut, it must be filed for record and the filing office shall index it:
a. Under the names of the debtor and of each owner of record shown on the
financing statement as if they were the mortgagors under a mortgage of the real
property described; and
b. To the extent that the law of this state provides for indexing of records of
mortgages under the name of the mortgagee, under the name of the secured
party as if the secured party were the mortgagee thereunder, or, if indexing is by
description, as if the financing statement were a record of a mortgage of the real
property described.
5. If a financing statement is filed as a fixture filing or covers as-extracted collateral or
timber to be cut, the filing office shall index an assignment filed under subsection 1 of
section 41-09-85 or an amendment filed under subsection 2 of section 41-09-85:
a. Under the name of the assignor as grantor; and
b. To the extent that the law of this state provides for indexing a record of the
assignment of a mortgage under the name of the assignee, under the name of
the assignee.
6. The filing office shall maintain a capability:
a. To retrieve a record by the name of the debtor and by the file number assigned to
the initial financing statement to which the record relates; and
b. To associate and retrieve with one another an initial financing statement and each
filed record relating to the initial financing statement.
7. The filing office may not remove a debtor's name from the index until one year after
the effectiveness of a financing statement naming the debtor lapses under section

8. The filing office shall perform the acts required by subsections 1 through 5 at the time
and in the manner prescribed by filing-office rule, but not later than two business days
after the filing office receives the record in question.
### § 41-09-91. (9-520) Acceptance and refusal to accept record.

1. A filing office shall refuse to accept a record for filing for a reason set forth in
subsection 2 of section 41-09-87 and may refuse to accept a record for filing only for a
reason set forth in subsection 2 of section 41-09-87.
2. If a filing office refuses to accept a record for filing, it shall communicate to the person
that presented the record the fact of and reason for the refusal and the date and time
the record would have been filed had the filing office accepted it. The communication
must be made at the time and in the manner prescribed by filing-office rule but in no
event more than two business days after the filing office receives the record.
3. A filed financing statement satisfying subsections 1 and 2 of section 41-09-73 is
effective, even if the filing office is required to refuse to accept it for filing under
subsection 1. However, section 41-09-58 applies to a filed financing statement
providing information described in subdivision e of subsection 2 of section 41-09-87
which is incorrect at the time the financing statement is filed.
4. If a record communicated to a filing office provides information that relates to more
than one debtor, this part applies as to each debtor separately.
### § 41-09-92. (9-521) Uniform form of written financing statement and amendment.

1. A filing office that accepts written records may not refuse to accept a written initial
financing statement in the form and format established by the secretary of state,
except for a reason set forth in subsection 2 of section 41-09-87.
2. A filing office that accepts written records may not refuse to accept a written record in
the form and format established by the secretary of state, except for a reason set forth
in subsection 2 of section 41-09-87.
### § 41-09-93. (9-522) Maintenance and destruction of records.

1. The filing office shall maintain a record of the information provided in a filed financing
statement for at least one year after the effectiveness of the financing statement has
lapsed under section 41-09-86 with respect to all secured parties of record. The record
must be retrievable by using the name of the debtor and by using the file number
assigned to the initial financing statement to which the record relates.
2. Except to the extent that a statute governing disposition of public records provides
otherwise, the filing office immediately may destroy any written record evidencing a
financing statement. However, if the filing office destroys a written record, it shall
maintain another record of the financing statement which complies with subsection 1.
### § 41-09-94. (9-523) Information from filing office - Sale or license of records.

1. Any person may request electronically an acknowledgment of a filing. The central
indexing system shall provide to the person detailed information and an image of the
record, if not filed electronically, showing the number assigned to the record pursuant
to subdivision a of subsection 1 of section 41-09-90 and the date and time of the filing
of the record.
2. The central indexing system shall communicate electronically the following information
to any person that requests it:
a. Whether there is on file on a date and time specified by the central indexing
system, any statement of an agricultural lien created under chapter 35-17, 35-30,
or 35-31 or any financing statement that:
(1) Designates a particular debtor or, if the request so states, designates a
particular debtor at the address specified in the request;
(2) Has not lapsed under section 41-09-86 with respect to all secured parties of
record; and

(3) Effective January 1, 2002, if the request so states, has lapsed under section
under subsection 1 of section 41-09-93;
b. The date and time of filing of each statement and each financing statement; and
c. The information provided in each statement and each financing statement.
3. If a request to the central indexing system cannot be automatically accepted, the
secretary of state shall perform the acts required by subsections 1 and 2 not later than
two business days after the central indexing system receives the request.
4. At least weekly, the secretary of state shall offer to sell or license to the public on a
nonexclusive basis, in bulk, detailed information of all records filed.
### § 41-09-95. (9-524) Delay by filing office.

Delay by the filing office beyond a time limit prescribed by this part is excused if:
1. The delay is caused by interruption of communication or computer facilities, war,
emergency conditions, failure of equipment, or other circumstances beyond control of
the filing office; and
2. The filing office exercises reasonable diligence under the circumstances.
### § 41-09-96. (9-525) Fees.

1. The fee for filing and indexing an original statement under this title is forty dollars. An
additional fee may not be charged for the same statement to gain protection under the
central notice system.
2. The fee for filing and indexing an amendment, assignments, releases, or correction
statements under this title is forty dollars. An additional fee may not be charged for the
same document to gain protection under the central notice system.
3. The fee for filing and indexing a continuation under this title is thirty dollars. An
additional fee may not be charged for the same document to gain protection under the
central notice system.
4. A fee may not be charged for a central indexing system response to an electronic
request for:
a. Information from the central indexing system communicating whether there is on
file any financing statement or statement naming a particular debtor.
b. Information on specific filings on a particular debtor.
c. Copies of each filing on a particular debtor.
d. Certified copies of filings on a particular debtor.
5. The fee for a central indexing response providing information on specific filings
submitted by a particular secured party is five hundred dollars.
6. Any fees collected by the secretary of state pursuant to this chapter and all other
filings entered into the central indexing system must be deposited in the general fund
in the state treasury, with the exception of the fees collected under subsection 4 of
section 41-09-94, subsection 5, and a portion of the filing fees specifically identified in
section 54-09-11, which must be deposited in the secretary of state's general services
operating fund.
### § 41-09-97. (9-526) Rules.

