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SOURCE-PROVENANCE HEADER (added on capture; statute text follows below the rule)
Citation: O.C.G.A. Title 11, Article 9 (Secured Transactions), 11-9-101 through 11-9-809
Article/coverage: UCC Article 9 - Secured Transactions (entire article)
Jurisdiction: Georgia - Official Code of Georgia Annotated (O.C.G.A.)
Source: law.resource.org public-domain OCGA machine-readable release
  https://law.resource.org/pub/us/code/ga/gov.ga.ocga.2019.08.21.release.73.zip (OCGA Release 73, 2019-08-21; per-title ODT extracted from the full-code release zip)
  Extracted from: gov.ga.ocga.2019.08.21.r73.title.11.odt (content.xml -> plain text)
Currency: 2019 codification (Release 73). Post-2019 amendments NOT reflected.
Public-domain basis: Georgia v. Public.Resource.Org, 590 U.S. 255 (2020).
Retrieved: 2026-07-10
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TITLE 11
COMMERCIAL CODE

ARTICLE 9
SECURED TRANSACTIONS


Part 1

General Provisions.

Part 1

SHORT TITLE, DEFINITIONS, AND GENERAL CONCEPTS.
 11-9-101. Short title.
 11-9-102. Definitions and index of definitions.
 11-9-103. Purchase money security interest; application of payments; burden of establishing.
 11-9-104. Control of deposit account.
 11-9-105. Control of electronic chattel paper.
 11-9-106. Control of investment property.
 11-9-107. Control of letter of credit right.
 11-9-108. Sufficiency of description.

Part 2

APPLICABILITY OF ARTICLE.
 11-9-109. Scope.
 11-9-110. Security interests arising under Article 2 or 2A of this title.
 11-9-111. Applicability of bulk transfer laws [Repealed].

Part 2

Effectiveness of Security Agreement; Attachment of Security Interest; Rights of Parties to Security Agreement.

Part 1

EFFECTIVENESS AND ATTACHMENT.
 11-9-201. General effectiveness of security agreement.
 11-9-202. Title to collateral immaterial.
 11-9-203. Attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites.
 11-9-204. After acquired property; future advances.
 11-9-205. Use or disposition of collateral permissible.
 11-9-206. Security interest arising in purchase or delivery of financial asset.

Part 2

RIGHTS AND DUTIES.
 11-9-207. Rights and duties of secured party having possession or control of collateral.
 11-9-208. Additional duties of secured party having control of collateral.
 11-9-209. Duties of secured party if account debtor has been notified of assignment.
 11-9-210. Request for accounting; request regarding list of collateral or statement of account.

Part 3

Perfection and Priority.

Part 1

LAW GOVERNING PERFECTION AND PRIORITY.
 11-9-301. Law governing perfection and priority of security interests.
 11-9-302. Law governing perfection and priority of agricultural liens.
 11-9-303. Law governing perfection and priority of security interests in goods covered by a certificate of title.
 11-9-304. Law governing perfection and priority of security interests in deposit accounts.
 11-9-305. Law governing perfection and priority of security interests in investment property.
 11-9-306. Law governing perfection and priority of security interests in letter of credit rights.
 11-9-307. Location of debtor.

Part 2

PERFECTION.
 11-9-308. When security interest or agricultural lien is perfected; continuity of perfection.
 11-9-309. Security interest perfected upon attachment.
 11-9-310. When filing required to perfect security interest or agricultural lien; security interests and agricultural liens to which filing provisions do not apply.
 11-9-311. Perfection of security interests in property subject to certain statutes, regulations, and treaties.
 11-9-312. Perfection of security interests in chattel paper, deposit accounts, documents, goods covered by documents, instruments, investment property, letter of credit rights, and money; perfection by permissive filing; temporary perfection without filing or transfer of possession.
 11-9-313. When possession by or delivery to secured party perfects security interest without filing.
 11-9-314. Perfection by control.
 11-9-315. Secured party's rights on disposition of collateral and in proceeds.
 11-9-316. Effect of change in governing law.

Part 3

PRIORITY.
 11-9-317. Interests that take priority over or take free of security interest or agricultural lien.
 11-9-318. 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.
 11-9-319. Rights and title of consignee with respect to creditors and purchasers.
 11-9-320. Buyer of goods.
 11-9-321. Licensee of general intangible and lessee of goods in ordinary course of business.
 11-9-322. Priorities among conflicting security interests in and agricultural liens on same collateral.
 11-9-322.1. Crops produced with new value.
 11-9-323. Future advances.
 11-9-324. Priority of purchase money security interests.
 11-9-325. Priority of security interests in transferred collateral.
 11-9-326. Priority of security interests created by new debtor.
 11-9-327. Priority of security interests in deposit account.
 11-9-328. Priority of security interests in investment property.
 11-9-329. Priority of security interests in letter of credit right.
 11-9-330. Priority of purchaser of chattel paper or instrument.
 11-9-331. Priority of rights of purchasers of instruments, documents, and securities under other articles; priority of interests in financial assets and security entitlements under Article 8 of this title.
 11-9-332. Transfer of money; transfer of funds from deposit account.
 11-9-333. Priority of certain liens.
 11-9-334. Priority of security interests in fixtures and crops.
 11-9-335. Accessions.
 11-9-336. Commingled goods.
 11-9-337. Priority of security interests in goods covered by certificate of title.
 11-9-338. Priority of security interest or agricultural lien perfected by filed financing statement providing certain incorrect information.
 11-9-339. Priority subject to subordination.

Part 4

RIGHTS OF BANK.
 11-9-340. Effectiveness of right of recoupment or set-off against deposit account.
 11-9-341. Bank's rights and duties with respect to deposit account.
 11-9-342. Bank's right to refuse to enter into or disclose existence of control agreement.

Part 4

Rights of Third Parties.
 11-9-401. Alienability of debtor's rights.
 11-9-402. Secured party not obligated on contract of debtor or in tort.
 11-9-403. Agreement not to assert defenses against assignee.
 11-9-404. Rights acquired by assignee; claims and defenses against assignee.
 11-9-405. Modification of assigned contract.
 11-9-406. 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.
 11-9-407. Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest.
 11-9-408. Restrictions on assignment of promissory notes, health care insurance receivables, and certain general intangibles ineffective.
 11-9-409. Restrictions on assignment of letter of credit rights ineffective.

Part 5

Filing.

Part 1

FILING OFFICE; CONTENTS AND EFFECTIVENESS OF FINANCING STATEMENT.
 11-9-501. Filing office.
 11-9-502. Contents of financing statement; record of mortgage as fixture filing or financing statement; time of filing financing statement.
 11-9-503. Name of debtor and secured party.
 11-9-504. Indication of collateral.
 11-9-505. Filing and compliance with other statutes and treaties for consignments, leases, other bailments, and other transactions.
 11-9-506. Effect of errors or omissions.
 11-9-507. Effect of certain events on effectiveness of financing statement.
 11-9-508. Effectiveness of financing statement if new debtor becomes bound by security agreement.
 11-9-509. Persons entitled to file a record.
 11-9-510. Effectiveness of filed record.
 11-9-511. Secured party of record.
 11-9-512. Amendment of financing statement.
 11-9-513. Termination statement.
 11-9-514. Assignment of powers of secured party of record.
 11-9-515. Duration and effectiveness of financing statement; effect of lapsed financing statement; record of mortgage as financing statement.
 11-9-516. What constitutes filing; effectiveness of filing.
 11-9-517. Effect of indexing errors.
 11-9-518. Inaccurate or wrongfully filed record.

Part 2

DUTIES AND OPERATION OF FILING OFFICE AND CENTRAL INDEXING SYSTEM.
 11-9-519. Numbering, maintaining, and indexing records; communicating information provided in records.
 11-9-520. Acceptance and refusal to accept record.
 11-9-521. Uniform form of written financing statement and amendment; authority may prescribe forms.
 11-9-522. Maintenance and destruction of records.
 11-9-523. Information from filing office and central indexing system; sale or license of records.
 11-9-524. Delay by filing office or authority.
 11-9-525. Fees.
 11-9-526. Rules.

Part 6

Default.

Part 1

DEFAULT AND ENFORCEMENT OF SECURITY INTEREST.
 11-9-601. Rights after default; judicial enforcement; consignor or buyer of accounts, chattel paper, payment intangibles, or promissory notes.
 11-9-602. Waiver and variance of rights and duties.
 11-9-603. Agreement on standards concerning rights and duties.
 11-9-604. Procedure if security agreement covers real property or fixtures.
 11-9-605. Unknown debtor or secondary obligor.
 11-9-606. Time of default for agricultural lien.
 11-9-607. Collection and enforcement by secured party.
 11-9-608. Application of proceeds of collection or enforcement; liability for deficiency and right to surplus.
 11-9-609. Secured party's right to take possession after default.
 11-9-610. Disposition of collateral after default.
 11-9-611. Notification before disposition of collateral.
 11-9-612. Timeliness of notification before disposition of collateral.
 11-9-613. Contents and form of notification before disposition of collateral; general.
 11-9-614. Contents and form of notification before disposition of collateral; consumer goods transaction.
 11-9-615. Application of proceeds of disposition; liability for deficiency and right to surplus.
 11-9-616. Explanation of calculation of surplus or deficiency.
 11-9-617. Rights of transferee of collateral.
 11-9-618. Rights and duties of certain secondary obligors.
 11-9-619. Transfer of record or legal title.
 11-9-620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.
 11-9-621. Notification of proposal to accept collateral.
 11-9-622. Effect of acceptance of collateral.
 11-9-623. Right to redeem collateral.
 11-9-624. Waiver.

Part 2

NONCOMPLIANCE WITH ARTICLE.
 11-9-625. Remedies for secured party's failure to comply with article.
 11-9-626. Action in which deficiency or surplus is in issue.
 11-9-627. Determination of whether conduct was commercially reasonable.
 11-9-628. Nonliability and limitation on liability of secured party; liability of secondary obligor.

Part 7

2001 Transition.
 11-9-701. Effective date.
 11-9-702. Savings clause.
 11-9-703. Security interest perfected before effective date.
 11-9-704. Security interest unperfected before effective date.
 11-9-705. Effectiveness of action taken before effective date.
 11-9-706. When initial financing statement suffices to continue effectiveness of financing statement.
 11-9-707. Amendment of pre-effective date financing statement.
 11-9-708. Persons entitled to file initial financing statement or continuation statement.
 11-9-709. Priority.
 11-9-710. Exculpation.

Part 8

2013 Transition.
 11-9-801. Reserved.
 11-9-802. Savings clause.
 11-9-803. Security interest perfected before effective date.
 11-9-804. Security interest unperfected before effective date.
 11-9-805. Effectiveness of action taken before effective date.
 11-9-806. When initial financing statement suffices to continue effectiveness of financing statement.
 11-9-807. Amendment of pre-effective date financing statement.
 11-9-808. Person entitled to file initial financing statement or continuation statement.
 11-9-809. Priority.
Annotations
Effective date. - This article became effective July 1, 2001.  

Cross references. - Effect of transfer of note secured by mortgage, etc., § 10-3-1.  
Making of secured transactions and other dispositions of corporate property and assets not requiring shareholder approval, § 14-2-1201.  
Criminal penalty for destruction, removal, concealment, etc., of property subject to security interests, § 16-9-51.  
Perfection and validity of security interests in motor vehicles, § 40-3-50 et seq.  
Mortgages, conveyances to secure debt, etc., § 44-14-1 et seq.  

  Editor's notes. - Ga. L. 2001, p. 362, § 1, effective July 1, 2001, repealed the Code sections formerly codified as this article and enacted the current article. The former article consisted of Code Sections 11-9-101 through 11-9-116 (Part 1), 11-9-201 through 11-9-208 (Part 2), 11-9-301 through 11-9-318 (Part 3), 11-9-401 through 11-9-409 (Part 4), and 11-9-501 through 11-9-507 (Part 5), relating to secured transactions, sales of accounts and chattel paper, and was based on Code 1933, §§ 109A-9-101 through 109A-9-114; Code 1933 §§ 109A-9-201 through 109A-9-208; Code 1933 §§ 109A-9-301 through 109A-9-318; Code 1933, §§ 109A-9-401 through 109A-9-409; Code 1933, §§ 109A-9-501 through 109A-9-507; Ga. L. 1962, p. 156, § 1; Ga. L. 1963, p. 188, §§ 23 through 36; Ga. L. 1964, p. 70, §§ 1, 3 through 7; Ga. L. 1968, p. 1151, § 1; Ga. L. 1969, p. 149, §  1; Ga. L. 1970, p. 604, §  1; Ga. L. 1978, p. 1081, §  1; Ga. L. 1979, p. 626, §  1; Ga. L. 1980, p. 443, §§ 2 through 6; Ga. L. 1980, p. 1134, §§ 1 through 3; Ga. L. 1981, p. 1396, §§ 9 through 14; Ga. L. 1982, p. 3, § 11; Ga. L. 1985, p. 1107, § 1; Ga. L. 1985, p. 1517, §§ 1 through 4; Ga. L. 1986, p. 357, §§  1 through 2; Ga. L. 1986, p. 1002, §§ 5 through 8; Ga. L. 1988, p. 13, § 11; Ga. L. 1991, p. 94, §  11; Ga. L. 1992, p. 1028, § 1; Ga. L. 1992, p. 2626, §§ 4 through 11; Ga. L. 1993, p. 576, § 1; Ga. L. 1993, p. 633, § 4; Ga. L. 1993, p. 1550, §§ 1 through 6; Ga. L. 1994, p. 1693, §§  1 through 12; Ga. L. 1997, p. 143, §  11; Ga. L. 1997, p. 970, § 3; Ga. L. 1998, p. 128, § 11; Ga. L. 1998, p. 1323, § 2 through 14.  

Table of Comparable Provisions for Title 11, Article 9 
Former Code Sections to Revised Code Sections  
This table lists each section in the version of Article 9 of the Uniform Commercial Code in effect prior to July 1, 2001, and provides the comparable provisions for Article 9 in effect on  and after July 1, 2001. It is intended to assist the user who is familiar with the former title to find comparable new provisions.  


FORMER
CODE                                  REVISED CODE
---                                            ---
11-9-101                                  11-9-101
11-9-102                                  11-9-109
11-9-103              11-9-301, 11-9-303, 11-9-305
11-9-104                                  11-9-109
11-9-105                                  11-9-102
11-9-106                                  11-9-102
11-9-107                                  11-9-103
11-9-108                                  repealed
11-9-109                                  11-9-102
11-9-110                                  11-9-108
11-9-111                                  11-9-111
11-9-112                                  repealed
11-9-113                                  11-9-110
11-9-114                                  11-9-319
11-9-115              11-9-102, 11-9-106, 11-9-301
11-9-116                                  11-9-206


Part Two 
11-9-201                                  11-9-201
11-9-202                                  11-9-202
11-9-203                                  11-9-203
11-9-204                                  11-9-204
11-9-205                                  11-9-205
11-9-206                                  11-9-403
11-9-207                                  11-9-207
11-9-208                                  11-9-210


Part Three 
11-9-301                        11-9-102, 11-9-317
11-9-302                                  11-9-310
11-9-303                                  11-9-308
11-9-304                                  11-9-312
11-9-305                                  11-9-313
11-9-306                        11-9-102, 11-9-315
11-9-307                                  11-9-320
11-9-308                                  11-9-330
11-9-309                                  11-9-331
11-9-310                                  11-9-333
11-9-311                                  11-9-401
11-9-312            11-9-322, 11-9-322.1, 11-9-324
11-9-313                                  11-9-334
11-9-314                                  11-9-335
11-9-315                                  11-9-336
11-9-316                                  11-9-339
11-9-317                                  11-9-402
11-9-318                        11-9-404, 11-9-405


Part Four 
11-9-401                                  11-9-501
11-9-402    11-9-502, 11-9-503, 11-9-504, 11-9-506
11-9-403    11-9-510, 11-9-511, 11-9-515, 11-9-516
11-9-404                                  11-9-513
11-9-405                        11-9-514, 11-9-525
11-9-406                                  11-9-525
11-9-407              11-9-519, 11-9-523, 11-9-526
11-9-408                                  11-9-505
11-9-409                                  repealed


Part Five 
11-9-501                        11-9-601, 11-9-602
11-9-502                                  11-9-607
11-9-503                                  11-9-609
11-9-504                       11-9-610 - 11-9-614
11-9-505                        11-9-620, 11-9-622
11-9-506                                  11-9-623
11-9-507                                  11-9-625


Revised Code Sections to Former Code Sections  
This table lists each section in the version of Article 9 of the Uniform Commercial Code in effect on and after July 1, 2001, and provides the comparable provisions for Article 9 in effect prior to July 1, 2001. It is intended to assist the user who is familiar with the new title to find comparable former provisions.  