The secretary of state shall adopt and publish rules to implement this chapter. The rules
must be:
1. Consistent with this chapter; and
2. Adopted and published in accordance with chapter 28-32.
### § 41-09-98. (9-601) Rights after default - Judicial enforcement - Consignor or buyer of

accounts, chattel paper, payment intangibles, or promissory notes.
1. After default, a secured party has the rights provided in this part and, except as
otherwise provided in section 41-09-99, those provided by agreement of the parties. A
secured party:

a. May reduce a claim to judgment, foreclose, or otherwise enforce the claim,
security interest, or agricultural lien by any available judicial procedure; and
b. If the collateral is documents, may proceed either as to the documents or as to
the goods they cover.
2. A secured party in possession of collateral or control of collateral under section
41-07-06, 41-09-04, 41-09-05, 41-09-05.1, 41-09-06, 41-09-07, or 41-09-07.1 has the
rights and duties provided in section 41-09-17.
3. The rights under subsections 1 and 2 are cumulative and may be exercised
simultaneously.
4. Except as otherwise provided in subsection 7 and section 41-09-102, after default, a
debtor and an obligor have the rights provided in this part and by agreement of the
parties.
5. If a secured party has reduced its claim to judgment, the lien of any levy that may be
made upon the collateral by virtue of an execution based upon the judgment relates
back to the earliest of:
a. The date of perfection of the security interest or agricultural lien in the collateral;
b. The date of filing a financing statement covering the collateral; or
c. Any date specified in a statute under which the agricultural lien was created.
6. A sale pursuant to an execution is a foreclosure of the security interest or agricultural
lien by judicial procedure within the meaning of this section. A secured party may
purchase at the sale and thereafter hold the collateral free of any other requirements
of this chapter.
7. Except as otherwise provided in subsection 3 of section 41-09-104, sections 41-09-98
through 41-09-123 impose no duties upon a secured party that is a consignor or is a
buyer of accounts, chattel paper, payment intangibles, or promissory notes.
### § 41-09-99. (9-602) Waiver and variance of rights and duties.

Except as otherwise provided in section 41-09-119, to the extent that they give rights to a
debtor or obligor and impose duties on a secured party, the debtor or obligor may not waive or
vary the rules stated in the following listed sections:
1. Paragraph 3 of subdivision d of subsection 2 of section 41-09-17, which deals with use
and operation of the collateral by the secured party;
2. Section 41-09-20, which deals with requests for an accounting and requests
concerning a list of collateral and statement of account;
3. Section 41-09-22, which deals with perfection and priority of agricultural liens;
4. Subsection 3 of section 41-09-104, which deals with collection and enforcement of
collateral;
5. Subsection 1 of section 41-09-105 and subsection 3 of section 41-09-111 to the extent
that they deal with application or payment of noncash proceeds of collection,
enforcement, or disposition;
6. Subsection 1 of section 41-09-105 and subsection 4 of section 41-09-111 to the extent
that they require accounting for or payment of surplus proceeds of collateral;
7. Section 41-09-106 to the extent that it imposes upon a secured party that takes
possession of collateral without judicial process the duty to do so without breach of the
peace;
8. Subsection 2 of section 41-09-107, section 41-09-108, and section 41-09-110, which
deal with disposition of collateral;
9. Subsection 6 of section 41-09-111, which deals with calculation of a deficiency or
surplus when a disposition is made to the secured party, a person related to the
secured party, or a secondary obligor;
10. Sections 41-09-115 through 41-09-117, which deal with acceptance of collateral in
satisfaction of obligation;
11. Section 41-09-118, which deals with redemption of collateral;
12. Section 41-09-119, which deals with permissible waivers; and
13. Sections 41-09-120 and 41-09-121, which deal with the secured party's liability for
failure to comply with this chapter.

### § 41-09-100. (9-603) Agreement on standards concerning rights and duties.

1. The parties may determine by agreement the standards measuring the fulfillment of
the rights of a debtor or obligor and the duties of a secured party under a rule stated in
section 41-09-99 if the standards are not manifestly unreasonable.
2. Subsection 1 does not apply to the duty under section 41-09-106 to refrain from
breaching the peace.
### § 41-09-101. (9-604) Procedure if security agreement covers real property or fixtures.

1. If a security agreement covers both personal and real property, a secured party may
proceed:
a. Under this part as to the personal property without prejudicing any rights with
respect to the real property; or
b. As to both the personal property and the real property in accordance with the
rights with respect to the real property, in which case the other provisions of this
part do not apply.
2. Subject to subsection 3, if a security agreement covers goods that are or become
fixtures, a secured party may proceed:
a. Under this part; or
b. In accordance with the rights with respect to real property, in which case the other
provisions of this part do not apply.
3. Subject to the other provisions of this part, if a secured party holding a security interest
in fixtures has priority over all owners and encumbrancers of the real property, the
secured party, after default, may remove the collateral from the real property.
4. A secured party that removes collateral shall promptly reimburse any encumbrancer or
owner of the real property, other than the debtor, for the cost of repair of any physical
injury caused by the removal. The secured party need not reimburse the
encumbrancer or owner for any diminution in value of the real property caused by the
absence of the goods removed or by any necessity of replacing them. A person
entitled to reimbursement may refuse permission to remove until the secured party
gives adequate assurance for the performance of the obligation to reimburse.
### § 41-09-102. (9-605) Unknown debtor or secondary obligor.

1. Except as provided in subsection 2, a secured party does not owe a duty based on its
status as secured party:
a. To a person that is a debtor or obligor, unless the secured party knows:
(1) That the person is a debtor or obligor;
(2) The identity of the person; and
(3) How to communicate with the person; or
b. To a secured party or lienholder that has filed a financing statement against a
person, unless the secured party knows:
(1) That the person is a debtor; and
(2) The identity of the person.
2. A secured party owes a duty based on its status as a secured party to a person if, at
the time the secured party obtains control of collateral that is a controllable account,
controllable electronic record, or controllable payment intangible or at the time the
security interest attaches to the collateral, whichever is later:
a. The person is a debtor or obligor; and
b. The secured party knows that the information in subdivision a of subsection 1
relating to the person is not provided by the collateral, a record attached to or
logically associated with the collateral, or the system in which the collateral is
recorded.

### § 41-09-103. (9-606) Time of default for agricultural lien.

For purposes of this part, a default occurs in connection with an agricultural lien at the time
the secured party becomes entitled to enforce the lien in accordance with the statute under
which it was created or section 35-01-29.
### § 41-09-104. (9-607) Collection and enforcement by secured party.

1. If so agreed, and in any event after default, a secured party:
a. May notify an account debtor or other person obligated on collateral to make
payment or otherwise render performance to or for the benefit of the secured
party;
b. May take any proceeds to which the secured party is entitled under section
41-09-35;
c. May enforce the obligations of an account debtor or other person obligated on
collateral and exercise the rights of the debtor with respect to the obligation of the
account debtor or other person obligated on collateral to make payment or
otherwise render performance to the debtor, and with respect to any property that
secures the obligations of the account debtor or other person obligated on the
collateral;
d. If it holds a security interest in a deposit account or an uncertificated certificate of
deposit perfected by control under subdivision a of subsection 1 of section
41-09-04, or in a certificated certificate of deposit perfected by possession under
section 41-09-33, may apply the balance of the deposit account or certificate of
deposit to the obligation secured by the deposit account or certificate of deposit;
and
e. If it holds a security interest in a deposit account or an uncertificated certificate of
deposit perfected by control under subdivision b or c of subsection 1 of section
41-09-04, or in a certificated certificate of deposit perfected by possession under
section 41-09-33, may instruct the bank to pay the balance of the deposit account
or certificate of deposit to or for the benefit of the secured party.
2. If necessary to enable a secured party to exercise under subdivision c of subsection 1
the right of a debtor to enforce a mortgage nonjudicially, the secured party may record
in the office in which a record of the mortgage is recorded:
a. A copy of the security agreement that creates or provides for a security interest in
the obligation secured by the mortgage; and
b. The secured party's sworn affidavit in recordable form stating that:
(1) A default has occurred with respect to the obligation secured by the
mortgage; and
(2) The secured party is entitled to enforce the mortgage nonjudicially.
3. A secured party shall proceed in a commercially reasonable manner if the secured
party:
a. Undertakes to collect from or enforce an obligation of an account debtor or other
person obligated on collateral; and
b. Is entitled to charge back uncollected collateral or otherwise to full or limited
recourse against the debtor or a secondary obligor.
4. A secured party may deduct from the collections made pursuant to subsection 3
reasonable expenses of collection and enforcement, including reasonable attorney's
fees and legal expenses incurred by the secured party.
5. This section does not determine whether an account debtor, bank, or other person
obligated on collateral owes a duty to a secured party.
### § 41-09-105. (9-608) Application of proceeds of collection or enforcement - Liability for

deficiency and right to surplus.
1. If a security interest or agricultural lien secures payment or performance of an
obligation, the following rules apply:

a. A secured party shall apply or pay over for application the cash proceeds of
collection or enforcement under section 41-09-104 in the following order to:
(1) The reasonable expenses of collection and enforcement and, to the extent
provided for by agreement and not prohibited by law, reasonable attorney's
fees and legal expenses incurred by the secured party;
(2) The satisfaction of obligations secured by the security interest or agricultural
lien under which the collection or enforcement is made; and
(3) The satisfaction of obligations secured by any subordinate security interest
in or other lien on the collateral subject to the security interest or agricultural
lien under which the collection or enforcement is made if the secured party
receives a signed demand for proceeds before distribution of the proceeds
is completed.
b. If requested by a secured party, a holder of a subordinate security interest or
other lien shall furnish reasonable proof of the interest or lien within a reasonable
time. Unless the holder complies, the secured party need not comply with the
holder's demand under subdivision c.
c. A secured party need not apply or pay over for application noncash proceeds of
collection and enforcement under section 41-09-104 unless the failure to do so
would be commercially unreasonable. A secured party that applies or pays over
for application noncash proceeds shall do so in a commercially reasonable
manner.
d. A secured party shall account to and pay a debtor for any surplus, and the obligor
is liable for any deficiency.
2. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles,
or promissory notes, the debtor is not entitled to any surplus, and the obligor is not
liable for any deficiency.
### § 41-09-106. (9-609) Secured party's right to take possession after default.

1. After default, a secured party:
a. May take possession of the collateral; and
b. Without removal, may render equipment unusable and dispose of collateral on a
debtor's premises under section 41-09-107.
2. A secured party may proceed under subsection 1:
a. Pursuant to judicial process; or
b. Without judicial process, if it proceeds without breach of the peace.
3. If so agreed, and in any event after default, a secured party may require the debtor to
assemble the collateral and make it available to the secured party at a place to be
designated by the secured party which is reasonably convenient to both parties.
### § 41-09-107. (9-610) Disposition of collateral after default.

1. After default, a secured party may sell, lease, license, or otherwise dispose of any or
all of the collateral in its present condition or following any commercially reasonable
preparation or processing.
2. Every aspect of a disposition of collateral, including the method, manner, time, place,
and other terms, must be commercially reasonable. If commercially reasonable, a
secured party may dispose of collateral by public or private proceedings, by one or
more contracts, as a unit or in parcels, and at any time and place and on any terms.
3. A secured party may purchase collateral:
a. At a public disposition; or
b. At a private disposition only if the collateral is of a kind that is customarily sold on
a recognized market or the subject of widely distributed standard price
quotations.
4. A contract for sale, lease, license, or other disposition includes the warranties relating
to title, possession, quiet enjoyment, and the like which by operation of law
accompany a voluntary disposition of property of the kind subject to the contract.
5. A secured party may disclaim or modify warranties under subsection 4:

a. In a manner that would be effective to disclaim or modify the warranties in a
voluntary disposition of property of the kind subject to the contract of disposition;
or
b. By communicating to the purchaser a record evidencing the contract for
disposition and including an express disclaimer or modification of the warranties.
6. A record is sufficient to disclaim warranties under subsection 5 if it indicates "there is
no warranty relating to title, possession, quiet enjoyment, or the like in this disposition"
or uses words of similar import.
### § 41-09-108. (9-611) Notification before disposition of collateral.

1. In this section, "notification date" means the earlier of the date on which:
a. A secured party sends to the debtor and any secondary obligor a signed
notification of disposition; or
b. The debtor and any secondary obligor waive the right to notification.
2. Except as otherwise provided in subsection 4, a secured party that disposes of
collateral under section 41-09-107 shall send to the persons specified in subsection 3
a reasonable signed notification of disposition.
3. To comply with subsection 2, the secured party shall send a signed notification of
disposition to:
a. The debtor;
b. Any secondary obligor;
c. Any other person from which the secured party has received, before the
notification date, a signed notification of a claim of an interest in the collateral;
d. Any other secured party or lienholder that, ten days before the notification date,
held a security interest in or other lien on the collateral perfected by the filing of a
financing statement that:
(1) Identified the collateral;
(2) Was indexed under the debtor's name as of that date; and
(3) Was filed in the office in which to file a financing statement against the
debtor covering the collateral as of that date; and
e. Any other secured party that, ten days before the notification date, held a security
interest in the collateral perfected by compliance with a statute, regulation, or
treaty described in subsection 1 of section 41-09-31.
4. Subsection 2 does not apply if the collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market.
5. A secured party complies with the requirements for notification prescribed by
paragraph 2 of subdivision c of subsection 3 if:
a. Not later than twenty days or earlier than thirty days before the notification date,
the secured party requests, in a commercially reasonable manner, information
concerning financing statements indexed under the debtor's name in the office
indicated in paragraph 2 of subdivision c of subsection 3; and
b. Before the notification date, the secured party:
(1) Did not receive a response to the request for information; or
(2) Received a response to the request for information and sent a signed
notification of disposition to each secured party or other lienholder named in
that response whose financing statement covered the collateral.
### § 41-09-109. (9-612) Timeliness of notification before disposition of collateral.