REVISED
CODE                                   FORMER CODE
---                                            ---
11-9-101                                  11-9-101
11-9-102  11-9-105, 11-9-106, 11-9-109, 11-9-115,
          11-9-301, 11-9-306
11-9-103                                  11-9-107
11-9-104                                      none
11-9-105                                      none
11-9-106                                  11-9-115
11-9-107                                      none
11-9-108                                  11-9-110


Subpart Two 
11-9-109                                  11-9-104
11-9-110                                  11-9-113
11-9-111                                  11-9-111


Part Two, Subpart One 
11-9-201                                  11-9-201
11-9-202                                  11-9-202
11-9-203                                  11-9-203
11-9-204                                  11-9-204
11-9-205                                  11-9-205
11-9-206                                  11-9-116


Subpart Two 
11-9-207                                  11-9-207
11-9-208                                      none
11-9-209                                      none
11-9-210                                  11-9-208


Part Three, Subpart One 
11-9-301                        11-9-103, 11-9-115
11-9-302                                      none
11-9-303                                  11-9-103
11-9-304                                      none
11-9-305                                  11-9-103
11-9-306                                      none
11-9-307                                      none


Subpart Two 
11-9-308                                  11-9-303
11-9-309                                      none
11-9-310                                  11-9-302
11-9-311                                      none
11-9-312                                  11-9-304
11-9-313                                  11-9-305
11-9-314                                      none
11-9-315                                  11-9-306
11-9-316                                      none


Subpart Three 
11-9-317                                  11-9-301
11-9-318                                      none
11-9-319                                  11-9-114
11-9-320                                  11-9-307
11-9-321                                      none
11-9-322                                  11-9-312
11-9-322.1                                11-9-312
11-9-323                                      none
11-9-324                                  11-9-312
11-9-325                                      none
11-9-326                                      none
11-9-327                                      none
11-9-328                                      none
11-9-329                                      none
11-9-330                                  11-9-308
11-9-331                                  11-9-309
11-9-332                                      none
11-9-333                                  11-9-310
11-9-334                                  11-9-313
11-9-335                                  11-9-314
11-9-336                                  11-9-315
11-9-337                                      none
11-9-338                                      none
11-9-339                                  11-9-316


Subpart Four 
11-9-340                                      none
11-9-341                                      none
11-9-342                                      none


Part Four 
11-9-401                                  11-9-311
11-9-402                                  11-9-317
11-9-403                                  11-9-206
11-9-404                                  11-9-318
11-9-405                                  11-9-318
11-9-406                                      none
11-9-407                                      none
11-9-408                                      none
11-9-409                                      none


Part Five, Subpart One 
11-9-501                                  11-9-401
11-9-502                                  11-9-402
11-9-503                                  11-9-402
11-9-504                                  11-9-402
11-9-505                                  11-9-408
11-9-506                                  11-9-402
11-9-507                                      none
11-9-508                                      none
11-9-509                                      none
11-9-510                                  11-9-403
11-9-511                                  11-9-403
11-9-512                                      none
11-9-513                                  11-9-404
11-9-514                                  11-9-405
11-9-515                                  11-9-403
11-9-516                                  11-9-403
11-9-517                                      none
11-9-518                                      none


Subpart Two 
11-9-519                                  11-9-407
11-9-520                                      none
11-9-521                                      none
11-9-522                                      none
11-9-523                                  11-9-407
11-9-524                                      none
11-9-525                        11-9-405, 11-9-406
11-9-526                                  11-9-407


Part Six, Subpart One 
11-9-601                                  11-9-501
11-9-602                                  11-9-501
11-9-603                                      none
11-9-604                                      none
11-9-605                                      none
11-9-606                                      none
11-9-607                                  11-9-502
11-9-608                                      none
11-9-609                                  11-9-503
11-9-610                                  11-9-504
11-9-611                                  11-9-504
11-9-612                                  11-9-504
11-9-613                                  11-9-504
11-9-614                                  11-9-504
11-9-615                                      none
11-9-616                                      none
11-9-617                                      none
11-9-618                                      none
11-9-619                                      none
11-9-620                                  11-9-505
11-9-621                                      none
11-9-622                                  11-9-505
11-9-623                                  11-9-506
11-9-624                                      none


Subpart Two 
11-9-625                                  11-9-507
11-9-626                                  11-9-504
11-9-627                                  11-9-504
11-9-628                                      none


Part Seven 
11-9-701                                      none
11-9-702                                      none
11-9-703                                      none
11-9-703                                      none
11-9-705                                      none
11-9-706                                      none
11-9-707                                      none
11-9-708                                      none
11-9-709                                      none
11-9-710                                      none

Law reviews. -  For article discussing the effect of the Uniform Commercial Code upon the statutory lien provision of section 67(c) of the Bankruptcy Act, see 1 Ga. L. Rev. 149 (1967). For article discussing federal truth in lending provisions and their relation to state laws, see 6 Ga. St. B.J. 19 (1969). For article discussing secured lending, and offering some practical guidelines, see 28 Mercer L. Rev. 699 (1977). For article discussing fifth circuit bankruptcy cases in 1977, see 29 Mercer L. Rev. 937 (1978). For article surveying Georgia cases dealing with commercial law from June 1977 through May 1978, see 30 Mercer L. Rev. 15 (1978). For article discussing possible impact of new Bankruptcy Code on Article 9 of the Uniform Commercial Code, see 14 Ga. L. Rev. 153 (1980). For article "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981). For article, "State Administrative Agency Contested Case Hearings," see 24 Ga. St. B.J. 193 (1988). For article, "Contribution Arguments in Commercial Law," see 42 Emory L.J. 897 (1993). For annual survey article discussing developments in commercial law, see 51 Mercer L. Rev. 165 (1999). For article, "Perfecting Bitcoin," see 52 Ga. L. Rev. 505 (2018).  

  For case note, "Midlantic National Bank v. New Jersey Department of Environmental Protection: The Problem of Hazardous Wastes and the Bankrupt Firm," see 38 Mercer L. Rev. 693 (1987).  

  For comment on Maley v. National Acceptance Co., 250 F. Supp. 841 (N.D. Ga. 1966), see 3 Ga. St. B.J. 248 (1966). For comment, " 'The Twain Shall Meet': A Real Property Approach to Article 9 Perfection," see 64 Emory L.J. 1103 (2015).  


JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Purpose. - Concept and intention of this article is to provide method whereby all security interests can be perfected. In some instances, filing is required, and in others, possession of collateral is only means available or permitted whereby creditor can perfect security interest. In re Atlanta Times, Inc., 259 F. Supp. 820 (N.D. Ga. 1966), aff'd sub nom. Sanders v. National Acceptance Co. of Am., 383 F.2d 606 (5th Cir. 1967).  

Applicability. - This article applies to security transactions in broad spectrum of tangible and intangible personal property. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981).  

Conflicts with Installment Sales Act. - Parties may contract to create security interest which will then be governed by provisions of Uniform Commercial Code unless those provisions conflict with specific terms in Installment Sales Act. Brown v. Jenkins, 135 Ga. App. 694, 218 S.E.2d 690 (1975).  

Priorities between secured interests and setoff rights. - This article applies to resolving priority disputes between Article 9 secured interests and contractual setoff rights, as distinguished from the creation of the right of setoff. Credit Alliance Corp. v. National Bank, 718 F. Supp. 954 (N.D. Ga. 1989).  

A valid maritime lien is superior to a perfected nonmaritime UCC security interest in the same collateral. Ambassador Factors v. First Am. Bulk Carrier Corp. (In re Topgallant Lines), 125 Bankr. 682 (Bankr. S.D. Ga. 1991), aff'd sub nom. McAllister Towing v. Ambassador Factors (In re Topgallant Lines), 154 Bankr. 368 (S.D. Ga. 1993).  

Perfection gives notice. - Perfection of security interests under T. 40, Ch. 3, Art. 3, as under T. 11, Art. 9, serves purpose of giving notice to subsequent creditors. In re Firth, 363 F. Supp. 369 (M.D. Ga. 1973).  

Conversion of property subject to security interest. - Where property is subject to security interest, exercise of dominion or control over property which is inconsistent with rights of secured party, constitutes, as to the secured party, conversion of the property; and there may be conversion by secured party where the party acts are in defiance of rights of others in the property. Trust Co. v. Associated Grocers Co-Op., 152 Ga. App. 701, 263 S.E.2d 676 (1979).  
Where a sale of collateral is, with respect to the secured party, a conversion of the collateral, there is a conversion on the part of the one who sells, as well as on the part of the one who purchases, and the purchaser may be liable regardless of intent, and regardless of the purchaser's lack of actual knowledge of the rights of the secured party. Trust Co. v. Associated Grocers Co-Op., 152 Ga. App. 701, 263 S.E.2d 676 (1979).  

Where lease provisions retained title in the lessor and the leased machine was to be returned to the lessor at the termination of the lease with no residual interest therein to the lessee, the lease was not a security instrument and this article does not apply. Capital Assocs. v. Zabel, 172 Ga. App. 19, 322 S.E.2d 67 (1984).  
Where there was no agreement or intent by either party that the lessee would purchase leased equipment, the fact that the contract obligated the lessee to pay taxes, insurance, and expenses of repairs, and allowed the lessor to retain the equipment after it was returned, did not make the contract a security agreement rather than a lease. City Food Mart, Inc. v. Bell Atl. Tricon Leasing Corp., 218 Ga. App. 57, 460 S.E.2d 525 (1995).  

Transfer of part of security interest. - There is no Georgia law that requires the simultaneous transfer of an underlying promissory note with the transfer of the security interest. Instead, the Georgia Commercial Code anticipates and allows a secured party's assignment of all or part of its security interest. Tidwell v. Slocumb (In re Ga. Steel, Inc.), 71 Bankr. 903 (Bankr. M.D. Ga. 1987).  

Retention of certificate of origin for mobile home. - Where manufacturer retained certificate of origin for mobile home which was "on consignment" and not yet included in a retailer's floor-plan arrangement, it was nonetheless in the retailer's inventory and available for sale to its retail customers, and the rights of the parties were determined under the Uniform Commercial Code rather than the Motor Vehicle Certificate of Title Act, O.C.G.A. § 40-3-1 et seq. GECC v. Catalina Homes, Inc., 178 Ga. App. 319, 342 S.E.2d 734 (1986).  

Perfection of security interest in automobile. - When bank financed purchase of car by car leasing business, the correct avenue for perfecting of its security interest in the car was through procedure set forth in the Motor Vehicle Certificate of Title Act (O.C.G.A. § 40-3-1 et seq.) as opposed to filing of its financial statement under procedures established by the U.C.C. United Carolina Bank v. Capital Auto. Co., 163 Ga. App. 796, 294 S.E.2d 661 (1982).  

Limited partnership agreement. - Where limited partners acquired their interest in a partnership by paying cash and giving a promissory note, and the limited partnership agreement provided that if the note were not paid by a date certain the limited partners' interest in the partnership would be automatically reduced by the fraction of the principal remaining unpaid, the agreement did not constitute a security agreement governed by Article 9. Consolidated Equities Corp. v. Bird, 195 Ga. App. 45, 392 S.E.2d 276 (1990).  


OPINIONS OF THE ATTORNEY GENERAL

Editor's notes. - In the light of the similarity of the provisions, opinions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Definition of "security interest." - "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation; retention or reservation of title by seller of goods notwithstanding shipment or delivery to buyer is limited in effect to reservation of "security interest"; this term also includes any interest of a buyer of accounts, chattel paper or contract rights. 1963-65 Op. Att'y Gen. p. 162.  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, § 1 et seq.  

C.J.S. - 79 C.J.S., Secured Transactions, § 1 et seq.  

ALR. - Liability for assault or trespass in forcibly retaking property sold conditionally, 9 A.L.R. 1180; 105 A.L.R. 926; 99 A.L.R.2d 358.  
Bankruptcy: effect of filing secured debt as an unsecured claim, 46 A.L.R. 922.  
Rights of parties to conditional sale as affected by breach of warranty, 48 A.L.R. 969, 130 A.L.R. 753.  
Construction and effect of UCC Article 9, dealing with secured transactions, sales of accounts, contract rights, and chattel paper, 30 A.L.R.3d 9; 67 A.L.R.3d 308; 69 A.L.R.3d 1162; 76 A.L.R.3d 11; 99 A.L.R.3d 807; 99 A.L.R.3d 1080; 100 A.L.R.3d 10; 100 A.L.R.3d 940; 7 A.L.R.4th 308; 11 A.L.R.4th 241; 25 A.L.R.5th 696.  
Effect of UCC article 9 upon conflict, as to funds in debtor's bank account, between secured creditor and bank claiming right of setoff, 3 A.L.R.4th 998.  
Security interests in liquor licenses, 56 A.L.R.4th 1131.  
Applicability of Article 9 of Uniform Commercial Code to assignment of rights under real-estate sales contract, lease agreement, or mortgage as collateral for separate transaction, 76 A.L.R.4th 765.  
Construction and effect of "future advances" clauses under UCC Article 9, 90 A.L.R.4th 859.  
Equitable estoppel of secured party's right to assert prior, perfected security interest against other secured creditor or subsequent purchaser under Article 9 of Uniform Commercial Code, 9 A.L.R.5th 708.  
Liability of secured creditor under Uniform Commercial Code to third party on ground of unjust enrichment, 27 A.L.R.5th 719.  

——————————
PART 1
GENERAL PROVISIONS

Annotations
Law reviews. -  For article, "Revised Article 9 of Uniform Commercial Code Adopted," see 6 Ga. St. B.J. 22 (2001).  


RESEARCH REFERENCES

C.J.S. - 79 C.J.S., Secured Transactions, § 1 et seq.  


PART 1

SHORT TITLE, DEFINITIONS, AND GENERAL CONCEPTS


11-9-101. Short title.

Statute text
This article may be cited as "Uniform Commercial Code - Secured Transactions."  

History
(Code 1981, § 11-9-101, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For comment, "Electronic Self-Help Repossession and You: A Computer Software Vendor's Guide to Staying Out of Jail," see 48 Emory L.J. 1477 (1999).  


JUDICIAL DECISIONS

Cited in Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, § 123 et seq.  

Violation of the Truth-In-Lending Act and Regulation Z, 73 POF3d 275.  

C.J.S. - 6A C.J.S., Assignments, §§ 82, 87. 8 C.J.S., Bailments, § 42. 14 C.J.S., Chattel Mortgages, §§ 2, 311 et seq. 35 C.J.S., Factors, § 46 et seq. 53 C.J.S., Liens, § 2 et seq. 72 C.J.S., Pledges, §§ 5, 43 et seq.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-101.  

ALR. - What constitutes Truth in Lending Act violation which "was not intentional and resulted from bona fide error not withstanding maintenance of procedures reasonably adapted to avoid any such error" within meaning of § 130(c) of Act (15 USCA § 1640(c)), 153 A.L.R. Fed. 193.  
Consignment transactions under Uniform Commercial Code Article 9 on secured transactions, 58 A.L.R.6th 289.  

11-9-102. Definitions and index of definitions.

Statute text
(a)  Article 9 definitions. As used in this article, the term:  
(1) "Accession" means goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.  
(2) "Account," except as used in "account for," means a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) 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. The term includes health care insurance receivables. The term does not include (i) rights to payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter of credit rights or letters of credit, or (vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card.  
(3) "Account debtor" means a person obligated on an account, chattel paper, or general intangible. The term does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper.  
(4) "Accounting," except as used in "accounting for," means a record:  
(A) Authenticated by a secured party;  
(B) Indicating the aggregate unpaid secured obligations as of a date not more than 35 days earlier or 35 days later than the date of the record; and  
(C) Identifying the components of the obligations in reasonable detail.  
(5) "Agricultural lien" means an interest in farm products:  
(A) Which secures payment or performance of an obligation for:  
(i) Goods or services furnished in connection with a debtor's farming operation; or  
(ii) Rent on real property leased by a debtor in connection with its farming operation;  
(B) Which is created by statute in favor of a person that:  
(i) In the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's farming operation; or  
(ii) Leased real property to a debtor in connection with the debtor's farming operation; and  
(C) Whose effectiveness does not depend on the person's possession of the personal property.  
(6) "As-extracted collateral" means:  
(A) Oil, gas, or other minerals that are subject to a security interest that:  
(i) Is created by a debtor having an interest in the minerals before extraction; and  
(ii) Attaches to the minerals as extracted; or  
(B) Accounts arising out of the sale at the wellhead or minehead of oil, gas, or other minerals in which the debtor had an interest before extraction.  
(7) "Authenticate" means:  
(A) To sign; or  
(B) With present intent to adopt or accept a record, to attach to or logically associate with such record an electronic sound, symbol, or process.  
(8) "Authority" means the Georgia Superior Court Clerks' Cooperative Authority.  
(9) "Bank" means an organization that is engaged in the business of banking. The term includes savings banks, savings and loan associations, credit unions, and trust companies.  
(10) "Cash proceeds" means proceeds that are money, checks, deposit accounts, or the like.  
(11) "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 shall include 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.  
(12) "Chattel paper" means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods. As used in this paragraph, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of the goods and includes a monetary obligation with respect to software used in the goods. The term does not include:  
(A) Charters or other contracts involving the use or hire of a vessel; or  
(B) Records 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.  