1. Except as otherwise provided in subsection 2, whether a notification is sent within a
reasonable time is a question of fact.
2. A notification of disposition sent after default and ten days before the earliest time of
disposition set forth in the notification is sent within a reasonable time before the
disposition.

### § 41-09-110. (9-613) Contents and form of notification before disposition of collateral -

General.
1. The contents of a notification of disposition are sufficient if the notification:
a. Describes the debtor and the secured party;
b. Describes the collateral that is the subject of the intended disposition;
c. States the method of intended disposition;
d. States that the debtor is entitled to an accounting of the unpaid indebtedness and
states the charge, if any, for an accounting; and
e. States the time and place of a public disposition or the time after which any other
disposition is to be made.
2. Whether the contents of a notification that lacks any of the information specified in
subsection 1 are nevertheless sufficient is a question of fact.
3. The contents of a notification providing substantially the information specified in
subsection 1 are sufficient, even if the notification includes:
a. Information not specified by that subsection; or
b. Minor errors that are not seriously misleading.
4. A particular phrasing of the notification is not required.
### § 41-09-111. (9-615) Application of proceeds of disposition - Liability for deficiency and

right to surplus.
1. A secured party shall apply or pay over for application the cash proceeds of disposition
under section 41-09-107 in the following order to:
a. The reasonable expenses of retaking, holding, preparing for disposition,
processing, and disposing, and, to the extent provided for by agreement and not
prohibited by law, reasonable attorney's fees and legal expenses incurred by the
secured party;
b. The satisfaction of obligations secured by the security interest or agricultural lien
under which the disposition is made;
c. The satisfaction of obligations secured by any subordinate security interest in or
other subordinate lien on the collateral if:
(1) The secured party receives from the holder of the subordinate security
interest or other lien a signed demand for proceeds before distribution of the
proceeds is completed; and
(2) In a case in which a consignor has an interest in the collateral, the
subordinate security interest or other lien is senior to the interest of the
consignor; and
d. A secured party that is a consignor of the collateral if the secured party receives
from the consignor a signed demand for proceeds before distribution of the
proceeds is completed.
2. If requested by a secured party, a holder of a subordinate security interest or other lien
shall furnish reasonable proof of the interest or lien within a reasonable time. Unless
the holder does so, the secured party need not comply with the holder's demand under
subdivision c of subsection 1.
3. A secured party need not apply or pay over for application noncash proceeds of
disposition under section 41-09-107 unless the failure to do so would be commercially
unreasonable. A secured party that applies or pays over for application noncash
proceeds shall do so in a commercially reasonable manner.
4. If the security interest under which a disposition is made secures payment or
performance of an obligation, after making the payments and applications required by
subsection 1 and permitted by subsection 3:
a. Unless subdivision d of subsection 1 requires the secured party to apply or pay
over cash proceeds to a consignor, the secured party shall account to and pay a
debtor for any surplus; and
b. The obligor is liable for any deficiency.
5. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles,
or promissory notes:

a. The debtor is not entitled to any surplus; and
b. The obligor is not liable for any deficiency.
6. The surplus or deficiency following a disposition is calculated based on the amount of
proceeds that would have been realized in a disposition complying with this part to a
transferee other than the secured party, a person related to the secured party, or a
secondary obligor if:
a. The transferee in the disposition is the secured party, a person related to the
secured party, or a secondary obligor; and
b. The amount of proceeds of the disposition is significantly below the range of
proceeds that a complying disposition to a person other than the secured party, a
person related to the secured party, or a secondary obligor would have brought.
7. A secured party that receives cash proceeds of a disposition in good faith and without
knowledge that the receipt violates the rights of the holder of a security interest or
other lien that is not subordinate to the security interest or agricultural lien under which
the disposition is made:
a. Takes the cash proceeds free of the security interest or other lien;
b. Is not obligated to apply the proceeds of the disposition to the satisfaction of
obligations secured by the security interest or other lien; and
c. Is not obligated to account to or pay the holder of the security interest or other
lien for any surplus.
### § 41-09-112. (9-617) Rights of transferee of collateral.

1. A secured party's disposition of collateral after default:
a. Transfers to a transferee for value all of the debtor's rights in the collateral;
b. Discharges the security interest under which the disposition is made; and
c. Discharges any subordinate security interest or other subordinate lien.
2. A transferee that acts in good faith takes free of the rights and interests described in
subsection 1, even if the secured party fails to comply with this chapter or the
requirements of any judicial proceeding.
3. If a transferee does not take free of the rights and interests described in subsection 1,
the transferee takes the collateral subject to:
a. The debtor's rights in the collateral;
b. The security interest or agricultural lien under which the disposition is made; and
c. Any other security interest or other lien.
### § 41-09-113. (9-618) Rights and duties of certain secondary obligors.

1. A secondary obligor acquires the rights and becomes obligated to perform the duties
of the secured party after the secondary obligor:
a. Receives an assignment of a secured obligation from the secured party;
b. Receives a transfer of collateral from the secured party and agrees to accept the
rights and assume the duties of the secured party; or
c. Is subrogated to the rights of a secured party with respect to collateral.
2. An assignment, transfer, or subrogation described in subsection 1:
a. Is not a disposition of collateral under section 41-09-107; and
b. Relieves the secured party of further duties under this chapter.
### § 41-09-114. (9-619) Transfer of record or legal title.

1. In this section, "transfer statement" means a record signed by a secured party stating:
a. That the debtor has defaulted in connection with an obligation secured by
specified collateral;
b. That the secured party has exercised its postdefault remedies with respect to the
collateral;
c. That, by reason of the exercise, a transferee has acquired the rights of the debtor
in the collateral; and
d. The name and mailing address of the secured party, debtor, and transferee.