If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper.  
(13) "Collateral" means the property subject to a security interest or agricultural lien. The term includes:  
(A) Proceeds to which a security interest attaches;  
(B) Accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and  
(C) Goods that are the subject of a consignment.  
(14) "Commercial tort claim" means a claim arising in tort with respect to which:  
(A) The claimant is an organization; or  
(B) The claimant is an individual and the claim:  
(i) Arose in the course of the claimant's business or profession; and  
(ii) Does not include damages arising out of personal injury to or the death of an individual.  
(15) "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.  
(16) "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:  
(A) 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  
(B) 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.  
(17) "Commodity customer" means a person for which a commodity intermediary carries a commodity contract on its books.  
(18) "Commodity intermediary" means a person that:  
(A) Is registered as a futures commission merchant under federal commodities law; or  
(B) In the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities law.  
(19) "Communicate" means:  
(A) To send a written or other tangible record;  
(B) To transmit a record by any means agreed upon by the persons sending and receiving the record; or  
(C) In the case of transmission of a record to or by a filing office or the authority, to transmit a record by any means prescribed by filing office rule.  
(20) "Consignee" means a merchant to which goods are delivered in a consignment.  
(21) "Consignment" means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:  
(A) The merchant:  
(i) Deals in goods of that kind under a name other than the name of the person making delivery;  
(ii) Is not an auctioneer; and  
(iii) Is not generally known by its creditors to be substantially engaged in selling the goods of others;  
(B) With respect to each delivery, the aggregate value of the goods is $1,000.00 or more at the time of delivery;  
(C) The goods are not consumer goods immediately before delivery; and  
(D) The transaction does not create a security interest that secures an obligation.  
(22) "Consignor" means a person that delivers goods to a consignee in a consignment.  
(23) "Consumer debtor" means a debtor in a consumer transaction.  
(24) "Consumer goods" means goods that are used or bought for use primarily for personal, family, or household purposes.  
(25) "Consumer goods transaction" means a consumer transaction in which:  
(A) An individual incurs an obligation primarily for personal, family, or household purposes; and  
(B) A security interest in consumer goods secures the obligation.  
(26) "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.  
(27) "Consumer transaction" means a transaction in which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household purposes. The term includes consumer goods transactions.  
(28) "Continuation statement" means an amendment of a financing statement which:  
(A) Identifies, by its file number, the initial financing statement to which it relates; and  
(B) Indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified financing statement.  
(29) "Debtor" means:  
(A) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;  
(B) A seller of accounts, chattel paper, payment intangibles, or promissory notes; or  
(C) A consignee.  
(30) "Deposit account" means a demand, time, savings, passbook, or similar account maintained with a bank. The term does not include investment property or accounts evidenced by an instrument.  
(31) "Document" means a document of title or a receipt of the type described in subsection (2) of Code Section 11-7-201.  
(32) "Electronic chattel paper" means chattel paper evidenced by a record or records consisting of information stored in an electronic medium.  
(33) "Encumbrance" means a right, other than an ownership interest, in real property. The term includes mortgages and other liens on real property.  
(34) "Equipment" means goods other than inventory, farm products, or consumer goods.  
(35) "Farm products" means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are:  
(A) Crops grown, growing, or to be grown, including:  
(i) Crops produced on trees, vines, and bushes; and  
(ii) Aquatic goods produced in aquacultural operations;  
(B) Livestock, born or unborn, including aquatic goods produced in aquacultural operations;  
(C) Supplies used or produced in a farming operation; or  
(D) Products of crops or livestock in their unmanufactured states.  
(36) "Farming operation" means raising, cultivating, propagating, fattening, grazing, or any other farming, livestock, or aquacultural operation.  
(37) "File number" means the number assigned to an initial financing statement pursuant to subsection (a) of Code Section 11-9-519.  
(38) "Filing office" means an office designated in Code Section 11-9-501 as the place to file a financing statement.  
(39) "Filing office rule" means a rule adopted pursuant to Code Section 11-9-526.  
(40) "Financing statement" means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement.  
(41) "Fixture filing" means the filing of a financing statement covering goods that are or are to become fixtures and satisfying subsections (a) and (b) of Code Section 11-9-502. The term includes the filing of a financing statement covering goods of a transmitting utility which are or are to become fixtures.  
(42) "Fixtures" means goods that have become so related to particular real property that an interest in them arises under real property law.  
(43) "General intangible" means any personal property, including things in action, other than accounts, 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 payment intangibles and software.  
(44) Reserved.  
(45) "Goods" means all things that are movable when a security interest attaches. The term includes (i) fixtures, (ii) standing timber that is to be cut and removed under a conveyance or contract for sale, (iii) the unborn young of animals, and (iv) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes. 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 (i) the program is associated with the goods in such a manner that it customarily is considered part of the goods, or (ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods. 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, 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.  
(46) "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.  
(47) "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.  
(48) "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 (i) investment property, (ii) letters of credit, or (iii) 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.  
(49) "Inventory" means goods, other than farm products, which:  
(A) Are leased by a person as lessor;  
(B) Are held by a person for sale or lease or to be furnished under a contract of service;  
(C) Are furnished by a person under a contract of service; or  
(D) Consist of raw materials, work in process, or materials used or consumed in a business.  
(50) "Investment property" means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account.  
(51) "Jurisdiction of organization," with respect to a registered organization, means the jurisdiction under whose law the organization is formed or organized.  
(52) "Letter of credit right" means a right to payment or performance under a letter of credit, whether or not 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.  
(53) "Lien creditor" means:  
(A) A creditor that has acquired a lien on the property involved by attachment, levy, or the like;  
(B) An assignee for benefit of creditors from the time of assignment;  
(C) A trustee in bankruptcy from the date of the filing of the petition; or  
(D) A receiver in equity from the time of appointment.  
(54) "Mortgage" means a consensual interest in real property, including fixtures, which secures payment or performance of an obligation. The term includes a deed to secure debt.  
(55) "New debtor" means a person that becomes bound as debtor under subsection (d) of Code Section 11-9-203 by a security agreement previously entered into by another person.  
(56) "New value" means (i) money, (ii) money's worth in property, services, or new credit, or (iii) 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.  
(57) "Noncash proceeds" means proceeds other than cash proceeds.  
(58) "Obligor" means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral, (i) owes payment or other performance of the obligation, (ii) has provided property other than the collateral to secure payment or other performance of the obligation, or (iii) 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.  
(59) "Original debtor," except as used in subsection (c) of Code Section 11-9-310, means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under subsection (d) of Code Section 11-9-203.  
(60) "Payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary obligation.  
(61) "Person related to," with respect to an individual, means:  
(A) The spouse of the individual;  
(B) A brother, brother-in-law, sister, or sister-in-law of the individual;  
(C) An ancestor or lineal descendant of the individual or the individual's spouse; or  
(D) Any other relative, by blood or marriage, of the individual or the individual's spouse who shares the same home with the individual.  
(62) "Person related to," with respect to an organization, means:  
(A) A person directly or indirectly controlling, controlled by, or under common control with the organization;  
(B) An officer or director of, or a person performing similar functions with respect to, the organization;  
(C) An officer or director of, or a person performing similar functions with respect to, a person described in subparagraph (A) of this paragraph;  
(D) The spouse of an individual described in subparagraph (A), (B), or (C) of this paragraph; or  
(E) An individual who is related by blood or marriage to an individual described in subparagraph (A), (B), (C), or (D) of this paragraph and shares the same home with the individual.  
(63) "Proceeds," except as used in subsection (d) of Code Section 11-9-609, means the following property:  
(A) Whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral;  
(B) Whatever is collected on, or distributed on account of, collateral;  
(C) Rights arising out of collateral;  
(D) 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  
(E) 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.  
(64) "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.  
(65) "Proposal" means a record authenticated 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 pursuant to Code Sections 11-9-620, 11-9-621, and 11-9-622.  
(66) "Public finance transaction" means a secured transaction in connection with which:  
(A) Debt securities are issued;  
(B) All or a portion of the securities issued have an initial stated maturity of at least five years; and  
(C) The debtor, obligor, secured party, account debtor or other person obligated on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest is a state or a governmental unit of a state.  
(67) "Public organic record" means a record that is available to the public for inspection and is:  
(A) 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 such state or the United States which amends or restates the initial record;  
(B) An organic record of a business trust consisting of the record initially filed with a state and any record filed with such state which amends or restates the initial record, if a statute of such state governing business trusts requires that the record be filed with such state; or  
(C) 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 such state or the United States which amends or restates the name of the organization.  
(68) "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, whether or not a subsequent event of default or other event not within the secured party's control has relieved or may relieve the secured party from its obligation.  
(69) "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.  
(70) "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 a state or the United States. The term shall include a business trust that is formed or organized under the law of a single state if a statute of such state governing business trusts requires that the business trust's organic record be filed with such state.  
(71) "Secondary obligor" means an obligor to the extent that:  
(A) The obligor's obligation is secondary; or  
(B) The obligor has a right of recourse with respect to an obligation secured by collateral against the debtor, another obligor, or property of either.  
(72) "Secured party" means:  
(A) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;  
(B) A person that holds an agricultural lien;  
(C) A consignor;  
(D) A person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold;  
(E) 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  
(F) A person that holds a security interest arising under Code Section 11-2-401, 11-2-505, or subsection (3) of Code Section 11-2-711, subsection (5) of Code Section 11-2A-508, Code Section 11-4-210, or Code Section 11-5-118.  
(73) "Security agreement" means an agreement that creates or provides for a security interest.  
(74) "Send," in connection with a record or notification, means:  
(A) To deposit in the mail, deliver for transmission, or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or  
(B) To cause the record or notification to be received within the time that it would have been received if properly sent under subparagraph (A) of this paragraph.  
(75) "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.  
(76) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.  
(77) "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.  
(78) "Tangible chattel paper" means chattel paper evidenced by a record or records consisting of information that is inscribed on a tangible medium.  
(79) "Termination statement" means an amendment of a financing statement which:  
(A) Identifies, by its file number, the initial financing statement to which it relates; and  
(B) Indicates either that it is a termination statement or that the identified financing statement is no longer effective.  
(80) "Transmitting utility" means a person primarily engaged in the business of:  
(A) Operating a railroad, subway, street railway, or trolley bus;  
(B) Transmitting communications electrically, electromagnetically, or by light;  
(C) Transmitting goods by pipeline or sewer; or  
(D) Transmitting or producing and transmitting electricity, steam, gas, or water.  
(b)  Definitions in other articles. "Control" as provided in Code Section 11-7-106 and the following definitions in other articles apply to this article:  

"Applicant." Code Section 11-5-102.  

"Beneficiary." Code Section 11-5-102.  

"Broker." Code Section 11-8-102.  

"Certificated security." Code Section 11-8-102.  

"Check." Code Section 11-3-104.  

"Clearing corporation." Code Section 11-8-102.  

"Contract for sale." Code Section 11-2-106.  

"Customer." Code Section 11-4-104.  

"Entitlement holder." Code Section 11-8-102.  

"Financial asset." Code Section 11-8-102.  

"Holder in due course." Code Section 11-3-302.  

"Issuer" (with respect to a letter of credit or letter of credit right). Code Section 11-5-102.  

"Issuer" (with respect to a security). Code Section 11-8-201.  

"Issuer" (with respect to documents of title). Code Section 11-7-102.  

"Lease." Code Section 11-2A-103.  

"Lease agreement." Code Section 11-2A-103.  

"Lease contract." Code Section 11-2A-103.  

"Leasehold interest." Code Section 11-2A-103.  

"Lessee." Code Section 11-2A-103.  

"Lessee in ordinary course of business." Code Section 11-2A-103.  

"Lessor." Code Section 11-2A-103.  

"Lessor's residual interest." Code Section 11-2A-103.  

"Letter of credit." Code Section 11-5-102.  

"Merchant." Code Section 11-2-104.  

"Negotiable instrument." Code Section 11-3-104.  

"Nominated person." Code Section 11-5-102.  

"Note." Code Section 11-3-104.  

"Proceeds of a letter of credit." Code Section 11-5-114.  

"Prove." Code Section 11-3-103.  

"Sale." Code Section 11-2-106.  

"Securities account." Code Section 11-8-501.  

"Securities intermediary." Code Section 11-8-102.  

"Security." Code Section 11-8-102.  

"Security certificate." Code Section 11-8-102.  

"Security entitlement." Code Section 11-8-102.  

"Uncertificated security." Code Section 11-8-102.  
(c)  Article 1 definitions and principles. Article 1 of this title contains general definitions and principles of construction and interpretation applicable throughout this article.  

History
(Code 1981, § 11-9-102, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2002, p. 995, § 3; Ga. L. 2010, p. 481, § 2-19/HB 451; Ga. L. 2013, p. 690, § 1/SB 185; Ga. L. 2015, p. 996, § 3B-18/SB 65.)

Annotations
The 2002 amendment, effective July 1, 2002, in subsection (a), deleted ", other than a security interest," in paragraph (5) and added "or to be provided" at the end of paragraph (47).  

The 2010 amendment, effective May 27, 2010, in subsection (b), substituted the present introductory paragraph for the former provisions, which read: "Other definitions applying to this article and the Code sections in which they appear are" and added the provisions on "'Issuer' (with respect to documents of title)". See the Editor's notes for applicability.  

The 2013 amendment, effective July 1, 2013, substituted "With present intent to adopt or accept a record, to attach to or logically associate with such record an electronic sound, symbol, or process" for "To execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record" in subparagraph (a)(7)(B); added the last sentence in paragraph (a)(11); inserted "formed or" in paragraph (a)(51); redesignated former paragraphs (a)(67) through (a)(79) as current paragraphs (a)(68) through (a)(80), respectively; added present paragraph (a)(67); and rewrote paragraph (a)(70).  

The 2015 amendment, effective January 1, 2016, substituted "Reserved" for " 'Good faith' means honesty in fact and the observance of reasonable commercial standards of fair dealing" in paragraph (a)(44).  

Code Commission notes. - Pursuant to Code Section 28-9-5, in 2001, "Code Section" was inserted preceding "11-5-118" at the end of subparagraph (a)(71)(F).  

  Editor's notes. - Ga. L. 2002, p. 995, § 8, not codified by the General Assembly, provides that: "This Act shall become effective July 1, 2002, and shall apply to a letter of credit that is issued on or after July 1, 2002. This Act does not apply to a transaction, event, obligation, or duty arising out of or associated with a letter of credit that was issued before July 1, 2002."  
Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  
Ga. L. 2015, p. 996, § 1-1/SB 65, not codified by the General Assembly, provides: "(a) This Act shall be known and may be cited as the 'Debtor-Creditor Uniform Law Modernization Act of 2015.'  
"(b) To promote consistency among the states, it is the intent of the General Assembly to modernize certain existing uniform laws promulgated by the Uniform Law Commission affecting debtor and creditor rights, responsibilities, and relationships and other federally recognized laws affecting such rights, responsibilities, and relationships."  
Law reviews. -  For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981). For article discussing the classification of a continuing security interest in changing collateral as an unenforceable preference under Section 60a of the Bankruptcy Act, see 1 Ga. L. Rev. 257 (1967). For article, "Preparing the Georgia Farmer (or Other Smaller Entrepreneur) for Bankruptcy," see 22 Ga. State Bar J. 186 (1986). For annual survey article on commercial law, see 50 Mercer L. Rev. 193 (1998). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For article, "Leveraged Buyouts in Bankruptcy," see 20 Ga. L. Rev. 73 (1985). For annual survey of commercial law, see 43 Mercer L. Rev. 119 (1991).  

  For note discussing creditor's remedy of direct collection of accounts and instruments owed to the defaulting debtor, see 3 Ga. L. Rev. 198 (1968).  

  For comment on Maley v. National Acceptance Co., 250 F. Supp. 841 (N.D. Ga. 1966), see 3 Ga. St. B.J. 248 (1966). For comment on Sherrock v. Commercial Credit Corp., 290 A.2d 648 (Del. S. Ct. 1972), see 10 Ga. St. B.J. 110 (1973).  


JUDICIAL DECISIONS
 
		ANALYSIS
   	General Consideration
   	Debtor
   	Deposit Accounts
   	Instrument
   	Security Agreement
   	Secured Party
 


 General Consideration


Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

This section defines "account" in the sense of collateral. Metter Banking Co. v. Fisher Foods, Inc., 183 Ga. App. 441, 359 S.E.2d 145, cert. denied, 183 Ga. App. 906, 359 S.E.2d 145 (1987) (decided under former Code Section 11-9-102).  

Construction. - This statute is in derogation of common law and must be strictly construed and followed. Citizens & S. Nat'l Bank v. Weyerhaeuser Co., 152 Ga. App. 176, 262 S.E.2d 485 (1979) (decided under former Code Section 11-9-102).  

Proceeds of accounts receivable. - A bankruptcy debtor's unearned postpetition income under a contract for employment did not constitute proceeds of the creditor's prepetition interest in accounts receivable. In re Rumker, 184 Bankr. 621 (Bankr. S.D. Ga. 1995) (decided under former Code Section 11-9-102).  

Trademark, trade name, and goodwill. - In addition to a trademark, a trade name, along with the goodwill it represents, may be the subject of an Article 9 security interest and may be reacquired along with other secured property on foreclosure. Reis v. Ralls, 250 Ga. 721, 301 S.E.2d 40 (1983) (decided under former Code Section 11-9-102).  

Computer information and programming recorded on magnetic tape were "general intangibles" which are not included in the types of collateral in which security interests can be perfected by possession under former § 11-9-305 (see now O.C.G.A. § 11-9-313), and a security interest therein could therefore only be perfected by filing a financing statement. Dabney v. Information Exch., Inc., 98 Bankr. 603 (Bankr. N.D. Ga. 1989) (decided under former Code Section 11-9-102).  

Post bankruptcy milk diversion program payments. - The Farmers Home Administration, which had a pre-petition security agreement extending to the bankruptcy debtors' "farm products," including milk, had a lien which attached to milk proceeds created post bankruptcy. Post-petition milk diversion program payments, therefore, were substitutes for post-petition milk and proceeds, to which the lien attached, and were not "general intangibles." United States v. Hollie, 42 Bankr. 111 (Bankr. M.D. Ga. 1984) (decided under former Code Section 11-9-102).  

Property listed in financing statements need not be specific but must only reasonably identify same, giving dates leases and amount of same, "secured by" equipment listed in leases and its location. Stephens v. Bank of Camilla, 133 Ga. App. 210, 210 S.E.2d 358 (1974), aff'd, 234 Ga. 293, 216 S.E.2d 71 (1975) (decided under former Code Section 11-9-102).  

Classification of goods. - Goods are classified as consumer goods, equipment, farm products, and inventory. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-102).  

Effect of filing. - Filing of financing statement can perfect only those interests acquired through security agreements. Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393 (1971) (decided under former Code Section 11-9-102).  

Unsecured interest in marital property. - Where evidence supports trial court's holding that wife is entitled to a special lien, wife's lien is superior to any interest of bank in marital property, as the bank was an unsecured creditor whose lien was based on an invalid handwritten note. First Nat'l Bank v. Blackburn, 254 Ga. 379, 329 S.E.2d 897 (1985) (decided under former Code Section 11-9-102).  

Applying Canadian law to the facts of the case, a remote purchaser could not prevail over a creditor who had perfected its purchase money security interest in a truck within the time specified by Canadian law. Paccar Fin. Servs., Ltd. v. Johnson, 195 Ga. App. 412, 393 S.E.2d 685 (1990) (decided under former Code Section 11-9-102).  

"Debtor." - Word "debtor" in former subsection (4) includes transferees who hold proceeds which are validly claimed by secured parties of debtor who initially granted a lien on property which gave rise to the proceeds. Moister v. National Bank (In re Guaranteed Muffler Supply Co.), 1 Bankr. 324 (Bankr. N.D. Ga. 1979) (decided under former Code Section 11-9-102).  

Insurance benefits considered "proceeds" and subject to lender's security interest. - Insurance benefits payable from a third-party tortfeasor's insurer upon the destruction of a vehicle became "proceeds," subject to a lender's security interest, before payment to the victims. JCS Enter., Inc. v. Vanliner Ins., 227 Ga. App. 371, 489 S.E.2d 95 (1997) (decided under former Code Section 11-9-102).  

Determination of good faith for jury. - Given the disputed evidence as to the good faith of a transaction, summary judgment awards on the priorities of security interests were not appropriate as the matter had to be remanded to the trial court because the good faith of a transaction was peculiarly a question for the trier of fact. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).  

Cited in Shepard v. State of Ga., 267 Ga. App. 604, 600 S.E.2d 691 (2004); Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004); Bank of Dawson v. Worth Gin Co., 295 Ga. App. 256, 671 S.E.2d 279 (2008).  


 Debtor


Debtor construed. - A debtor may be construed as anyone who owes payment. Allis-Chalmers Corp. v. Barbree, 162 Ga. App. 512, 291 S.E.2d 453, rev'd on other grounds, 250 Ga. 409, 297 S.E.2d 465 (1982) (decided under former Code Section 11-9-102).  
One who is a seller of chattel paper, whether or not that one is the owner of the underlying collateral, with full recourse against the seller in the event of a deficiency is a debtor entitled to notice of the post-default proceedings disposing of the collateral. Barbree v. Allis-Chalmers Corp., 250 Ga. 409, 297 S.E.2d 465 (1982) (decided under former Code Section 11-9-102).  

Owner of collateral. - Because former § 11-9-504(3) dealt with disposition of collateral after default, "debtor" in that section meant owner of collateral. Allis-Chalmers Corp. v. Barbree, 162 Ga. App. 512, 291 S.E.2d 453, rev'd on other grounds, 250 Ga. 409, 297 S.E.2d 465 (1982) (decided under former Code Section 11-9-102).  

When status of "debtor" attaches. - Buyer of cows who had milked and cared for the cows for several weeks prior to obtaining a loan for their purchase, but who did not finally decide to purchase the cows until after buyer obtained the loan was not a "debtor," and did not take possession until the loan was closed. United States v. Hooks, 40 Bankr. 715 (Bankr. M.D. Ga. 1984) (decided under former Code Section 11-9-102).  

Assignment to surety. - Trial court properly granted a surety's motion for summary judgment because the security interest in the accounts owed was covered by the Uniform Commercial Code, and to the extent that the anti-assignment clauses of the construction contract could be construed to prohibit the roofing company from assigning the company's right to those accounts to the company's surety, the contracts were unenforceable as a matter of law under O.C.G.A. § 11-9-406(d)(1). State Dep't of Corr. v. Developers Sur. & Indem. Co., 324 Ga. App. 371, 750 S.E.2d 697 (2013).  


 Deposit Accounts


Inapplicability of former article to deposit accounts. - Since former § 11-9-104(j) clearly provided that former Article 9 did not apply to a transfer of an interest in any deposit account, inasmuch as a depositor's commercial checking account is a "deposit account", the structures of that article were not applicable to the bank's appropriation of the account under its right of set-off. Design Spectrum, Inc. v. First Nat'l Bank, 182 Ga. App. 418, 355 S.E.2d 733 (1987) (decided under former Code Section 11-9-102).  


 Instrument


Money came within the definition of "instrument". In re Atlanta Times, Inc., 259 F. Supp. 820 (N.D. Ga. 1966), aff'd sub nom. Sanders v. National Acceptance Co. of Am., 383 F.2d 606 (5th Cir. 1967) (decided under former Code Section 11-9-102).  

Promissory note. - Under the promissory note, the debtors were consumers who were to pay money to the lender, and the debtor's obligation to do so arose from a transaction involving property that was primarily for the debtors' personal, family, or household purposes; the promissory note was a debt within the plain language of 15 U.S.C. § 1692a(5), and the law firm's letter and enclosed documents were an attempt to collect that debt - the complaint sufficiently alleged that the notice was a communication related to the collection of a debt within the meaning of 15 U.S.C. § 1692e. Even if the firm intended the letter and documents to give notice of the foreclosure to the debtors, the letters also demanded payment on the underlying debt and the fact that the letter and documents related to the enforcement of a security interest did not prevent the letters from also relating to the collection of a debt within the meaning of § 1692e; the complaint contained enough factual content to allow a reasonable inference that the firm was a debt collector because the firm regularly attempted to collect debts. Reese v. Ellis, Painter, Ratterree & Adams LLP, 678 F.3d 1211 (11th Cir. 2012).  


 Security Agreement


Intent to create a security interest is sole requisite for security agreement. Barton v. Chemical Bank, 577 F.2d 1329 (5th Cir. 1978) (decided under former Code Section 11-9-102).  

Financing statement alone cannot serve as "security agreement," however, financing statement accompanied by other documents or circumstances may suffice as valid "security agreement." In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd, 460 F.2d 1405 (5th Cir. 1972) (decided under former Code Section 11-9-102).  

Writing signed by debtor, describing collateral and including "security agreement". - For security interest to be enforceable, there must be a writing, signed by debtor, which includes "security agreement" as that term is defined, and which describes collateral. In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd, 460 F.2d 1405 (5th Cir. 1972) (decided under former Code Section 11-9-102).  

Letter agreeing to execute financing statement for stated consideration together with financing statement. - Letter agreeing to execute and return financing statement in consideration of creditor's acceptance of debtor's notes to cover its indebtedness and financing statement, taken together, meet requirements for creation of security agreement; which requires that debtor sign security agreement which contains description of collateral. In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd, 460 F.2d 1405 (5th Cir. 1972) (decided under former Code Section 11-9-102).  

Three-year "lease agreement contract," by which "lessee" would make monthly payments and, at the end of the three years, without any additional payments, would own the leased equipment, was a security agreement and not a lease. National Traveler, Inc. v. Paccom Leasing Corp., 110 Bankr. 619 (Bankr. M.D. Ga. 1990) (decided under former Code Section 11-9-102).  

Agreement which did not stipulate a purchase price but indicated an intent to negotiate a purchase price was a true lease, and not a conditional sale. Chapman v. Avco Fin. Servs. Leasing Co., 193 Ga. App. 147, 387 S.E.2d 391 (1989) (decided under former Code Section 11-9-102).  

Farmers Home Administration. - Despite the fact that the form executed by the debtors did not contain a clause that "granted" a security interest to the Farmers Home Administration (FmHA), considering other language in the form, including a heading "Security Agreement (chattels and crops)," a reference to the FmHA as the "Secured Party," and a provision which read: "It is the purpose and intent of this instrument that . . . this instrument shall secure payment of the note," the debtors did grant the FmHA a security interest in crops, livestock and offspring, farm equipment, and farm products. United States v. Hollie, 42 Bankr. 111 (Bankr. M.D. Ga. 1984) (decided under former Code Section 11-9-102).  

No writing established. - Creditor did not establish that the creditor had a valid security interest under Georgia law because there was no evidence of a specific writing, signed by the debtor, that reflected an intent to create a security interest, and that reasonably identified the personal property as collateral. First Nat'l Bank v. Alba (In re Alba), 429 Bankr. 353 (Bankr. N.D. Ga. 2008).  


 Secured Party


Automobile lessor did not, merely by initiating a foreclosure action in regard to the vehicle, thereby acquire any status as a secured party for purposes of obtaining a priority over the holder of a prior validly perfected mechanic's lien. First Nat'l Bank v. Strother Ford, Inc., 188 Ga. App. 749, 374 S.E.2d 203, rev'd on other grounds, 258 Ga. 319, 368 S.E.2d 489 (1988) (decided under former Code Section 11-9-102).  

Parent was not secured party and had no standing. - No public record allowed a criminal defendant's parent to perfect an implied trust (based on the parent's allegation that the parent paid for cars but titled them in the son's name for insurance purposes) against bona fide purchaser for value; so, in a O.C.G.A. § 16-13-49 forfeiture proceeding of two cars, the parent was not the statutory "owner" or "interest holder" as those terms were defined in O.C.G.A. § 11-9-102 and O.C.G.A. § 16-13-49(a)(7), (n)(3), (o)(3), (a)(6), and the parent thus lacked standing to contest the forfeiture. McFarley v. State of Ga., 268 Ga. App. 621, 602 S.E.2d 341 (2004).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 31-110, 121, 291-293, 471, 474-475, 482-486, 527, 550-554, 777, 780-835, 931-934, 962-982.  

Consignment, 1 POF2d 223.  

C.J.S. - 72 C.J.S., Pledges, §§ 20, 23, 28, 36. 82 C.J.S., Statutes, § 309.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-102.  

ALR. - Realization on security deposited as collateral as interrupting the statute of limitations, 25 A.L.R. 58; 165 A.L.R. 1400.  
Note or bond purporting to be given as collateral security for obligation of third person as guaranty or unconditional obligation, 43 A.L.R. 185.  
Creditor levying upon subject of unfiled conditional sale contract under prior judgment, 55 A.L.R. 1137.  
Interest of vendee under conditional sales contract as subject to attachment, garnishment, or execution, 61 A.L.R. 781.  
Lien which attaches under chattel mortgage of livestock to offspring subsequently born, as surviving period of suitable nurture, 144 A.L.R. 330.  
What constitutes "accounts receivable" under contract selling, assigning, pledging, or reserving such items, 41 A.L.R.2d 1395.  
Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.  
Consignment transactions under the Uniform Commercial Code, 40 A.L.R.3d 1078.  
Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  
Secured transactions: What constitutes "consumer goods" under UCC § 9-109(1), 77 A.L.R.3d 1225.  
Secured Transactions: What constitutes "inventory" under UCC § 9-109(4), 77 A.L.R.3d 1266.  
Effect of UCC Article 9 upon conflict, as to funds in debtor's bank account, between secured creditor and bank claiming right of setoff, 3 A.L.R.4th 998.  
What is "commercially reasonable" disposition of collateral required by UCC § 9-504(3), 7 A.L.R.4th 308.  
What constitutes secured party's authorization to transfer collateral free of lien under UCC § 9-306(2), 37 A.L.R.4th 787.  
Secured transactions: government agricultural program payments as "proceeds" of agricultural products under UCC § 9-306, 79 A.L.R.4th 903.  
Conveyance of land as including mature but unharvested crops, 51 A.L.R.4th 1263.  
Construction mortgagee-lender's duty to protect interest of subordinated purchase-money mortgagee, 13 A.L.R.5th 684.  
Consignment transactions under Uniform Commercial Code Article 9 on secured transactions, 58 A.L.R.6th 289.  

11-9-103. Purchase money security interest; application of payments; burden of establishing.

Statute text
(a)  Definitions. As used in this Code section, the term:  
(1) "Purchase money collateral" means goods or software that secures a purchase money obligation incurred with respect to that collateral.  
(2) "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.  
(b)  Purchase money security interest in goods. A security interest in goods is a purchase money security interest:  
(1) To the extent that the goods are purchase money collateral with respect to that security interest;  
(2) 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  
(3) 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.  
(c)  Purchase money security interest in software. 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:  
(1) The debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods; and  
(2) The debtor acquired its interest in the software for the principal purpose of using the software in the goods.  
(d)  Consignor's inventory purchase money security interest. The security interest of a consignor in goods that are the subject of a consignment is a purchase money security interest in inventory.  
(e)  Application of payment in nonconsumer goods transaction. In a transaction other than a consumer goods transaction, 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:  
(1) In accordance with any reasonable method of application to which the parties agree;  
(2) 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  
(3) In the absence of an agreement to a reasonable method and a timely manifestation of the obligor's intention, in the following order:  
(A) To obligations that are not secured; and  
(B) If more than one obligation is secured, to obligations secured by purchase money security interests in the order in which those obligations were incurred.  
(f)  No loss of status of purchase money security interest in nonconsumer goods transaction. In a transaction other than a consumer goods transaction, a purchase money security interest does not lose its status as such, even if:  
(1) The purchase money collateral also secures an obligation that is not a purchase money obligation;  
(2) Collateral that is not purchase money collateral also secures the purchase money obligation; or  
(3) The purchase money obligation has been renewed, refinanced, consolidated, or restructured.  
(g)  Burden of proof in nonconsumer goods transaction. In a transaction other than a consumer goods transaction, 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.  
(h)  Nonconsumer goods transactions; no inference. The limitation of the rules in subsections (e), (f), and (g) of this Code section to transactions other than consumer goods transactions is intended to leave to the court the determination of the applicable rules in consumer goods transactions. The court may not infer from that limitation the nature of the applicable rule in consumer goods transactions and may continue to apply established approaches.  

History
(Code 1981, § 11-9-103, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article, "The Fourth Annual Emory Bankruptcy Developments Journal Symposium, March 1, 2007:  Consumer Bankruptcy Panel: Selected Hot BAPCPA Topics," see 23 Bank. Dev. J. 517 (2007). For article, "Eleventh Circuit Survey: January 1, 2008 - December 31, 2008: Article: Bankruptcy,"  see 60 Mercer L. Rev. 1141 (2009).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Enforceable title-retention agreement constitutes purchase money security interest within definition of that term. Food Serv. Equip. Co. v. First Nat'l Bank, 121 Ga. App. 421, 174 S.E.2d 216 (1970) (decided under former Code Section 11-9-107).  

Security interest to secure preexisting account balance. - Security interest taken by the creditor, not to secure all or part of the purchase price of the collateral, but rather to secure the preexisting balance of the debtor's account with the creditor, did not fall within the definition of a purchase money security interest. In re Carter, 169 Bankr. 227 (Bankr. M.D. Ga. 1993) (decided under former Code Section 11-9-107).  

Purchase money security interest in collateral purchased with loan proceeds. - One who is a "lender," may acquire purchase money security interest in collateral to be purchased with proceeds of loan provided proceeds are in fact so used. Continental Oil Co. Agrico Chem. Co. Div. v. Sutton, 126 Ga. App. 78, 189 S.E.2d 925 (1972) (decided under former Code Section 11-9-107).  

Unexercised future advances clause. - Where seller, rather than lender, claims purchase-money security interest, unexercised future advances clause is immaterial. Meadows v. Household Retail Servs., Inc. (In re Griffin), 9 Bankr. 880 (N.D. Ga. 1988) (decided under former Code Section 11-9-107).  

Bank financing sales price of mobile home. - Where seller sold mobile home for cash sales price and bank financed loan for cash sales price, proceeds of which were then paid to seller, the bank, not seller, had purchase money security interest in the mobile home, and actual sale was not a retail installment transaction under O.C.G.A. § 10-1-31(a)(9). Massey v. Stephens, 155 Ga. App. 243, 270 S.E.2d 796 (1980) (decided under former Code Section 11-9-107).  

Price limitation on security interest. - Purchase money security interest must be in the item purchased, and if vendor of consumer goods is to be protected despite absence of filing, security interest cannot exceed price of item purchased in transaction out of which it arose. Roberts Furn. Co. v. Pierce, 507 F.2d 990 (5th Cir. 1975) (decided under former Code Section 11-9-107).  

Transfer and assignment of a purchase money note and security agreement to a third party did not destroy the purchase money character of the security interest, where the assignment did not refinance, renew, or modify the debtor's purchase money debt. Brooks v. First Franklin Fin. Corp., 74 Bankr. 418 (Bankr. N.D. Ga. 1987) (decided under former Code Section 11-9-107).  

Refinancing or consolidation of loans. - Refinancing or consolidating loans by paying off an old loan and extending a new one extinguishes the purchase money character of the original loan because the proceeds of the new loan are not used to acquire rights in the collateral. Franklin v. ITT Fin. Servs., 75 Bankr. 268 (Bankr. M.D. Ga. 1986) (decided under former Code Section 11-9-107).  
Under Georgia law, the refinancing of a promissory note destroys the purchase money nature of the security interest. Hipps v. Landmark Fin. Servs., 89 Bankr. 264 (Bankr. N.D. Ga. 1988) (decided under former Code Section 11-9-107).  
Where the debt secured contained both purchase money and nonpurchase money components, including the refinancing of prior obligations, the security interest of the creditor could not retain purchase money status, as it secured more than the "price" of the collateral. Lee v. Davis/McGraw, Inc., 169 Bankr. 790 (Bankr. S.D. Ga. 1994) (decided under former Code Section 11-9-107).  
When debtor refinanced a prior purchase of furniture when the debtor financed a second purchase, the seller lost the seller's purchase money security interest status on the balance due from the first purchase because the installment contract failed to specify the order in which add-on costs, i.e., late fee, delivery fee, credit life insurance, and property insurance, abated upon payment. In re McClow,    Bankr.    (Bankr. S.D. Ga. Dec. 17, 2009).  

Additional items purchased with collateral. - Simultaneous purchase on credit of a vehicle and an extended service contract, and payment of a documentary fee and a certificate of title fee, did not transform the secured creditor's claim into a non-purchase money security interest, disqualifying its claim for treatment under the hanging paragraph at the end of 11 U.S.C. § 1325(a), because the cost of the additional items was part of the price of the vehicle. In re Murray, 352 Bankr. 340 (Bankr. M.D. Ga. 2006).  

Purchase money interest in negative equity financed as part of trade-in. - Because the definition of "cash sales price" under O.C.G.A. § 11-9-103(a)(2) included any amount paid to the buyer or to a third party to satisfy a lease on or a lien on or a security interest in a motor vehicle used as a trade-in, that entire amount was included in the purchase money security interest under 11 U.S.C. § 1325(a). In re Graupner, 356 Bankr. 907 (Bankr. M.D. Ga. 2006), aff'd, NO. 4:07-CV-37 (CDL), 2007 U.S. Dist. LEXIS 46144 (M.D. Ga. 2007).  
Monies paid on debtor's behalf for an extended service contract and gap insurance were part of the purchase price of the debtor's vehicle for purposes of O.C.G.A. § 11-9-103 and the unnumbered, hanging paragraph following 11 U.S.C. § 1325(a)(9). The service contract was a charge for "servicing" the motor vehicle under O.C.G.A § 10-1-31(a)(1), and applying the close nexus standard in § 11-9-103 led the court to believe that gap insurance was also included in the purchase money security interest. In re Spratling, 377 Bankr. 941 (Bankr. M.D. Ga. 2007).  
Because a debtor purchased a vehicle for personal use within 910 days of filing a bankruptcy petition under 11 U.S.C. § 1325(a), the cramdown provision of 11 U.S.C. § 506 did not apply; instead, O.C.G.A. § 11-9-103 determined that the purchase money security interest included the negative equity of a trade-in that was integral to the sales transaction. Graupner v. Nuvell Credit Corp.,    F. Supp. 2d    (M.D. Ga. June 26, 2007), aff'd, 537 F.3d 1295 (11th Cir. 2008).  
Under O.C.G.A. §§ 10-1-31(a) and 11-9-103, negative equity in a debtor's trade-in vehicle was properly regarded as a purchase money security interest under the hanging paragraph referencing 11 U.S.C. § 1325(a)(5) in that there was a close nexus to the purchase of a vehicle for personal use within 910 days of filing for Chapter 13 relief. Thus, 11 U.S.C. § 506 did not apply to cram down the creditor's secured claim. Graupner v. Nuvell Credit Corp. (In re Graupner), 537 F.3d 1295 (11th Cir. 2008).  

Distribution of loan proceeds subsequent to closing of loan. - Lender obtained a purchase-money security interest in cows sold by a third party to the debtor although the debtor took care of the cows for the purpose of inspecting and milking several weeks before the loan was closed and legal ownership passed, and although the money was disbursed almost two weeks after the loan was closed, since the loan and its disbursement were closely allied to the sale. United States v. Hooks, 40 Bankr. 715 (Bankr. M.D. Ga. 1984) (decided under former Code Section 11-9-107).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 75-84, 841.  