2. A transfer statement entitles the transferee to the transfer of record of all rights of the
debtor in the collateral specified in the statement in any official filing, recording,
registration, or certificate-of-title system covering the collateral. If a transfer statement
is presented with the applicable fee and request form to the official or office
responsible for maintaining the system, the official or office shall:
a. Accept the transfer statement;
b. Promptly amend its records to reflect the transfer; and
c. If applicable, issue a new appropriate certificate of title in the name of the
transferee.
3. A transfer of the record or legal title to collateral to a secured party under subsection 2
or otherwise is not of itself a disposition of collateral under this chapter and does not of
itself relieve the secured party of its duties under this chapter.
### § 41-09-115. (9-620) Acceptance of collateral in full or partial satisfaction of obligation -

Compulsory disposition of collateral.
1. A secured party may accept collateral in full or partial satisfaction of the obligation it
secures only if:
a. The debtor consents to the acceptance under subsection 3;
b. The secured party does not receive, within the time set forth in subsection 4, a
notification of objection to the proposal signed by:
(1) A person to which the secured party was required to send a proposal under
section 41-09-116; or
(2) Any other person, other than the debtor, holding an interest in the collateral
subordinate to the security interest that is the subject of the proposal.
2. A purported or apparent acceptance of collateral under this section is ineffective
unless:
a. The secured party consents to the acceptance in a signed record or sends a
proposal to the debtor; and
b. The conditions of subsection 1 are met.
3. For purposes of this section:
a. A debtor consents to an acceptance of collateral in partial satisfaction of the
obligation it secures only if the debtor agrees to the terms of the acceptance in a
record signed after default; and
b. A debtor consents to an acceptance of collateral in full satisfaction of the
obligation it secures only if the debtor agrees to the terms of the acceptance in a
record signed after default or the secured party:
(1) Sends to the debtor after default a proposal that is unconditional or subject
only to a condition that collateral not in the possession of the secured party
be preserved or maintained;
(2) In the proposal, proposes to accept collateral in full satisfaction of the
obligation it secures; and
(3) Does not receive a notification of objection signed by the debtor within
twenty days after the proposal is sent.
4. To be effective under subdivision c of subsection 1, a notification of objection must be
received by the secured party:
a. In the case of a person to which the proposal was sent pursuant to section
41-09-116, within twenty days after notification was sent to that person; and
b. In other cases:
(1) Within twenty days after the last notification was sent pursuant to section
41-09-116; or
(2) If a notification was not sent, before the debtor consents to the acceptance
under subsection 3.
### § 41-09-116. (9-621) Notification of proposal to accept collateral.

1. A secured party that desires to accept collateral in full or partial satisfaction of the
obligation it secures shall send its proposal to:

a. Any person from which the secured party has received, before the debtor
consented to the acceptance, a signed notification of a claim of an interest in the
collateral;
b. Any other secured party or lienholder that, ten days before the debtor consented
to the acceptance, held a security interest in or other lien on the collateral
perfected by the filing of a financing statement that:
(1) Identified the collateral;
(2) Was indexed under the debtor's name as of that date; and
(3) Was filed in the office or offices in which to file a financing statement against
the debtor covering the collateral as of that date; and
c. Any other secured party that, ten days before the debtor consented to the
acceptance, held a security interest in the collateral perfected by compliance with
a statute, regulation, or treaty described in subsection 1 of section 41-09-31.
2. A secured party that desires to accept collateral in partial satisfaction of the obligation
it secures shall send its proposal to any secondary obligor in addition to the persons
described in subsection 1.
### § 41-09-117. (9-622) Effect of acceptance of collateral.

1. A secured party's acceptance of collateral in full or partial satisfaction of the obligation
it secures:
a. Discharges the obligation to the extent consented to by the debtor;
b. Transfers to the secured party all of a debtor's rights in the collateral;
c. Discharges the security interest or agricultural lien that is the subject of the
debtor's consent and any subordinate security interest or other subordinate lien;
and
d. Terminates any other subordinate interest.
2. A subordinate interest is discharged or terminated under subsection 1, even if the
secured party fails to comply with this chapter.
### § 41-09-118. (9-623) Right to redeem collateral.

1. A debtor, any secondary obligor, or any other secured party or lienholder may redeem
collateral.
2. To redeem collateral, a person shall tender:
a. Fulfillment of all obligations secured by the collateral; and
b. The reasonable expenses and attorney's fees described in subdivision a of
subsection 1 of section 41-09-111.
3. A redemption may occur at any time before a secured party:
a. Has collected collateral under section 41-09-104;
b. Has disposed of collateral or entered into a contract for its disposition under
section 41-09-107; or
c. Has accepted collateral in full or partial satisfaction of the obligation it secures
under section 41-09-117.
### § 41-09-119. (9-624) Waiver.

1. A debtor or secondary obligor may waive the right to notification of disposition of
collateral under section 41-09-108 only by an agreement to that effect entered into and
signed after default.
2. A debtor or secondary obligor may waive the right to redeem collateral under section
### § 41-09-120. (9-625) Remedies for secured party's failure to comply with chapter.

1. If it is established that a secured party is not proceeding in accordance with this
chapter, a court may order or restrain collection, enforcement, or disposition of
collateral on appropriate terms and conditions.

2. Subject to subsections 3, 4, and 6, a person is liable for damages in the amount of any
loss caused by a failure to comply with this chapter. Loss caused by a failure to comply
with a request under section 41-09-20 may include loss resulting from the debtor's
inability to obtain, or increase costs of, alternative financing.
3. Except as otherwise provided in section 41-09-123:
a. A person that, at the time of the failure, was a debtor, was an obligor, or held a
security interest in or other lien on the collateral may recover in an individual
action damages under subsection 2 for its loss; and
b. If the collateral is consumer goods, a person that was a debtor or a secondary
obligor at the time a secured party failed to comply with this part may recover in
an individual action for that failure in any event an amount not less than the credit
service charge plus ten percent of the principal amount of the obligation or the
time-price differential plus ten percent of the cash price.
4. A debtor whose deficiency is eliminated under section 41-09-121 may recover in an
individual action damages for the loss of any surplus. However, a debtor or secondary
obligor whose deficiency is eliminated or reduced under section 41-09-121 may not
otherwise recover under subsection 2 for noncompliance with the provisions of
sections 41-09-98 through 41-09-123 relating to collection, enforcement, disposition,
or acceptance.
5. In addition to any damages recoverable under subsection 2, the debtor or person
named as a debtor in a filed record, as applicable, may recover in an individual action
one hundred dollars in each case from a person that:
a. Fails to comply with section 41-09-18;
b. Fails to comply with section 41-09-19;
c. Files a record that the person is not entitled to file under subsection 1 of section
41-09-80; or
d. Fails to comply with section 41-09-84.
6. A debtor or consumer obligor may recover in an individual action damages under
subsection 2 and, in addition, one hundred dollars in each case from a person that,
without reasonable cause, fails to comply with a request under section 41-09-20. A
recipient of a request under section 41-09-20 which never claimed an interest in the
collateral or obligations that are the subject of a request under that section has a
reasonable excuse for failure to comply with the request within the meaning of this
subsection.
7. If a secured party fails to comply with a request regarding a list of collateral or a
statement of account under section 41-09-20, the secured party may claim a security
interest only as shown in the list or statement included in the request as against a
person that is reasonably misled by the failure.
### § 41-09-121. (9-626) Action in which deficiency or surplus is in issue.