C.J.S. - 82 C.J.S., Statutes, § 309.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-103.  

ALR. - Personal liability for mortgage debt of real owner who procures mortgage to be executed by another, 25 A.L.R. 1486.  
Priority as between mechanic's lien and purchase-money mortgage, 73 A.L.R.2d 1407.  
Consignment transactions under Uniform Commercial Code Article 9 on secured transactions, 58 A.L.R.6th 289.  
Determination of appropriate Chapter 11 "cramdown" rate of interest, 17 A.L.R. Fed. 3d 8.  

11-9-104. Control of deposit account.

Statute text
(a)  Requirements for control. A secured party has control of a deposit account if:  
(1) The secured party is the bank with which the deposit account is maintained;  
(2) The debtor, secured party, and bank have agreed in an authenticated record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor; or  
(3) The secured party becomes the bank's customer with respect to the deposit account.  
(b)  Debtor's right to direct disposition. A secured party that has satisfied subsection (a) of this Code section has control, even if the debtor retains the right to direct the disposition of funds from the deposit account.  

History
(Code 1981, § 11-9-104, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-104.  

11-9-105. Control of electronic chattel paper.

Statute text
(a)  General rule; control of electronic chattel paper. A secured party has control of electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel paper reliably establishes the secured party as the person to which the chattel paper was assigned.  
(b)  Specific facts giving control. A system satisfies the provisions of subsection (a) of this Code section if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that:  
(1) A single authoritative copy of the record or records exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6) of this subsection, unalterable;  
(2) The authoritative copy identifies the secured party as the assignee of the record or records;  
(3) The authoritative copy is communicated to and maintained by the secured party or its designated custodian;  
(4) Copies or amendments that add or change an identified assignee of the authoritative copy can be made only with the consent of the secured party;  
(5) 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  
(6) Any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.  

History
(Code 1981, § 11-9-105, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 2/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, designated the existing provisions as subsections (a) and (b); in subsection (a), added the subsection heading and added "if a system employed for evidencing the transfer of interests in the chattel paper reliably establishes the secured party as the person to which the chattel paper was assigned" at the end; in the introductory language of subsection (b), added the subsection heading and "A system satisfies the provisions of subsection (a) of this Code section" at the beginning; substituted "subsection" for "Code section" in paragraph (b)(1); in paragraph (b)(4), substituted "amendments" for "revisions" near the beginning and substituted "consent" for "participation" near the end; and, in paragraph (b)(6), substituted "amendment" for "revision" near the beginning and substituted "as authorized or unauthorized" for "an authorized or unauthorized revision" at the end.  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-105.  

11-9-106. Control of investment property.

Statute text
(a)  Control under Code Section 11-8-106. A person has control of a certificated security, uncertificated security, or security entitlement as provided in Code Section 11-8-106.  
(b)  Control of commodity contract. A secured party has control of a commodity contract if:  
(1) The secured party is the commodity intermediary with which the commodity contract is carried; or  
(2) 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.  
(c)  Effect of control of securities account or commodity account. 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.  

History
(Code 1981, § 11-9-106, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-106.  

11-9-107. Control of letter of credit right.

Statute text
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 (c) of Code Section 11-5-114 or otherwise applicable law or practice.  

History
(Code 1981, § 11-9-107, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-107.  

11-9-108. Sufficiency of description.

Statute text
(a)  Sufficiency of description. Except as otherwise provided in subsections (c), (d), and (e) of this Code section, a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.  
(b)  Examples of reasonable identification. Except as otherwise provided in subsection (d) of this Code section, a description of collateral reasonably identifies the collateral if it identifies the collateral by:  
(1) Specific listing;  
(2) Category;  
(3) Except as otherwise provided in subsection (e) of this Code section, a type of collateral defined in this title;  
(4) Quantity;  
(5) Computational or allocational formula or procedure; or  
(6) Except as otherwise provided in subsection (c) of this Code section, any other method, if the identity of the collateral is objectively determinable.  
(c)  Supergeneric description not sufficient. 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.  
(d)  Investment property. Except as otherwise provided in subsection (e) of this Code section, a description of a security entitlement, securities account, or commodity account is sufficient if it describes:  
(1) The collateral by those terms or as investment property; or  
(2) The underlying financial asset or commodity contract.  
(e)  When description by type insufficient. A description only by type of collateral defined in this title is an insufficient description of:  
(1) A commercial tort claim; or  
(2) In a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account.  

History
(Code 1981, § 11-9-108, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing the classification of a continuing security interest in changing collateral as an unenforceable preference under Section 60a of the Bankruptcy Act, see 1 Ga. L. Rev. 257 (1967). For article discussing the U.C.C. provisions regarding the sufficiency of "The Description of Collateral in Security Agreements and Financing Statements," see 28 Mercer L. Rev. 611 (1977). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981).  

  For comment on United States v. Crittenden, 563 F.2d 678 (5th Cir. 1977), appearing below, see 12 Ga. L. Rev. 692 (1977).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Sufficiency in financing statements. - Property listed in financing statements need not be specific but must only reasonably identify same, giving dated leases and amount of same, "secured by" equipment listed in leases and its location. Stephens v. Bank of Camilla, 133 Ga. App. 210, 210 S.E.2d 358 (1974), aff'd, 234 Ga. 293, 216 S.E.2d 71 (1975) (decided under former Code Section 11-9-110).  
Physical description in financing statement need not be sufficient in itself to identify the property. It is sufficient if description provides such key to identity of property as would enable a person of ordinary business prudence, upon inquiry, to discover actual identity of property described. Abney v. ITT Diversified Credit Corp. (In re Environmental Elec. Sys.), 11 Bankr. 965 (Bankr. N.D. Ga. 1981) (decided under former Code Section 11-9-110).  

Description need not be of exact or detailed nature. - Courts should refuse to follow holdings, often found in older chattel mortgage cases, that descriptions are insufficient unless they are of exact and detailed nature, i.e., so-called "serial number" test. BVA Credit Corp. v. Mullins, 552 F.2d 1145 (5th Cir. 1977) (decided under former Code Section 11-9-110).  

Sufficient description enables one to identify thing described. - Test of the sufficiency of a description is that the description do the job assigned to it, that it make possible identification of thing described. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-110).  

Sufficiency of description is question of law, while identity is question of fact. - Question of sufficiency of description of property is one of law, for the court; that of identity of property is one of fact, to be decided by jury. Bank of Cumming v. Chapman, 245 Ga. 261, 264 S.E.2d 201 (1980).  

Description of collateral in security agreements. - Purchase money security agreements on consumer goods are not required to be filed, and purpose of description of collateral in such agreements is not to give notice, as a financing statement, but is to provide identification of collateral so as to avoid disputes over its identity. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-110).  
Requirement that identification of collateral indicate type of collateral is applicable to financing statements, not security agreements. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-110).  
Bankruptcy court found that: (1) the equipment in issue was incorrectly described in both the security agreement and the financing statement; and (2) the rights of the debtor, as a hypothetical lien creditor, were superior to the rights of the creditor. Deere Credit, Inc. v. Pickle Logging, Inc. (In re Pickle Logging, Inc.), 286 Bankr. 181 (Bankr. M.D. Ga. 2002).  

Description by model and serial number. - Description of collateral in a purchase money security agreement by model and serial number alone meets requirements of former §§ 11-9-203(1)(b) and 11-9-110, where secured party named is manufacturer or dealer in specialty appliances sold under trade name. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-110).  

Merely stating incorrect serial number will not vitiate contract if key is there. Thomas Ford Tractor, Inc. v. North Ga. Prod. Credit Ass'n, 153 Ga. App. 820, 266 S.E.2d 571 (1980) (decided under former Code Section 11-9-110).  

Description of land or crops. - Description in security instrument of land or crops must raise warning flag, providing key to identity of property. United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970) (decided under former Code Section 11-9-110).  
Crop need not be described as tobacco crop when all crops on land are collateral for debt. The description that reasonably identifies what is described is adequate. United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970) (decided under former Code Section 11-9-110).  

Determining whether record gives sufficient notice. - Whether record gives sufficient notice depends not only on language appearing in mortgage, but also upon what a person of ordinary business prudence would have ascertained from pursuing such lines of inquiry as data given in mortgage would naturally suggest to the reasonable person's mind; and, additionally, any further information actually possessed by claimants at time of transaction, which would have led an ordinary man to believe that dealings were with mortgaged property, or would ordinarily have led the reasonable man to further inquiry, may be taken into consideration in determining whether they had notice of lien, or were legally chargeable with notice. Yancey Bros. Co. v. Dehco, Inc., 108 Ga. App. 875, 134 S.E.2d 828 (1964) (decided under former Code Section 11-9-110).  

Valid security interest in airplane established. - While description of bank's collateral as "67 #402 Cessna" could be ambiguous to one who is unaware that a "Cessna" is an airplane, the note and documents obtained by the bank from the borrower when it made the loan removed all doubt that the bank did have a valid security interest in the plane. F & M Bank v. State, 167 Ga. App. 77, 306 S.E.2d 11 (1983) (decided under former Code Section 11-9-110).  


OPINIONS OF THE ATTORNEY GENERAL

Duty of superior court clerks. - Clerks of superior court are not required to determine that property subject to a U.C.C. financing statement is properly described before recording the statement. 1982 Op. Att'y Gen. No. U82-38.  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, § 351.  

C.J.S. - 72 C.J.S., Pledges, § 10.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-108.  

ALR. - Sufficiency of description of property in mortgage on animals, 124 A.L.R. 944.  
Sufficiency of description in chattel mortgage as covering all property of a particular kind, 2 A.L.R.3d 839; 30 A.L.R.3d 9; 25 A.L.R.5th 696.  
Sufficiency of description of crops under UCC §§ 9-203(1)(b) and 9-402(1), 67 A.L.R.3d 308; 100 A.L.R.3d 10; 100 A.L.R.3d 940.  
Equipment leases as security interest within Uniform Commercial Code sec. 1-201(37), 76 A.L.R.3d 11.  
Sufficiency of address of debtor in financing statement required by UCC sec. 9-402(1), 99 A.L.R.3d 807.  
Sufficiency of address of secured party in financing statement required under UCC sec. 9-402(1), 99 A.L.R.3d 1080.  
What is "commercially reasonable" disposition of collateral required by UCC sec. 9-504(3), 7 A.L.R.4th 308.  
Sufficiency of secured party's notification of sale or other intended disposition of collateral under UCC sec. 9-504(3), 11 A.L.R.4th 241.  
Construction and effect of "future advances" clauses under UCC Article 9, 90 A.L.R.4th 859.  


PART 2

APPLICABILITY OF ARTICLE


11-9-109. Scope.

Statute text
(a)  General scope of article. Except as otherwise provided in subsections (c) and (d) of this Code section, this article applies to:  
(1) A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;  
(2) An agricultural lien;  
(3) A sale of accounts, chattel paper, payment intangibles, or promissory notes;  
(4) A consignment;  
(5) A security interest arising under Code Section 11-2-401, Code Section 11-2-505, subsection (3) of Code Section 11-2-711, or subsection (5) of Code Section 11-2A-508, as provided in Code Section 11-9-110; and  
(6) A security interest arising under Code Section 11-4-210 or 11-5-118.  
(b)  Security interest in secured obligation. The application of this article 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 article does not apply.  
(c)  Extent to which article does not apply. This article does not apply to the extent that:  
(1) A statute, regulation, or treaty of the United States preempts this article;  
(2) Another statute of this state expressly governs the creation, perfection, or priority;  
(3) 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  
(4) The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under Code Section 11-5-114.  
(d)  Inapplicability of article. This article does not apply to:  
(1) A landlord's lien, other than an agricultural lien;  
(2) A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but Code Section 11-9-333 applies with respect to priority of the lien;  
(3) An assignment of a claim for wages, salary, or other compensation of an employee;  
(4) A sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;  
(5) An assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only;  
(6) An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;  
(7) An assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;  
(8) 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 Code Sections 11-9-315 and 11-9-322 apply with respect to proceeds and priorities in proceeds;  
(9) An assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;  
(10) A right of recoupment or setoff, but:  
(A) Code Section 11-9-340 applies with respect to the effectiveness of rights of recoupment or setoff against deposit accounts; and  
(B) Code Section 11-9-404 applies with respect to defenses or claims of an account debtor;  
(11) The creation or transfer of an interest in or lien on real property, including a lease or usufruct or rents thereunder, except to the extent that provision is made for:  
(A) Liens on real property in Code Sections 11-9-203 and 11-9-308;  
(B) Fixtures in Code Section 11-9-334;  
(C) Fixture filings in Code Sections 11-9-501, 11-9-502, 11-9-512, 11-9-516, and 11-9-519; and  
(D) Security agreements covering personal and real property in Code Section 11-9-604;  
(12) An assignment of a claim arising in tort, other than a commercial tort claim, but Code Sections 11-9-315 and 11-9-322 apply with respect to proceeds and priorities in proceeds;  
(13) An assignment of a deposit account in a consumer transaction, but Code Sections 11-9-315 and 11-9-322 apply with respect to proceeds and priorities in proceeds;  
(14) An assignment of a lottery prize payable by this state or any instrumentality of this state;  
(15) An assignment of a claim or right to receive payment as described in and to the extent limited by the provisions of Code Section 34-9-84 or by Article 4 of Chapter 12 of Title 51; or  
(16) A security interest created by or affecting property of this state or any governmental unit of this state in any public finance transaction, other than a security interest created by:  
(A) An authority activated under Chapter 62 of Title 36, the "Development Authorities Law"; or  
(B) A local authority having as its principal function the stimulation of industrial growth and the reduction of unemployment.  

History
(Code 1981, § 11-9-109, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article on choice-of-law of contracts in Georgia, see 21 Mercer L. Rev. 389 (1970).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Ordinary meaning of "unsecured". - Ordinary meaning of "unsecured" is that there is no security interest that can be effective against third parties under the Georgia Uniform Commercial Code, specifically O.C.G.A. § 11-9-109. In re Estate of Sims, 259 Ga. App. 786, 578 S.E.2d 498 (2003).  

Federal statutory preemption of article. - Where a bank, based on its prior perfected security interest, sued a cattle-raiser for cattle in possession, the trial court correctly ruled that the Federal Security Act (7 U.S.C.A. § 1631), which controlled the transaction, preempted this article and properly awarded summary judgment to cattle-raiser. Ashburn Bank v. Farr, 206 Ga. App. 517, 426 S.E.2d 63 (1992) (decided under former Code Section 11-9-104).  

Maritime liens. - Creditor-holder of a properly perfected UCC security interest in debtor's freights did not take priority over holders of valid maritime liens. While freights fall within the literal terms of the definitions in former § 11-9-106, their inclusion therein does not subject maritime lien claimants to UCC priority rules. First, former subsection (a) of this section excludes security interests arising under federal statutes from the ambit of the UCC; unlike former subsection (b). Its state law counterpart, former subsection (a) does not specifically subject federal liens to UCC priority provisions. Second, former § 11-9-102 excludes non-consensual transactions from the UCC. Maritime liens by nature arise without intent or consent. Finally, maritime liens take priority over UCC security interests under pre-or post-UCC cases. McAllister Towing v. Ambassador Factors, (In re Topgallant Lines), 154 Bankr. 368 (S.D. Ga. 1993), aff'd, 20 F.3d 1175 (11th Cir. 1994) (decided under former Code Section 11-9-104).  

Priority over bank's right of setoff. - The Code's priority rules require that a perfected security interest will prevail over a bank's right of setoff. Continental Am. Life Ins. Co. v. Griffin, 251 Ga. 412, 306 S.E.2d 285 (1983) (decided under former Code Section 11-9-104).  

Bank's right of setoff superior. - In a case predicated on the Georgia tort law of conversion, a district court's entry of summary judgment in favor of a bank was affirmed because O.C.G.A. §§ 11-9-109(a)(1) and (d)(10)(A), and 11-9-340 governed the effectiveness of setoff rights in deposit accounts, brought the case expressly within the authority of the Uniform Commercial Code, and provided that the bank's setoff right was superior to any security interest of a company in a predecessor company's deposited funds. Eleison Composites, LLC v. Wachovia Bank, N.A.,    F.3d    (11th Cir. Mar. 7, 2008)(Unpublished).  

Former paragraph (c) did not include remuneration payable to an independent contractor. Perry v. Freeman, 163 Ga. App. 186, 293 S.E.2d 381 (1982) (decided under former Code Section 11-9-104).  

Debtor's assignment to bank of specific amounts from future proceeds from debtor's business was not exempted from former Article 9 and was required to be perfected by the filing of a financing statement. Bank of Cave Spring v. Gold Kist, Inc., 173 Ga. App. 679, 327 S.E.2d 800 (1985) (decided under former Code Section 11-9-104).  

Transfer and assignment of note and security deed not interest in real estate. - Even though a debtor gave possession of a note and security deed and executed a transfer and assignment of the instruments to the creditor as collateral for a loan, the instruments never vested in the creditor and the transaction was not the creation or transfer of an interest in real estate under former subsection (h); thus, where the creditor did not comply with the notice requirement of former § 11-9-305(2), the debtor was entitled to recover either damages for conversion of the collateral after default or damages prescribed by former § 11-9-507. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section 11-9-104).  

Security interest in proceeds from sale of debtor's residence. - Execution of guaranty, although ineffective to create security interest in debtor's residence, since real property is excluded from operation of Article 9, was effective to create a security interest in cash proceeds from sale of debtor's residence. United States v. Wood, 28 Bankr. 383 (N.D. Ga. 1983) (decided under former Code Section 11-9-104).  

Inapplicability of article to deposit accounts. - Since former subsection (j) clearly provided that former Article 9 did not apply to a transfer of an interest in any deposit account, inasmuch as a depositor's commercial checking account is a "deposit account" as that term was defined in former § 11-9-105(1)(e), the strictures of this former article were not applicable to the bank's appropriation of the account under its right of set-off. Design Spectrum, Inc. v. First Nat'l Bank, 182 Ga. App. 418, 355 S.E.2d 733 (1987) (decided under former Code Section 11-9-104).  

A security agreement covering the creditor's interest in unearned insurance premiums did not come within the ambit of the Uniform Commercial Code. Paulsen Street Investors v. EBCO Gen. Agencies, 224 Ga. App. 507, 481 S.E.2d 246 (1997) (decided under former Code Section 11-9-104).  