In an action arising from a transaction in which the amount of a deficiency or surplus is in
issue, the following rules apply:
1. A secured party need not prove compliance with the provisions of this part relating to
collection, enforcement, disposition, or acceptance unless the debtor or a secondary
obligor places the secured party's compliance in issue.
2. If the secured party's compliance is placed in issue, the secured party has the burden
of establishing that the collection, enforcement, disposition, or acceptance was
conducted in accordance with this part.
3. Except as otherwise provided in section 41-09-123, if a secured party fails to prove
that the collection, enforcement, disposition, or acceptance was conducted in
accordance with the provisions of this part relating to collection, enforcement,
disposition, or acceptance, the liability of a debtor or a secondary obligor for a
deficiency is limited to an amount by which the sum of the secured obligation,
expenses, and attorney's fees exceeds the greater of:
a. The proceeds of the collection, enforcement, disposition, or acceptance; or

b. The amount of proceeds that would have been realized had the noncomplying
secured party proceeded in accordance with the provisions of this part relating to
collection, enforcement, disposition, or acceptance.
4. For purposes of subdivision b of subsection 3, the amount of proceeds that would
have been realized is equal to the sum of the secured obligation, expenses, and
attorney's fees unless the secured party proves that the amount is less than that sum.
5. If a deficiency or surplus is calculated under subsection 6 of section 41-09-111, the
debtor or obligor has the burden of establishing that the amount of proceeds of the
disposition is significantly below the range of prices that a complying disposition to a
person other than the secured party, a person related to the secured party, or a
secondary obligor would have brought.
### § 41-09-122. (9-627) Determination of whether conduct was commercially reasonable.

1. The fact that a greater amount could have been obtained by a collection, enforcement,
disposition, or acceptance at a different time or in a different method from that selected
by the secured party is not of itself sufficient to preclude the secured party from
establishing that the collection, enforcement, disposition, or acceptance was made in a
commercially reasonable manner.
2. A disposition of collateral is made in a commercially reasonable manner if the
disposition is made:
a. In the usual manner on any recognized market;
b. At the price current in any recognized market at the time of the disposition; or
c. Otherwise in conformity with reasonable commercial practices among dealers in
the type of property that was the subject of the disposition.
3. A collection, enforcement, disposition, or acceptance is commercially reasonable if it
has been approved:
a. In a judicial proceeding;
b. By a bona fide creditors' committee;
c. By a representative of creditors; or
d. By an assignee for the benefit of creditors.
4. Approval under subsection 3 need not be obtained, and lack of approval does not
mean that the collection, enforcement, disposition, or acceptance is not commercially
reasonable.
### § 41-09-123. (9-628) Nonliability and limitation on liability of secured party - Liability of

secondary obligor.
1. Subject to subsection 5, unless a secured party knows that a person is a debtor or
obligor, knows the identity of the person, and knows how to communicate with the
person:
a. The secured party is not liable to the person, or to a secured party or lienholder
that has filed a financing statement against the person, for failure to comply with
this chapter; and
b. The secured party's failure to comply with this chapter does not affect the liability
of the person for a deficiency.
2. Subject to subsection 5, a secured party is not liable because of its status as secured
party:
a. To a person that is a debtor or obligor, unless the secured party knows:
(1) That the person is a debtor or obligor;
(2) The identity of the person; and
(3) How to communicate with the person; or
b. To a secured party or lienholder that has filed a financing statement against a
person, unless the secured party knows:
(1) That the person is a debtor; and
(2) The identity of the person.
3. A secured party is not liable to any person, and a person's liability for a deficiency is
not affected, because of any act or omission arising out of the secured party's

reasonable belief that a transaction is not a consumer-goods transaction or a
consumer transaction or that goods are not consumer goods, if the secured party's
belief is based on its reasonable reliance on:
a. A debtor's representation concerning the purpose for which collateral was to be
used, acquired, or held; or
b. An obligor's representation concerning the purpose for which a secured obligation
was incurred.
4. A secured party is not liable under subdivision b of subsection 3 of section 41-09-120
more than once with respect to any one secured obligation.
5. Subsections 1 and 2 do not apply to limit the liability of a secured party to a person if,
at the time the secured party obtains control of collateral that is a controllable account,
controllable electronic record, or controllable payment intangible or at the time the
security interest attaches to the collateral, whichever is later:
a. The person is a debtor or obligor; and
b. The secured party knows that the information in subdivision a of subsection 2
relating to the person is not provided by the collateral, a record attached to or
logically associated with the collateral, or the system in which the collateral is
recorded.
### § 41-09-124. (9-702) Savings clause.

1. Except as otherwise provided in this part, this chapter applies to a transaction or lien
within its scope, even if the transaction or lien was entered into or created before
July 1, 2001.
2. Except as otherwise provided in subsection 3 and sections 41-09-125 through
41-09-131:
a. Transactions and liens that were not governed by the former chapter 41-09 were
validly entered into or created before July 1, 2001, and would be subject to this
chapter if they had been entered into or created on or after July 1, 2001, and the
rights, duties, and interests flowing from those transactions and liens remain valid
after July 1, 2001; and
b. The transactions and liens may be terminated, completed, consummated, and
enforced as required or permitted by this chapter or by the law that otherwise
would apply if this chapter had not taken effect.
3. This chapter does not affect an action, case, or proceeding commenced before July 1,
2001.
### § 41-09-125. (9-703) Security interest perfected before effective date.

1. A security interest that is enforceable immediately before July 1, 2001, and would have
priority over the rights of a person that becomes a lien creditor at that time is a
perfected security interest under this chapter if, on July 1, 2001, the applicable
requirements for enforceability and perfection under this chapter are satisfied without
further action.
2. Except as otherwise provided in section 41-09-127, if, immediately before July 1,
2001, a security interest is enforceable and would have priority over the rights of a
person that becomes a lien creditor at that time, but the applicable requirements for
enforceability or perfection under this chapter are not satisfied on July 1, 2001, the
security interest:
a. Is a perfected security interest for one year after this chapter takes effect;
b. Remains enforceable thereafter only if the security interest becomes enforceable
under section 41-09-13 before the year expires; and
c. Remains perfected thereafter only if the applicable requirements for perfection
under this chapter are satisfied before the year expires.

### § 41-09-126. (9-704) Security interest unperfected before effective date.

A security interest that is enforceable immediately before July 1, 2001, but which would be
subordinate to the rights of a person that becomes a lien creditor at that time:
1. Remains an enforceable security interest until July 1, 2002;
2. Remains enforceable thereafter if the security interest becomes enforceable under
section 41-09-13 on July 1, 2001, or within one year thereafter; and
3. Becomes perfected:
a. Without further action, on July 1, 2001, if the applicable requirements for
perfection under this chapter are satisfied before or at that time; or
b. When the applicable requirements for perfection are satisfied if the requirements
are satisfied after that time.
### § 41-09-127. (9-705) Effectiveness of action taken before effective date.

1. If action, other than the filing of a financing statement, is taken before July 1, 2001,
and the action would have resulted in priority of a security interest over the rights of a
person that becomes a lien creditor had the security interest become enforceable
before July 1, 2001, the action is effective to perfect a security interest that attaches
under this chapter by July 1, 2002. An attached security interest becomes unperfected
on July 1, 2002, unless the security interest becomes a perfected security interest
under this chapter before the expiration of that period.
2. The filing of a financing statement before July 1, 2001, is effective to perfect a security
interest to the extent the filing would satisfy the applicable requirements for perfection
under this chapter.
3. This chapter does not render ineffective an effective financing statement that, before
July 1, 2001, is filed and satisfies the applicable requirements for perfection under the
law of the jurisdiction governing perfection as provided in the former section 41-09-03.
However, except as otherwise provided in subsections 4 and 5 and section 41-09-128,
the financing statement ceases to be effective at the earlier of:
a. The time the financing statement would have ceased to be effective under the law
of the jurisdiction in which it is filed; or
b. June 30, 2006.
4. The filing of a continuation statement after this chapter takes effect does not continue
the effectiveness of the financing statement filed before July 1, 2001. However, upon
the timely filing of a continuation statement after July 1, 2001, and in accordance with
the law of the jurisdiction governing perfection as provided in part 3, the effectiveness
of a financing statement filed in the same office in that jurisdiction before July 1, 2001,
continues for the period provided by the law of that jurisdiction.
5. Subdivision b of subsection 3 applies to a financing statement that, before July 1,
2001, is filed against a transmitting utility and satisfies the applicable requirements for
perfection under the law of the jurisdiction governing perfection as provided in the
former section 41-09-03 only to the extent that part 3 provides that the law of a
jurisdiction other than the jurisdiction in which the financing statement is filed governs
perfection of a security interest in collateral covered by the financing statement.
6. A financing statement that includes a financing statement filed before July 1, 2001,
takes effect and a continuation statement filed after July 1, 2001, is effective only to
the extent that it satisfies the requirements of part 5 for an initial financing statement.
### § 41-09-128. (9-706) When initial financing statement suffices to continue effectiveness

of financing statement.
1. The filing of an initial financing statement in the office specified in section 41-09-72
continues the effectiveness of a financing statement filed before July 1, 2001, if:
a. The filing of an initial financing statement in that office would be effective to
perfect a security interest under this chapter;
b. The pre-effective-date financing statement was filed in an office in another state
or another office in this state; and
c. The initial financing statement satisfies subsection 3.

2. The filing of an initial financing statement under subsection 1 continues the
effectiveness of the pre-effective-date financing statement:
a. If the initial financing statement is filed before July 1, 2001, for the period
provided in the former section 41-09-42 with respect to a financing statement;
and
b. If the initial financing statement is filed after July 1, 2001, for the period provided
in section 41-09-86 with respect to an initial financing statement.
3. To be effective for purposes of subsection 1, an initial financing statement must:
a. Satisfy the requirements of part 5 for an initial financing statement;
b. Identify the pre-effective-date financing statement by indicating the office in which
the financing statement was filed and providing the dates of filing and file
numbers, if any, of the financing statement and of the most recent continuation
statement filed with respect to the financing statement; and
c. Indicate that the pre-effective-date financing statement remains effective.
### § 41-09-129. (9-707) Amendment of pre-effective-date financing statement.

1. In this section, "pre-effective-date financing statement" means a financing statement
filed before July 1, 2001.
2. After July 1, 2001, a person may add or delete collateral covered by, continue or
terminate the effectiveness of, or otherwise amend the information provided in a
pre-effective-date financing statement only in accordance with the law of the
jurisdiction governing perfection as provided in part 3. However, the effectiveness of a
pre-effective-date financing statement also may be terminated in accordance with the
law of the jurisdiction in which the financing statement is filed.
3. Except as otherwise provided in subsection 4, if the law of this state governs
perfection of a security interest, the information in a pre-effective-date financing
statement may be amended after July 1, 2001, if:
a. The pre-effective-date financing statement and an amendment are filed in the
office specified in section 41-09-72;
b. An amendment is filed in the office specified in section 41-09-72 concurrently
with, or after the filing in that office of, an initial financing statement that satisfies
subsection 3 of section 41-09-128; or
c. An initial financing statement that provides the information as amended and
satisfies subsection 3 of section 41-09-128 is filed in the office specified in section
41-09-72.
4. If the law of this state governs perfection of a security interest, the effectiveness of a
pre-effective-date financing statement may be continued only under subsections 4 and
6 of section 41-09-127 and section 41-09-128.
5. Regardless of whether the law of this state governs perfection of a security interest,
the effectiveness of a pre-effective-date financing statement filed in this state may be
terminated July 1, 2001, by filing a termination statement in the office in which the
pre-effective-date financing statement is filed, unless an initial financing statement that
satisfies subsection 3 of section 41-09-128 has been filed in the office specified by the
law of the jurisdiction governing perfection as provided in part 3 as the office in which
to file a financing statement.
### § 41-09-130. (9-708) Persons entitled to file initial financing statement or continuation

statement.
A person may file an initial financing statement or a continuation statement under this part if:
1. The secured party of record authorizes the filing; and
2. The filing is necessary under this part:
a. To continue the effectiveness of a financing statement filed before July 1, 2001; or
b. To perfect or continue the perfection of a security interest.

### § 41-09-131. (9-709) Priority.

1. This chapter determines the priority of conflicting claims to collateral. However, if the
relative priorities of the claims were established before July 1, 2001, the former
chapter 41-09 determines priority.
2. For purposes of subsection 1 of section 41-09-42, the priority of a security interest that
becomes enforceable under section 41-09-13 dates from July 1, 2001, if the security
interest is perfected under this chapter by the filing of a financing statement before
July 1, 2001, which would not have been effective to perfect the security interest under
the former chapter 41-09. This subsection does not apply to conflicting security
interests each of which is perfected by the filing of such a financing statement.
### § 41-09-132. (9-802) Savings clause.

1. Except as otherwise provided in this section, this Act applies to a transaction or lien
within its scope, even if the transaction or lien was entered or created before this Act
takes effect.
2. This Act does not affect an action, case, or proceeding commenced before this Act
takes effect.
### § 41-09-133. (9-803) Security interest perfected before effective date.

1. A security interest that is a perfected security interest immediately before this Act takes
effect is a perfected security interest under this chapter as amended by this Act if,
when this Act takes effect, the applicable requirements for attachment and perfection
under this chapter as amended by this Act are satisfied without further action.
2. Except as otherwise provided in section 41-09-135, if, immediately before this Act
takes effect, a security interest is a perfected security interest, but the applicable
requirements for perfection under this chapter as amended by this Act are not satisfied
when this Act takes effect, the security interest remains perfected thereafter only if the
applicable requirements for perfection under this chapter as amended by this Act are
satisfied within one year after this Act takes effect.
### § 41-09-134. (9-804) Security interest unperfected before effective date.