Repossession of collateral located in Georgia. - Absent agreement that law of another state shall govern, Georgia law applies to repossession, resale, and right to deficiency judgment where collateral was located in Georgia at time of repossession and resale. Lewis v. First Nat'l Bank, 134 Ga. App. 798, 216 S.E.2d 347 (1975).  

Credit transaction pursuant to revolving account. - Security interest can be created in credit transaction pursuant to revolving account. Brown v. Jenkins, 135 Ga. App. 694, 218 S.E.2d 690 (1975).  

Effect on subrogation. - The Uniform Commercial Code does not abrogate, modify, affect, or abridge equitable doctrine of subrogation. Argonaut Ins. Co. v. C & S Bank, 140 Ga. App. 807, 232 S.E.2d 135 (1976).  
Surety is "secured" by its right of subrogation, which relates back to issuance of bond, to defeat intervening creditors. Uniform Commercial Code does not abrogate, modify, affect or abridge equitable doctrine of subrogation, and a surety is not required to file under the Code to preserve priority under equitable right of subrogation. Pembroke State Bank v. Balboa Ins. Co., 144 Ga. App. 609, 241 S.E.2d 483 (1978).  

Sale-leaseback agreement. - The former provisions of this section applied to sale-leaseback agreement which constitutes secured transaction. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981).  

Whether lease is intended as security is to be determined by facts of each case. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666, 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121, 381 S.E.2d 94 (1989).  

Name which parties give to transaction is not conclusive. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666, 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121, 381 S.E.2d 94 (1989).  

Mere holding of title insufficient. - Mere holding of title as a lessor of a leased motor vehicle does not give rise to a security interest therein, unless the interest arose under a lease intended as security. First Nat'l Bank v. Strother Ford, Inc., 188 Ga. App. 749, 374 S.E.2d 203 (1988).  

Factors tending to establish that a "lease" transaction is a conditional sale are: lessor's purchase of equipment from supplier; requirement that lessee be responsible for payment of all taxes, insurance and expenses for repairs, an initial downpayment, and additional payment of security deposit. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666, 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121, 381 S.E.2d 94 (1989).  

"Installment-service agreement" not "lease . . . intended as security". - Where nowhere within an "installation-service agreement" could it be construed that the parties contemplated a sale, an option to purchase, or creation of a security interest, the agreement was not a "lease . . . intended as security" and thus former Article 9 did not apply. Ford v. Rollins Protective Servs. Co., 171 Ga. App. 882, 322 S.E.2d 62 (1984).  

Agreement which did not stipulate a purchase price but indicated an intent to negotiate a purchase price was a true lease, and not a conditional sale. Chapman v. Avco Fin. Servs. Leasing Co., 193 Ga. App. 147, 387 S.E.2d 391 (1989).  

Trademark, trade name, and goodwill subject to security interests. - In addition to a trademark, a trade name, along with the goodwill it represents, may be the subject of an Article 9 security interest and may be reacquired along with other secured property on foreclosure. Reis v. Ralls, 250 Ga. 721, 301 S.E.2d 40 (1983).  

Radio tower as equipment. - Where a radio tower which had been determined to be personal property was used and bought for use primarily in debtor's business and defendants did not allege that the radio tower constituted inventory, farm products, or consumer goods, the radio tower was equipment. Tidwell v. Slocumb (In re Ga. Steel, Inc.), 71 Bankr. 903 (Bankr. M.D. Ga. 1987).  

Commercial reasonableness standard inapplicable to realty transactions. - The UCC, along with its standard of commercial reasonableness, does not apply to transactions involving realty. B & W Pipeline, Inc. v. Newton County Bank, 181 Ga. App. 684, 353 S.E.2d 829 (1987).  

Security interest in proceeds from sale of debtor's residence. - Execution of guaranty, although ineffective to create security interest in debtor's residence, since real property is excluded from operation of Article 9, was effective to create a security interest in cash proceeds from sale of debtor's residence. United States v. Wood, 28 Bankr. 383 (N.D. Ga. 1983).  

Article 9 applied to transaction. - See Trust Co. Bank v. Walker, 35 Bankr. 237 (Bankr. N.D. Ga. 1983).  

Insurance proceeds subject to lender's security agreement. - Bankruptcy court found that under the security deed the credit company held a valid security interest in the destroyed property and the security deed provided sufficient language to grant the credit company a security interest in the proceeds of the collateral, including any insurance proceeds. Altegra Credit Co. v. Ford Motor Credit Co. (In re Brantley), 286 Bankr. 918 (Bankr. S.D. Ga. 2002).  

Statute of limitations. - While it appeared that O.C.G.A. § 9-3-24, rather than O.C.G.A. § 11-2-725, would most likely apply to defendant collection attorney's state court deficiency action against plaintiff consumer, and it was not for the federal court to say what the Georgia courts would hold, the uncertainty meant there was no intentional unfair conduct and the consumer's Fair Debt Collection Practices Act claim was dismissed. Almand v. Reynolds & Robin, P.C., 485 F. Supp. 2d 1361 (M.D. Ga. 2007).  

Assignment to surety. - Trial court properly granted a surety's motion for summary judgment because the security interest in the accounts owed was covered by the Uniform Commercial Code, and to the extent that the anti-assignment clauses of the construction contract could be construed to prohibit the roofing company from assigning the company's right to those accounts to the company's surety, the contracts were unenforceable as a matter of law under O.C.G.A. § 11-9-406(d)(1). State Dep't of Corr. v. Developers Sur. & Indem. Co., 324 Ga. App. 371, 750 S.E.2d 697 (2013).  

Cited in Delta Air Lines, Inc. v. Clayton County Bd. of Tax Assessors, 246 Ga. App. 225, 539 S.E.2d 905 (2000); All Fleet Refinishing, Inc. v. W. Ga. Nat'l Bank, 280 Ga. App. 676, 634 S.E.2d 802 (2006).  


RESEARCH REFERENCES

Am. Jur. 2d. - 6 Am. Jur. 2d, Assignments, §§ 78, 79. 54A Am. Jur. 2d, Mortgages, §§ 5, 8. 68A Am. Jur. 2d, Secured Transactions, §§ 2, 3, 129-154.  

C.J.S. - 6A C.J.S., Assignments, §§ 82, 87. 72 C.J.S., Pledges, §§ 6, 41 et seq.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-109.  

ALR. - Taking note for price as waiver of reservation of title under conditional sale, 13 A.L.R. 1044; 55 A.L.R. 1160.  
Effect of repledge by one who at time holds property under tentative agreement for pledge which is subsequently consummated, 24 A.L.R. 433.  
Trust receipt, or instrument purporting to be such, as a chattel mortgage within filing statutes, 25 A.L.R. 332; 49 A.L.R. 309; 87 A.L.R. 316; 101 A.L.R. 463; 168 A.L.R. 378.  
Right to setoff deposit in insolvent bank against indebtedness to bank, 25 A.L.R. 938; 82 A.L.R. 665; 97 A.L.R. 588.  
Personal liability for mortgage debt of real owner who procures mortgage to be executed by another, 25 A.L.R. 1486.  
Rights as between holder of "trust receipt" and purchaser of goods from one who gave it, 31 A.L.R. 937.  
Effect of assignment of a conditional-sale contract as collateral, 36 A.L.R. 759.  
Pledge as covering pledgor's contingent liability as secondary obligor, 43 A.L.R. 1069.  
Trust receipts, 49 A.L.R. 282; 87 A.L.R. 302; 101 A.L.R. 453; 168 A.L.R. 359.  
Rights of holders of different notes in respect of collateral securing them, 52 A.L.R. 1391.  
Validity as to creditors of the buyer or consignee of reservation of title to goods delivered under implied or express authority to resell, 63 A.L.R. 355.  
Conditional sale as within statute providing for penalty for failure to satisfy lien, 65 A.L.R. 1316.  
Validity of assignment of future book accounts, 72 A.L.R. 856.  
Duty of broker or banker as regards pledged security on bankruptcy of customers, 79 A.L.R. 389.  
What amounts to conditional sale, 92 A.L.R. 304; 175 A.L.R. 1366.  
Assignability of contemplated debt before execution of agreement by which it is to be created, 116 A.L.R. 955.  
Valuation of notes and accounts receivable in determining question of insolvency or bankruptcy, 133 A.L.R. 1274.  
Necessity that mortgage covering oil and gas lease be recorded as real-estate mortgage, and/or filed or recorded as chattel mortgage, 34 A.L.R.2d 902.  
Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.  
Liability of pawnbroker or pledgee for theft by third person of pawned or pledged property, 68 A.L.R.2d 1259.  
Necessity and sufficiency of notice or statement prescribed by factor's lien law, 96 A.L.R.2d 727.  
Effect of UCC Article 9 upon conflict, as to funds in debtor's bank account, between secured creditor and bank claiming right of setoff, 3 A.L.R.4th 998.  
Who is "creditor" within meaning of § 103(f) of Truth in Lending Act (15 USCA § 1602(f)), 157 A.L.R. Fed. 419.  
Consignment transactions under Uniform Commercial Code Article 9 on secured transactions, 58 A.L.R.6th 289.  

11-9-110. Security interests arising under Article 2 or 2A of this title.

Statute text
A security interest arising under Code Section 11-2-401 or 11-2-505, subsection (3) of Code Section 11-2-711, or subsection (5) of Code Section 11-2A-508 is subject to this article. However, until the debtor obtains possession of the goods:  

(1) The security interest is enforceable, even if paragraph (3) of subsection (b) of Code Section 11-9-203 has not been satisfied;  
(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 Article 2 or 2A of this title; and  
(4) The security interest has priority over a conflicting security interest created by the debtor.  

History
(Code 1981, § 11-9-110, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Perfected security interest had priority over attempted reservation of title. - Peanut growers' attempted reservation of title when the growers' delivered peanuts to a peanut company at a peanut broker's direction amounted to a security interest; however, the growers never perfected the growers' security interests. A cooperative bank's security interest in the peanuts was perfected as the grower had filed financing statements and the security interest had attached so that the bank's perfected security interest had priority over the growers' unperfected security interests. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).  

Term "possession" as used in O.C.G.A. § 11-9-110 includes constructive possession. - Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-110.  

11-9-111. Applicability of bulk transfer laws.

Statute text
Repealed by Ga. L. 2015, p. 996, § 3D-2/SB 65, effective July 1, 2015.  

Annotations
  Editor's notes. - This Code section was based on Code 1981, § 11-9-111, enacted by Ga. L. 2001, p. 362, § 1.  

——————————
PART 2
EFFECTIVENESS OF SECURITY AGREEMENT; ATTACHMENT OF SECURITY INTEREST; RIGHTS OF PARTIES TO SECURITY AGREEMENT


Annotations

RESEARCH REFERENCES

C.J.S. - 79 C.J.S., Secured Transactions, §§ 20, 34, 62 et seq., 81 et seq., 111 et seq.  

ALR. - Elements and proof of crime of improper sale, removal, concealment, or disposal of property subject to security interest under UCC, 48 A.L.R.4th 819.  


PART 1

EFFECTIVENESS AND ATTACHMENT


11-9-201. General effectiveness of security agreement.

Statute text
(a)  General effectiveness. Except as otherwise provided in this title, a security agreement is effective according to its terms between the parties, against purchasers of the collateral, and against creditors.  
(b)  Applicable consumer laws and other law. A transaction subject to this article is subject to any applicable rule of law which establishes a different rule for consumers and is subject to Chapter 3 of Title 7; Chapter 4 of Title 7; and Article 1 of Chapter 1 of Title 10.  
(c)  Other applicable law controls. In case of conflict between this article and a rule of law, statute, or regulation described in subsection (b) of this Code section, the rule of law, statute, or regulation controls. Failure to comply with a statute or regulation described in subsection (b) of this Code section has only the effect the statute or regulation specifies.  
(d)  Further deference to other applicable law. This article does not:  
(1) Validate any rate, charge, agreement, or practice that violates a rule of law, statute, or regulation described in subsection (b) of this Code section; or  
(2) Extend the application of the rule of law, statute, or regulation to a transaction not otherwise subject to it.  

History
(Code 1981, § 11-9-201, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Effect of section on priority. - The effect of this section is to give the UCC Article 9 secured party, upon a debtor's default, priority over "anyone, anywhere, anyhow" except as otherwise provided by the remaining Code priority rules. Continental Am. Life Ins. Co. v. Griffin, 251 Ga. 412, 306 S.E.2d 285 (1983) (decided under former Code Section 11-9-201).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, § 155 et seq.  

C.J.S. - 72 C.J.S., Pledges, §§ 19, 31.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-201.  

ALR. - Provision in land contract against removal of buildings as affecting rights of third person under chattel mortgage or conditional sale, 30 A.L.R. 542.  
Rights and remedies of one to whom bank agrees to furnish collateral security, where bank fails before doing so, 122 A.L.R. 266.  
Conditional sale as affecting provision in insurance policy against change of title, interest, or possession, 133 A.L.R. 785.  
Usury as affecting conditional sale contract, 152 A.L.R. 598.  
Effect of UCC Article 9 upon conflict, as to funds in debtor's bank account, between secured creditor and bank claiming right of setoff, 3 A.L.R.4th 998.  

11-9-202. Title to collateral immaterial.

Statute text
Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment intangibles, or promissory notes, the provisions of this article with regard to rights and obligations apply whether title to collateral is in the secured party or the debtor.  

History
(Code 1981, § 11-9-202, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, § 192 et seq.  

C.J.S. - 72 C.J.S., Pledges, § 21.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-202.  

ALR. - Forfeiture by innocent vendor of article sold conditionally and used by vendee in violation of law, 2 A.L.R. 1596.  
Personal liability for mortgage debt of real owner who procures mortgage to be executed by another, 25 A.L.R. 1486.  
Claim of lien by conditional vendor as waiver of title, 45 A.L.R. 185.  
Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.  

11-9-203. Attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites.

Statute text
(a)  Attachment. A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.  
(b)  Enforceability. Except as otherwise provided in subsections (c) through (i) of this Code section, a security interest is enforceable against the debtor and third parties with respect to the collateral only if:  
(1) Value has been given;  
(2) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and  
(3) One of the following conditions is met:  
(A) The debtor has authenticated 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;  
(B) The collateral is not a certificated security and is in the possession of the secured party under Code Section 11-9-313 pursuant to the debtor's security agreement;  
(C) The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under Code Section 11-8-301 pursuant to the debtor's security agreement; or  
(D) The collateral is deposit accounts, electronic chattel paper, investment property, letter of credit rights, or electronic documents, and the secured party has control under Code Section 11-7-106, 11-9-104, 11-9-105, 11-9-106, or 11-9-107 pursuant to the debtor's security agreement.  
(c)  Other provisions of this title. Subsection (b) of this Code section is subject to Code Section 11-4-210 on the security interest of a collecting bank, Code Section 11-5-118 on the security interest of a letter of credit issuer or nominated person, Code Section 11-9-110 on a security interest arising under Article 2 or 2A of this title, and Code Section 11-9-206 on security interests in investment property.  
(d)  When person becomes bound by another person's security agreement. A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this article or by contract:  
(1) The security agreement becomes effective to create a security interest in the person's property; or  
(2) 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.  
(e)  Effect of new debtor becoming bound. If a new debtor becomes bound as debtor by a security agreement entered into by another person:  
(1) The agreement satisfies paragraph (3) of subsection (b) of this Code section with respect to existing or after acquired property of the new debtor to the extent the property is described in the agreement; and  
(2) Another agreement is not necessary to make a security interest in the property enforceable.  
(f)  Proceeds and supporting obligations. The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by Code Section 11-9-315 and is also attachment of a security interest in a supporting obligation for the collateral.  
(g)  Lien securing right to payment. 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.  
(h)  Security entitlement carried in securities account. 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.  
(i)  Commodity contracts carried in commodity account. The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contract carried in the commodity account.  

History
(Code 1981, § 11-9-203, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-20/HB 451.)

Annotations
The 2010 amendment, effective May 27, 2010, in subparagraph (b)(3)(D), substituted "letter of credit rights, or electronic documents," for "or letter of credit rights," and inserted "11-7-106,". See the Editor's notes for applicability.  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  
Law reviews. -  For article on the 1963 amendment to Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For article discussing the Uniform Commercial Code provisions regarding sufficiency of the description of collateral in security agreements and financing statements, see 28 Mercer L. Rev. 611 (1977). For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977).  


JUDICIAL DECISIONS
 
		ANALYSIS
   	General Consideration
   	Sufficiency of Writing
   	Description
   	Attachment
 


 General Consideration


Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Rights in collateral required. - Fundamental to secured party's acquisition of security interest in property of debtor is that debtor have rights in collateral. A security interest can be created in no other property. Anthony v. Community Loan & Inv. Corp., 559 F.2d 1363 (5th Cir. 1977) (decided prior to 1978 amendment which incorporated parts of § 109A-9-204 into what was § 11-9-203) (decided under former Code Section 11-9-203).  
One cannot encumber another person's property in the absence of consent, estoppel, or some other special rule. Russell v. Lawrence, 234 Ga. App. 612, 507 S.E.2d 161 (1998).  

Purchase money security interests. - To perfect purchase money security interest and for it to be enforceable against debtor and third parties, there must be a written agreement, signed by debtor under former subsection (1) of this section and filing of a financing statement under former § 11-9-302(1). Food Serv. Equip. Co. v. First Nat'l Bank, 121 Ga. App. 421, 174 S.E.2d 216 (1970) (decided under former Code Section 11-9-203).  

Financing statements. - A financing statement merely gives notice of the existence of a security interest but in itself does not create a security interest, for which a security agreement is required. Amoco Oil Co. v. G. Sims & Assocs., 162 Ga. App. 307, 291 S.E.2d 128 (1982) (decided under former Code Section 11-9-203).  
A financing statement cannot serve as a security agreement because it does not grant the creditor a security interest in the collateral and does not identify the obligation owed to the creditor. Amoco Oil Co. v. G. Sims & Assocs., 162 Ga. App. 307, 291 S.E.2d 128 (1982) (decided under former Code Section 11-9-203).  

Security agreement was unenforceable. - Where bank did not introduce written security agreement but instead relied upon its officer's deposition indicating that it possessed car's certificate of title, which car dealer had given to bank pursuant to its financing the dealer's inventory, and where certificate of title, purportedly executed in blank, was not produced, bank's failure to establish compliance with former subsection (1)(a) of this section rendered security interest unenforceable by means of summary judgment. Holloway v. F & M Bank, 151 Ga. App. 424, 260 S.E.2d 380 (1979) (decided under former Code Section 11-9-203).  
Unless secured party is in possession of collateral, the party's security interest, absent writing which satisfies former subsection (1)(a), is not enforceable even against debtor, and cannot be made so on theory of equitable mortgage or the like. McDonald v. Peoples Auto. Loan & Fin. Corp., 115 Ga. App. 483, 154 S.E.2d 886 (1967) (decided under former Code Section 11-9-203).  
The purchasers of a horse farm did not have a right in certain horses superior to that of the vendor's former partner based on the horses as collateral for a secured transaction, where the former partner was awarded the horses in a judgment against the vendor and, thus, the collateral did not belong to the vendor/debtor and the security interest did not attach. Russell v. Lawrence, 234 Ga. App. 612, 507 S.E.2d 161 (1998).  

Writing not required. - Where collateral is in possession of secured party, evidentiary need for written record is much less than where collateral is in debtor's possession, and under this article, as at common law, writing is not a formal requisite in former situation. Barton v. Chemical Bank, 577 F.2d 1329 (5th Cir. 1978) (decided under former Code Section 11-9-203).  

Good faith purchaser. - A bank was a good faith purchaser for value of certain cars under the following circumstances: The proprietor of a used-car business maintained a special checking account with the bank; the proprietor purchased cars from a car auction company with checks drawn upon this account and he then executed a promissory note to the bank, which loaned the proprietor the purchase price and took a security interest in the car; the account became overdrawn and the bank refused to honor the checks made out to the auction company. Georgia Cas. & Sur. Co. v. Tennille Banking Co. (In re Smith), 51 Bankr. 904 (Bankr. M.D. Ga. 1985) (decided under former Code Section 11-9-203).  

Insurance benefits considered "proceeds" and subject to lender's security interest. - Insurance benefits payable from a third-party tortfeasor's insurer upon the destruction of a vehicle became "proceeds," subject to a lender's security interest, before payment to the victims. JCS Enter., Inc. v. Vanliner Ins., 227 Ga. App. 371, 489 S.E.2d 95 (1997).  
Bankruptcy court found that under the security deed the credit company held a valid security interest in the destroyed property and the security deed provided sufficient language to grant the credit company a security interest in the proceeds of the collateral, including any insurance proceeds. Altegra Credit Co. v. Ford Motor Credit Co. (In re Brantley), 286 Bankr. 918 (Bankr. S.D. Ga. 2002).  

Computer information and programming. - Computer information and programming recorded on magnetic tape were "general intangibles" which are not included in the types of collateral in which security interests can be perfected by possession under former § 11-9-305, and a security interest therein could therefore only be perfected by filing a financing statement. Dabney v. Information Exch., Inc., 98 Bankr. 603 (Bankr. N.D. Ga. 1989) (decided under former Code Section 11-9-203).  

Security interest in the proceeds. - After a Chapter 13 debtors' vehicle was destroyed in an accident after confirmation of the plan, the failure of the secured creditor to introduce the insurance policy into evidence, meant that the court could not determine if the creditor had an independent right to the proceeds in addition to its Uniform Commercial Code Article 9 rights; the creditor proved only that it had a security interest in the proceeds and, therefore, Article 9 governed and the insurance payout was proceeds of the collateral. In re Jones,    Bankr.    (Bankr. S.D. Ga. June 4, 2004).  

Language held sufficient to prove security interest. - Bank that extended credit to a debtor before the debtor declared Chapter 13 bankruptcy, so the debtor could purchase merchandise using a credit card, had an enforceable security interest under O.C.G.A. § 11-9-203 in goods the debtor obtained using the credit card, and a plan the debtor filed for repaying creditors could not be confirmed under 11 U.S.C. § 1325 because the plan treated the bank's claim as an unsecured claim. An application the debtor completed when the debtor applied for the credit card stated that the debtor granted a business a purchase money security interest in goods purchased on the debtor's account. Thomas G. v. HSBC Nev., N.A. (In re Thomas G.),    Bankr.    (Bankr. N.D. Ga. Dec. 21, 2009)(Unpublished).  

Motor Vehicle Certificate of Title Act. - Failure to comply with the Motor Vehicle Certificate of Title Act (O.C.G.A. § 40-3-1 et seq.) with respect to the perfection of a security interest (former O.C.G.A. § 40-3-50(b)) does not affect the creation of the security interest, which remains a matter of contract between the parties. Spoon v. Herndon, 167 Ga. App. 794, 307 S.E.2d 693 (1983) (decided under former Code Section 11-9-203).  

Uniform Commercial Code financing statement found not to cover mobile home. See Homac, Inc. v. Fort Wayne Mtg. Co., 577 F. Supp. 1065 (N.D. Ga. 1983) (decided under former Code Section 11-9-203).  

Noncompliance with former subsection (1). - Security interest found to comply with former subsection (1). See USI Capital & Leasing v. Medical Oxygen Serv., Inc., 36 Bankr. 341 (Bankr. N.D. Ga. 1984) (decided under former Code Section 11-9-203).  

Passage of title. - When the peanut growers completed the performance of the growers' duties under the growers' contracts with a peanut broker by delivering the growers' peanuts to a peanut company, title passed to the broker. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).  


 Sufficiency of Writing


Requirements, generally. - For a security interest to be enforceable, there must be a writing signed by debtor, which includes "security agreement" as that term is defined, which describes collateral. In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd, 460 F.2d 1405 (5th Cir. 1972) (decided under former Code Section 11-9-203).  
Two creditors who loaned money to a debtor to buy a truck and who were named by the debtor as a "lienholder" on the debtor's application for a title won a ruling sustaining their objection to the debtor's proposed Chapter 13 plan in which the creditors' interest was treated as an unsecured interest, because Georgia law did not require the use of "magic words" to create an enforceable security interest and because the three documents signed by the debtor in connection with the transaction satisfied the requirements in O.C.G.A. § 11-9-203(b)(3)(A) for the creation of an enforceable security interest, and were consistent with the debtor's testimony that the debtor knew that the creditors would have a lien on the debtor's truck. In re Flager,    Bankr.    (Bankr. M.D. Ga. June 8, 2007).  

Signatures on face of documents. - Placing of initials and/or signatures on face of documents does not suffice to authenticate title retention agreement on reverse and as consequence does not entitle creditor to priority over disputed collateral. Food Serv. Equip. Co. v. First Nat'l Bank, 121 Ga. App. 421, 174 S.E.2d 216 (1970) (decided under former Code Section 11-9-203).  
Party does not receive signed security agreement from debtor with reference to sales orders where only signing appears on face of instruments and neither sale order nor delivery receipt makes any reference to reverse side of documents. Food Serv. Equip. Co. v. First Nat'l Bank, 121 Ga. App. 421, 174 S.E.2d 216 (1970) (decided under former Code Section 11-9-203).  

Signature on security agreement required for aircraft. - In a preferential transfer action under 11 U.S.C. § 547(b), while the trustee satisfied the trustee's burden as to many of the elements and was entitled to a partial summary judgment as to those elements, the trustee was not entitled to summary judgment under 11 U.S.C. § 547(b)(5) regarding the debtor's conveyance of an aircraft because there were material fact issues as to the existence of a security agreement, the amount of the debt, the value of the aircraft, and whether the security interest was filed with the Federal Aviation Administration (FAA). In this case, pursuant to O.C.G.A. § 11-9-203(b)(3)(A), in order to have an enforceable security interest, there had to be a signed security agreement. Kelley v. Murphy (In re McConnell), 455 Bankr. 824 (Bankr. M.D. Ga. 2011).  

Written assignments of debt. - Letter written by creditor to debtor stating that the creditor "has assigned" debt to third party, which letter bears "acceptance" by debtor of assignment, and on the basis of which assignee lends money to assignor, is sufficient writing to create security interest in assignee, attaching at time of loan to assignor. Citizens & S. Nat'l Bank v. Capital Constr. Co., 112 Ga. App. 189, 144 S.E.2d 465 (1965) (decided under former Code Section 11-9-203).  

Language held insufficient to prove security interest. - Sales invoices, which stated that sales of household goods were subject to a "charge agreement," were not sufficient to prove the existence of a security interest, where such invoices did not constitute a security agreement but merely gave notice of the existence of one. Grier v. Skinner's Furn. Store of Newnan, Inc., 180 Ga. App. 607, 349 S.E.2d 826 (1986) (decided under former Code Section 11-9-203).  

Written security agreement not established. - Creditor was not entitled to relief from an automatic stay under 11 U.S.C. § 362 when the creditor could not provide evidence of a written security agreement signed by the debtor for the personal property at issue and the debtor testified that the debtor never signed or intended to give a security interest in the personal property. First Nat'l Bank v. Alba (In re Alba), 429 Bankr. 353 (Bankr. N.D. Ga. 2008).  

Security agreement in aircraft not established. - When a trustee sought to avoid as a preferential transfer a debtor's conveyance of an aircraft to defendants, summary judgment was inappropriate as to 11 U.S.C. § 547(b)(5) because there were material fact issues as to the existence of a security agreement, the amount of the debt, the value of the aircraft, and whether the security interest in the aircraft was filed with the Federal Aviation Administration. Kelley v. Murphy (In re McConnell),    Bankr.    (Bankr. M.D. Ga. Aug. 18, 2011).  


 Description


Purpose of description in unfiled security agreements. - Purchase money security agreements on consumer goods are not required to be filed, and purpose of description of collateral in such agreements is not to give notice, as on a financing statement, but is to provide identification of collateral so as to avoid disputes over its identity. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-203).  

Sufficiency of description. - Test of the sufficiency of a description is that the description do job assigned to it, that it make possible identification of thing described. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-203).  
Written security agreement satisfies this provision if it is signed by debtor and contains description of collateral. Additional requirement of description of collateral is necessary to solve the evidentiary problem of identifying collateral when secured party lacks possession of it. Barton v. Chemical Bank, 577 F.2d 1329 (5th Cir. 1978) (decided under former Code Section 11-9-203).  

Type of collateral. - Requirement that identification of collateral indicate type of collateral is applicable to financing statements, not security agreements. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-203).  

Model and serial number. - Description of collateral in a purchase money security agreement by model and serial number alone meets requirements of former §§ 11-9-203(1)(b) and 11-9-110, where secured party named is manufacturer or dealer in specialty appliances sold under trade name. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-203).  

Accounts receivable. - Where the security agreement, like the financing statement, provided that creditor had a security interest in "all those items of personal property" located on debtor's premises, but the security agreement went further than the financing statement by including "all replacements and accessions thereto," the scope of the security agreement was thereby limited to debtor's personal property and any replacements and accessions, and this description did not entail accounts receivable. Thus, like the financing statement, the security agreement failed to place third parties on notice of a possible security interest in accounts receivable. Healthcorp, Inc. v. Southeastern Emergency Healthcare, 85 Bankr. 170 (Bankr. N.D. Ga. 1988) (decided under former Code Section 11-9-203).  

Security agreement lacked description of collateral. - Security agreement lacked description of collateral required for perfection of a security interest, where, although the agreement referred to a "Collateral List and Valuation," there was no record of a "Collateral List and Valuation" document. ITT Fin. Servs. v. Gibson, 188 Ga. App. 188, 372 S.E.2d 468 (1988) (decided under former Code Section 11-9-203).  

Crops. - Crop need not be described as tobacco crop when all crops on land are collateral for the debt, such description reasonably identifies what is described. United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970) (decided under former Code Section 11-9-203).  
Description in security instrument of land or crops must raise warning flag, providing key to identity of property. United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970) (decided under former Code Section 11-9-203).  
A debtor may not defeat the rights acquired by the creditor in existing or future crops by turning over the property described in the financing statement to a third party to produce a crop covered by the terms of the statement, where such statement has been executed and recorded according to law. Southwest Ga. Prod. Credit Ass'n v. James, 180 Ga. App. 795, 350 S.E.2d 786 (1986) (decided under former Code Section 11-9-203).  
A credit association's security interest in a pea crop grown on debtor's land attached at the time the crop was planted. Southwest Ga. Prod. Credit Ass'n v. James, 180 Ga. App. 795, 350 S.E.2d 786 (1986) (decided under former Code Section 11-9-203).  

Animals. - Where the security agreements signed by a debtor for a loan did not cover after-acquired collateral, nor did it cover the offspring of the pigs purchased with these funds, the bank did not have a valid security interest in the offspring of the pigs. F & M Bank v. Alexander, 70 Bankr. 419 (M.D. Ga. 1987) (decided under former Code Section 11-9-203).  


 Attachment


Attachment. - Security interest attaches as soon as parties reach agreement, creditor gives value, and debtor has rights in collateral, unless explicit agreement postpones time of attaching. Barton v. Chemical Bank, 577 F.2d 1329 (5th Cir. 1978) (decided under former Code Section 11-9-203).  
Where additional collateral is given to secure antecedent debt, new value is not necessary before a security interest will attach. However, where there is a purchase money security interest in crop to be grown, new value is necessary. United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970) (decided under former Code Section 11-9-203).  
It is self-evident that in absence of special circumstances, a security interest can attach only to extent of interest of debtor. First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284, 167 S.E.2d 190 (1969) (decided under former Code Section 11-9-203).  

Three elements for attachment. - For security interests governed by Article 9 of Georgia's Uniform Commercial Code, three conditions must be met before they may be enforceable against anyone, including the debtor: (i) unless the secured party possesses the collateral, there must be a written security agreement signed by the debtor and containing a description of the collateral; (ii) the secured party must have given value; and (iii) the debtor must have rights in the collateral. These three elements were met and the creditor's security interest in the debtor's inventory and its proceeds had been properly attached. In re Shree Meldikrupa Inc.,    Bankr.    (Bankr. S.D. Ga. Jan. 15, 2016).  

Date of signing contract determines rights. - After the debtor executed three contracts prior to filing the debtor's Chapter 11 bankruptcy petition, the date the contracts were signed determined whether the proceeds of the contracts were subject to the security interest of the debtor's pre-petition creditor under 11 U.S.C. § 552(b)(1) and O.C.G.A. § 11-9-203. Diversified Traffic Servs. v. Presidential Fin. Corp. (In re Diversified Traffic Servs.),    Bankr.    (Bankr. S.D. Ga. May 21, 2010).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 23, 65-67, 109, 155 et seq., 192 et seq., 234, 267 et seq., 482 et seq., 926 et seq.  

C.J.S. - 72 C.J.S., Pledges, §§ 10-23, 28, 29, 36.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-203.  

ALR. - Waiver of usury by renewal or other executory agreement, 13 A.L.R. 1213; 74 A.L.R. 1184.  
What amounts to a conditional sale, 17 A.L.R. 1421; 43 A.L.R. 1247; 92 A.L.R. 304; 175 A.L.R. 1366.  
Right of conditional seller or mortgagee in respect of proceeds of insurance which conditional purchaser or mortgagor, who had bound himself to carry insurance for former's benefit, had made payable to himself, 92 A.L.R. 559.  
Lien which attaches under chattel mortgage of livestock to offspring subsequently born, as surviving period of suitable nurture, 144 A.L.R. 330.  
Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.  
Priority as between seller or conditional seller of personalty and claimant under after-acquired-property clause of mortgage or other instrument, 86 A.L.R.2d 1152.  
Consignment transactions under the Uniform Commercial Code, 40 A.L.R.3d 1078.  
Sufficiency of description of crops under UCC §§ 9-203(1)(b) and 9-402(1), 67 A.L.R.3d 308; 100 A.L.R.3d 10; 100 A.L.R.3d 940.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  
Sufficiency of debtor's signature on security agreement or financing statement under UCC §§ 9-203 and 9-402, 3 A.L.R.4th 502.  
What is "commercially reasonable" disposition of collateral required by UCC § 9-504(3), 7 A.L.R.4th 308.  
Conveyance of land as including mature but unharvested crops, 51 A.L.R.4th 1263.  

11-9-204. After acquired property; future advances.

Statute text
(a)  After acquired collateral. Except as otherwise provided in subsection (b) of this Code section, a security agreement may create or provide for a security interest in after acquired collateral.  
(b)  When after acquired property clause not effective. A security interest does not attach under a term constituting an after acquired property clause to:  
(1) Consumer goods, other than an accession when given as additional security, unless the debtor acquires rights in them within ten days after the secured party gives value; or  
(2) A commercial tort claim.  
(c)  Future advances and other value. 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, whether or not the advances or value are given pursuant to commitment.  

History
(Code 1981, § 11-9-204, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For article discussing the classification of a continuing security interest in changing collateral as an unenforceable preference under Section 60a of the Bankruptcy Act, see 1 Ga. L. Rev. 257 (1967). For article "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981).  

  For note examining the conflict between the floating lien in after-acquired property under the Uniform Commercial Code and the voidable preferences provisions of the Bankruptcy Act, see 9 Ga. L. Rev. 685 (1975).  


JUDICIAL DECISIONS
 
		ANALYSIS
   	General Consideration
   	After-Acquired Property
   	Consumer Goods
   	Future Advances
 


 General Consideration


Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Scope. - This section governs whether, in a security agreement, after-acquired property is subject to a security interest. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-204).  

Construction with federal law. - State law determines whether lender possesses substantive interest in property securing performance of obligation, while Regulation Z § 226.8(b)(5), 15 U.S.C. Appx 12 CFR § 226.8, under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., merely defines whether this state-created substantive right constitutes a security interest for federal disclosure purposes. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-204).  

Guaranty on real estate. - Execution of guaranty, although ineffective to create security interest in debtor's residence, since real property is excluded from operation of Article 9, was effective to create a security interest in cash proceeds from sale of debtor's residence. United States v. Wood, 28 Bankr. 383 (N.D. Ga. 1983) (decided under former Code Section 11-9-204).  

Additional collateral given to secure antecedent debt. - Where additional collateral is given to secure antecedent debt, new value is not necessary before security interest will attach. However, where there is a purchase money security interest in crop to be grown, new value is necessary. United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970) (decided under former Code Section 11-9-204).  

"Magic words" not required. - Although the security agreement must provide that after-acquired collateral is covered under the security agreement, no "magic words" are required in the drafting. The test is whether a reasonable man looking at the entire security agreement and financing statement would recognize that the parties intended to secure after-acquired property. Kubota Tractor Corp. v. Citizens & S. Nat'l Bank, 198 Ga. App. 830, 403 S.E.2d 218 (1991) (decided under former Code Section 11-9-204).  
Although usually desirable, it is not mandatory that words such as "after-acquired" or "hereafter acquired" appear in the agreement's description. Kubota Tractor Corp. v. Citizens & S. Nat'l Bank, 198 Ga. App. 830, 403 S.E.2d 218 (1991) (decided under former Code Section 11-9-204).  