A security interest that is an unperfected security interest immediately before this Act takes
effect becomes a perfected security interest:
1. Without further action, when this Act takes effect if the applicable requirements for
perfection under this chapter as amended by this Act are satisfied before or at that
time; or
2. When the applicable requirements for perfection are satisfied if the requirements are
satisfied after that time.
### § 41-09-135. (9-805) Effectiveness of action taken before effective date.

1. The filing of a financing statement before this Act takes effect is effective to perfect a
security interest to the extent the filing would satisfy the applicable requirements for
perfection under this chapter as amended by this Act.
2. This Act does not render ineffective an effective financing statement that, before this
Act takes effect, is filed and satisfies the applicable requirements for perfection under
the law of the jurisdiction governing perfection as provided in this chapter as it existed
before amendment of this Act. However, except as otherwise provided in
subsections 3 and 4 and section 41-09-136, the financing statement ceases to be
effective:
a. If the financing statement is filed in this state, at the time the financing statement
would have ceased to be effective had this Act not taken effect; or
b. If the financing statement is filed in another jurisdiction, at the earlier of:
(1) The time the financing statement would have ceased to be effective under
the law of that jurisdiction; or
(2) June 30, 2018.

3. The filing of a continuation statement after this Act takes effect does not continue the
effectiveness of the financing statement filed before this Act takes effect. However,
upon the timely filing of a continuation statement after this Act takes effect, no later
than is required by section 41-09-86, and in accordance with the law of the jurisdiction
governing perfection as provided in this chapter as amended by this Act, the
effectiveness of a financing statement filed in the same office in that jurisdiction before
this Act takes effect continues for the period provided by the law of that jurisdiction.
4. Paragraph 2 of subdivision b of subsection 2 applies to a financing statement that,
before this Act takes effect, is filed against a transmitting utility and satisfies the
applicable requirements for perfection under the law of the jurisdiction governing
perfection as provided in this chapter as it existed before amendment, only to the
extent that this chapter as amended by this Act provides that the law of a jurisdiction
other than the jurisdiction in which the financing statement is filed governs perfection
of a security interest in collateral covered by the financing statement.
5. A financing statement that includes a financing statement filed before this Act takes
effect and a continuation statement filed after this Act takes effect is effective only to
the extent that it satisfies the requirements of sections 41-09-72 through 41-09-97 as
amended by this Act for an initial financing statement. A financing statement that
indicates that the debtor is a decedent's estate indicates that the collateral is being
administered by a personal representative within the meaning of subdivision b of
subsection 1 of section 41-09-74 as amended by this Act. A financing statement that
indicates that the debtor is a trust or is a trustee acting with respect to property held in
trust indicates that the collateral is held in a trust within the meaning of subdivision c of
subsection 1 of section 41-09-74 as amended by this Act.
### § 41-09-136. (9-806) When initial financing statement suffices to continue effectiveness

of financing statement.
1. The filing of an initial financing statement in the office specified in section 41-09-72
continues the effectiveness of a financing statement filed before this Act takes effect if:
a. The filing of an initial financing statement in that office would be effective to
perfect a security interest under this chapter as amended by this Act;
b. The pre-effective-date financing statement was filed in an office in another state;
and
c. The initial financing statement satisfies subsection 3.
2. The filing of an initial financing statement under subsection 1 continues the
effectiveness of the pre-effective-date financing statement:
a. If the initial financing statement is filed before this Act takes effect, for the period
provided in unamended section 41-09-86 with respect to an initial financing
statement; and
b. If the initial financing statement is filed after this Act takes effect, for the period
provided in section 41-09-86 as amended by this Act with respect to an initial
financing statement.
3. To be effective for purposes of subsection 1, an initial financing statement must:
a. Satisfy the requirements of sections 41-09-72 through 41-09-97 as amended by
this Act for an initial financing statement;
b. Identify the pre-effective-date financing statement by indicating the office in which
the financing statement was filed and providing the dates of filing and file
numbers, if any, of the financing statement and of the most recent continuation
statement filed with respect to the financing statement; and
c. Indicate that the pre-effective-date financing statement remains effective.
### § 41-09-137. (9-807) Amendment of pre-effective-date financing statement.

1. In this section, "pre-effective-date financing statement" means a financing statement
filed before this Act takes effect.
2. After this Act takes effect, a person may add or delete collateral covered by, continue
or terminate the effectiveness of, or otherwise amend the information provided in a

pre-effective-date financing statement only in accordance with the law of the
jurisdiction governing perfection as provided in this chapter as amended by this Act.
However, the effectiveness of a pre-effective-date financing statement also may be
terminated in accordance with the law of the jurisdiction in which the financing
statement is filed.
3. Except as otherwise provided in subsection 4, if the law of this state governs
perfection of a security interest, the information in a pre-effective-date financing
statement may be amended after this Act takes effect only if:
a. The pre-effective-date financing statement and an amendment are filed in the
office specified in section 41-09-72;
b. An amendment is filed in the office specified in section 41-09-72 concurrently
with, or after the filing in that office of, an initial financing statement that satisfies
subsection 3 of section 41-09-136; or
c. An initial financing statement that provides the information as amended and
satisfies subsection 3 of section 41-09-136 is filed in the office specified in section
41-09-72.
4. If the law of this state governs perfection of a security interest, the effectiveness of a
pre-effective-date financing statement may be continued only under subsections 3 and
5 of section 41-09-135 or section 41-09-136.
5. Whether or not the law of this state governs perfection of a security interest, the
effectiveness of a pre-effective-date financing statement filed in this state may be
terminated after this Act takes effect by filing a termination statement in the office in
which the pre-effective-date financing statement is filed, unless an initial financing
statement that satisfies subsection 3 of section 41-09-136 has been filed in the office
specified by the law of the jurisdiction governing perfection as provided in this chapter
as amended by this Act as the office in which to file a financing statement.
### § 41-09-138. (9-808) Person entitled to file initial financing statement or continuation

statement.
A person may file an initial financing statement or a continuation statement under sections
1. The secured party of record authorizes the filing; and
2. The filing is necessary under sections 41-09-132 through 41-09-139:
a. To continue the effectiveness of a financing statement filed before this Act takes
effect; or
b. To perfect or continue the perfection of a security interest.
### § 41-09-139. (9-809) Priority.

This Act determines the priority of conflicting claims to collateral. However, if the relative
priorities of the claims were established before this Act takes effect, this chapter as it existed
before amendment determines priority.