 After-Acquired Property


Floating liens. - "Floating lien" theory, by which all subsequently acquired property comes under earlier security instrument, has been approved by this section, however, former § 11-9-312 provides seller of noninventory goods under purchase money contract with right to retain priority provided the seller perfects the security interest before delivery or within ten days after delivery. Babson Credit Plan, Inc. v. Cordele Prod. Credit Ass'n, 146 Ga. App. 266, 246 S.E.2d 354 (1978) (decided prior to 1978 amendment of former Code Section 11-9-204, which changed time limit for perfecting under prior § 109A-9-312).  

Unperfected interest of seller of fixtures. - Where seller of personal property which is later affixed to realty retains security interest in the goods, which is not perfected, the seller's security interest attaches upon delivery and is superior to another creditor's prior perfected security interest in personalty and "after-acquired" "personal property" and "equipment of every description" of the common debtor when such "after-acquired" personalty is affixed to realty as fixtures. Babson Credit Plan, Inc. v. Cordele Prod. Credit Ass'n, 146 Ga. App. 266, 246 S.E.2d 354 (1978) (decided under former Code Section 11-9-204).  

Security interest in after-acquired fixtures. - Section does not apply to creation of real estate security interest in after-acquired fixtures, even though those fixtures might otherwise be encompassed in code definition of consumer goods on basis of their physical and utilitarian characteristics; a real estate interest in fixtures arises pursuant to real estate law and is contingent upon item of property attaining legal status of fixture, as defined by that law. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-204).  

Property located in different place. - After-acquired property clause may be interpreted to include property located in a different place than the location specified in the agreement where the reference to the location of the secured property is to facilitate identification of that property, not to limit the attachment of the security interest to only after-acquired property kept at that location. Hudson Properties, Inc. v. Citizens & S. Nat'l Bank, 168 Ga. App. 331, 308 S.E.2d 708 (1983) (decided under former Code Section 11-9-204).  

Mobile homes. - Transaction between a mobile home manufacturer and a retail dealer, involving a mobile home claimed by a floor-plan financer, was a "sale or return," and the mobile home was subject to the financer's claim arising from a security interest in the dealer's after-acquired inventory without regard to whether the manufacturer was compensated for the mobile home. GECC v. Catalina Homes, Inc., 178 Ga. App. 319, 342 S.E.2d 734 (1986) (decided under former Code Section 11-9-204).  

Animals. - Where the security agreement signed by debtor for a loan did not cover after-acquired collateral, nor did it cover the offspring of the pigs purchased with these funds, the bank did not have a valid security interest in the offspring of the pigs. F & M Bank v. Alexander, 70 Bankr. 419 (M.D. Ga. 1987) (decided under former Code Section 11-9-204).  


 Consumer Goods


Truth in Lending Act. - Truth in Lending Act, 15 U.S.C.S. § 1601 et seq., requires lender to explain ten-day limitation of former subsection (2) of this section so that borrower is informed that any consumer goods which the borrower may acquire within ten days of loan transaction are subject to security interest and that any consumer goods acquired after that date are not. Glenn v. Trust Co., 152 Ga. App. 314, 262 S.E.2d 590 (1979) (decided under former Code Section 11-9-204).  
After-acquired property was included under the part in a security agreement providing that a loan was secured by "all equipment, accessories and parts added or attached thereto," and the failure of a lender to disclose in the agreement the ten-day limitation of former subsection (2) of this section on after-acquired property subject to the lender's security interest violated a regulation of the Truth in Lending Act. Brown v. Termplan, Inc., 693 F.2d 1047 (11th Cir. 1982) (decided under former Code Section 11-9-204).  
Failure to disclose ten-day limitation provided in former subsection (2) violates Truth in Lending Act. Lender violates Regulation Z § 226.8(b)(5), 15 U.S.C. Appx 12 CFR § 226.8, under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., by failing to disclose nature of its security interest retained in after-acquired consumer goods when it omits from its disclosure statement the ten-day limitation provided in former subsection (2) of this section. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-204).  
A disclosure statement accompanying a promissory note violated the federal Truth in Lending Act, 15 U.S.C.S. § 1601 et seq., for failing to disclose the ten-day limit imposed under former subsection (2) of this section. Varner v. Century Fin. Co., 738 F.2d 1143 (11th Cir. 1984) (decided under former Code Section 11-9-204).  

Consumer goods. - To determine whether after-acquired consumer goods within meaning of section are contemplated within scope of any particular security deed, one must look to language of deed and interpret it in light of Uniform Commercial Code as adopted by Georgia Legislature. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-204).  
Section permits security interest in after-acquired consumer goods acquired within ten-day limitation period. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-204).  

Equipment. - By definition equipment is not consumer goods, and as such, security interest in after-acquired equipment is unaffected by ten-day limitation imposed in former subsection (2) of this section. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-204).  


 Future Advances


Future advances. - Georgia courts have long recognized and enforced "future advance" schemes in security instruments to effectuate a cross collateralization of previously granted security interests to indebtedness thereafter arising. Safeway Fin. Co. v. Ward, 14 Bankr. 549 (S.D. Ga. 1981) (decided under former Code Section 11-9-204).  
Former subsection (3) of this section allows use of future advances clause in retaining security interests in personal property and requires only that obligation of future advances be covered by security agreement. Barksdale v. Peoples Fin. Corp., 393 F. Supp. 112 (N.D. Ga. 1975), aff'd, 578 F.2d 1185 (5th Cir. 1978), rev'd on other grounds sub nom. McDaniel v. Fulton Nat'l Bank, 543 F.2d 568 (5th Cir. 1976) (decided under former Code Section 11-9-204).  

Indebtedness arising in future. - Clause setting up open ended security interest which expressly provides that it shall extend to other indebtedness arising in future, makes clear intent of parties and will be given full effect to bind subsequently arising debts. Barksdale v. Peoples Fin. Corp., 393 F. Supp. 112 (N.D. Ga. 1975), aff'd, 578 F.2d 1185 (5th Cir. 1978), rev'd on other grounds sub nom. McDaniel v. Fulton Nat'l Bank, 543 F.2d 568 (5th Cir. 1976) (decided under former Code Section 11-9-204).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 85 et seq., 174 et seq., 234 et seq.  

C.J.S. - 72 C.J.S., Pledges, § 22.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-204.  

ALR. - What are "minerals" within deed, lease, or license, 17 A.L.R. 156; 86 A.L.R. 983.  
Construction and effect of "future advances" clauses under UCC Article 9, 90 A.L.R.4th 859.  

11-9-205. Use or disposition of collateral permissible.

Statute text
(a)  When security interest not invalid or fraudulent. A security interest is not invalid or fraudulent against creditors solely because:  
(1) The debtor has the right or ability to:  
(A) Use, commingle, or dispose of all or part of the collateral, including returned or repossessed goods;  
(B) Collect, compromise, enforce, or otherwise deal with collateral;  
(C) Accept the return of collateral or make repossessions; or  
(D) Use, commingle, or dispose of proceeds; or  
(2) The secured party fails to require the debtor to account for proceeds or replace collateral.  
(b)  Requirements of possession not relaxed. This Code 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.  

History
(Code 1981, § 11-9-205, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing the classification of a continuing security interest in changing collateral as an unenforceable preference under Section 60a of the Bankruptcy Act, see 1 Ga. L. Rev. 257 (1967). For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981).  

  For note examining the conflict between the floating lien in after-acquired property under the Uniform Commercial Code and the voidable preferences provisions of the Bankruptcy Act, see 9 Ga. L. Rev. 685 (1975).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Floating liens on inventory. - Floating liens against inventory, except insofar as security instrument itself may stipulate otherwise, are valid and debtor has no legal responsibility for keeping property or proceeds from sale sequestered. Sowards v. State, 137 Ga. App. 423, 224 S.E.2d 85 (1976) (decided under former Code Section 11-9-205).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, § 510.  

C.J.S. - 37 C.J.S., Fraudulent Conveyances, § 159.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-205.  

ALR. - Necessity and sufficiency of notice or statement prescribed by factor's lien law, 96 A.L.R.2d 727.  
Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.  
Uniform Commercial Code: failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 A.L.R.3d 401.  

11-9-206. Security interest arising in purchase or delivery of financial asset.

Statute text
(a)  Security interest when person buys through securities intermediary. A security interest in favor of a securities intermediary attaches to a person's security entitlement if:  
(1) 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  
(2) The securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary.  
(b)  Security interest secures obligation to pay for financial asset. The security interest described in subsection (a) of this Code section secures the person's obligation to pay for the financial asset.  
(c)  Security interest in payment against delivery transaction. 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:  
(1) The security or other financial asset:  
(A) In the ordinary course of business is transferred by delivery with any necessary indorsement or assignment; and  
(B) Is delivered under an agreement between persons in the business of dealing with such securities or financial assets; and  
(2) The agreement calls for delivery against payment.  
(d)  Security interest secures obligation to pay for delivery. The security interest described in subsection (c) of this Code section secures the obligation to make payment for the delivery.  

History
(Code 1981, § 11-9-206, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-206.  


PART 2

RIGHTS AND DUTIES


11-9-207. Rights and duties of secured party having possession or control of collateral.

Statute text
(a)  Duty of care when secured party in possession. Except as otherwise provided in subsection (d) of this Code section, 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.  
(b)  Expenses, risks, duties, and rights when secured party in possession. Except as otherwise provided in subsection (d) of this Code section, if a secured party has possession of collateral:  
(1) 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;  
(2) The risk of accidental loss or damage is on the debtor to the extent of a deficiency in any effective insurance coverage;  
(3) The secured party shall keep the collateral identifiable, but fungible collateral may be commingled; and  
(4) The secured party may use or operate the collateral:  
(A) For the purpose of preserving the collateral or its value;  
(B) As permitted by an order of a court having competent jurisdiction; or  
(C) Except in the case of consumer goods, in the manner and to the extent agreed by the debtor.  
(c)  Duties and rights when secured party in possession or control. Except as otherwise provided in subsection (d) of this Code section, a secured party having possession of collateral or control of collateral under Code Section 11-7-106, 11-9-104, 11-9-105, 11-9-106, or 11-9-107:  
(1) May hold as additional security any proceeds, except money or funds, received from the collateral;  
(2) Shall apply money or funds received from the collateral to reduce the secured obligation, unless remitted to the debtor; and  
(3) May create a security interest in the collateral.  
(d)  Buyer of certain rights to payment. If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor:  
(1) Subsection (a) of this Code section does not apply unless the secured party is entitled under an agreement:  
(A) To charge back uncollected collateral; or  
(B) 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  
(2) Subsections (b) and (c) of this Code section do not apply.  

History
(Code 1981, § 11-9-207, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-21/HB 451.)

Annotations
The 2010 amendment, effective May 27, 2010, inserted "11-7-106," in the introductory paragraph of subsection (c). See the Editor's notes for applicability.  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  


JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the provisions, decisions under former Code 1933, §§ 12-605 and 12-607 and former Code Section 11-9-207 are included in the annotations for this section.  

Value of collateral. - This Code section requires only that a creditor use reasonable care to preserve the value of the collateral; it does not impose a duty to increase the value of the collateral, such as by repairing a repossessed automobile. McMillian v. Bank S., 188 Ga. App. 355, 373 S.E.2d 61 (1988) (decided under former Code Section 11-9-207).  
Subsection (2)(c) of this section concerns increase in collateral held by secured party which, if money, must be paid to debtor or applied to reduce secured obligation. Twisdale v. Georgia R.R. Bank & Trust Co., 129 Ga. App. 18, 198 S.E.2d 396 (1973) (decided under former Code Section 11-9-207).  

Care and diligence of pawnee. - A pawnee is bound to exercise ordinary care and diligence, and whether such care has been exercised is question for jury. Johnson v. First Nat'l Bank, 53 Ga. App. 56, 184 S.E. 915 (1936) (decided under former Code 1933, § 12-605).  

Expenses and repairs. - A pawner is chargeable with necessary expenses and repairs on property pledged. Johnson v. First Nat'l Bank, 53 Ga. App. 56, 184 S.E. 915 (1936) (decided under former Code 1933, § 12-607).  

Negligence by creditor. - Where the creditor has negligently failed to perform its duty, which results in default on main debt, resulting injury or additional expense should be paid by creditor rather than by debtors. Irwin v. Life & Cas. Ins. Co., 204 Ga. 582, 50 S.E.2d 354 (1948) (decided under former Code 1933, § 12-605).  

Decline in value of collateral. - Pledgor of personalty cannot require pledgee to sell property, but where certain cotton was pledged to bank as security for note, and contract provided that pledgor should maintain excess of 10 percent in value of security over amount of debt, in default of which note should become due immediately, and where pledgor afterwards became alarmed by decline in cotton market and requested bank to sell, and bank refused, agreeing it would sell as soon as price of cotton declined to point where value of the cotton would not exceed amount of debt, breach of this agreement by bank could be set up in defense to suit on note. Johnson v. First Nat'l Bank, 53 Ga. App. 56, 184 S.E. 915 (1936) (decided under former Code 1933, §§ 12-605, 12-607).  

Cited in Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-207.  

11-9-208. Additional duties of secured party having control of collateral.

Statute text
(a)  Applicability of Code section. This Code 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.  
(b)  Duties of secured party after receiving demand from debtor. Within ten days after receiving an authenticated demand by the debtor:  
(1) A secured party having control of a deposit account under paragraph (2) of subsection (a) of Code Section 11-9-104 shall send to the bank with which the deposit account is maintained an authenticated statement that releases the bank from any further obligation to comply with instructions originated by the secured party;  
(2) A secured party having control of a deposit account under paragraph (3) of subsection (a) of Code Section 11-9-104 shall:  
(A) Pay the debtor the balance on deposit in the deposit account; or  
(B) Transfer the balance on deposit into a deposit account in the debtor's name;  
(3) A secured party, other than a buyer, having control of electronic chattel paper under Code Section 11-9-105 shall:  
(A) Communicate the authoritative copy of the electronic chattel paper to the debtor or its designated custodian;  
(B) If the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic chattel paper is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and  
(C) Take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party;  
(4) A secured party having control of investment property under paragraph (2) of subsection (d) of Code Section 11-8-106 or subsection (b) of Code Section 11-9-106 shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained an authenticated 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;  
(5) A secured party having control of a letter of credit right under Code Section 11-9-107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party an authenticated release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party; and  
(6) A secured party having control of an electronic document shall:  
(A) Give control of the electronic document to the debtor or its designated custodian;  
(B) If the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic document is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and  
(C) Take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authenticated copy which add or change an identified assignee of the authoritative copy without the consent of the secured party.  

History
(Code 1981, § 11-9-208, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-22/HB 451.)

Annotations
The 2010 amendment, effective May 27, 2010, deleted "and" at the end of paragraph (b)(4); substituted "; and" for a period at the end of paragraph (b)(5); and added paragraph (b)(6). See the Editor's notes for applicability.  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-208.  

11-9-209. Duties of secured party if account debtor has been notified of assignment.

Statute text
(a)  Applicability of Code section. Except as otherwise provided in subsection (c) of this Code section, this Code section applies if:  
(1) There is no outstanding secured obligation; and  
(2) The secured party is not committed to make advances, incur obligations, or otherwise give value.  
(b)  Duties of secured party after receiving demand from debtor. Within ten days after receiving an authenticated demand by the debtor, a secured party shall send to an account debtor that has received notification of an assignment to the secured party as assignee under subsection (a) of Code Section 11-9-406 an authenticated record that releases the account debtor from any further obligation to the secured party.  
(c)  Inapplicability to sales. This Code section does not apply to an assignment constituting the sale of an account, chattel paper, or payment intangible.  

History
(Code 1981, § 11-9-209, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-209.  

11-9-210. Request for accounting; request regarding list of collateral or statement of account.

Statute text
(a)  Definitions. As used in this Code section, the term:  
(1) "Request" means a record of a type described in paragraph (2), (3), or (4) of this subsection.  
(2) "Request for an accounting" means a record authenticated 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.  
(3) "Request regarding a list of collateral" means a record authenticated 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.  
(4) "Request regarding a statement of account" means a record authenticated 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.  
(b)  Duty to respond to requests. Subject to subsections (c), (d), (e), and (f) of this Code section, 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 14 days after receipt:  
(1) In the case of a request for an accounting, by authenticating and sending to the debtor an accounting; and  
(2) In the case of a request regarding a list of collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction.  
(c)  Request regarding list of collateral; statement concerning type of collateral. 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 an authenticated record including a statement to that effect within 14 days after receipt.  
(d)  Request regarding list of collateral; no interest claimed. A person that receives a request regarding a list of collateral, claims no interest in the collateral when it receives the request, and claimed an interest in the collateral at an earlier time shall comply with the request within 14 days after receipt by sending to the debtor an authenticated record:  
(1) Disclaiming any interest in the collateral; and  
(2) 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.  
(e)  Request for accounting or regarding a statement of account; no interest in obligation claimed. 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 14 days after receipt by sending to the debtor an authenticated record:  
(1) Disclaiming any interest in the obligations; and  
(2) 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.  
(f)  Charges for responses. A debtor is entitled without charge to one response to a request under this Code section during any six-month period. The secured party may require payment of a charge not exceeding $10.00 for each additional response.  

History
(Code 1981, § 11-9-210, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Requests by third persons. - Fact that this section provided for a request for information by debtor does not preclude a request being made by third person directly to creditor. Ayers v. Yancy Bros. Co., 141 Ga. App. 358, 233 S.E.2d 471 (1977) (decided under former Code Section 11-9-208).  
Should secured party fail to furnish information requested by third party, the third party should require debtor to obtain information from secured party and may refuse to complete transaction with debtor until such information is obtained and is satisfactory to subsequent party. Ayers v. Yancy Bros. Co., 141 Ga. App. 358, 233 S.E.2d 471 (1977) (decided under former Code Section 11-9-208).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 35, 547-549.  

C.J.S. - 72 C.J.S., Pledges, §§ 20, 27, 36-48.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-210.  

——————————
PART 3
PERFECTION AND PRIORITY



PART 1

LAW GOVERNING PERFECTION AND PRIORITY


11-9-301. Law governing perfection and priority of security interests.

Statute text
Except as otherwise provided in Code Sections 11-9-303 through 11-9-306, 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 Code 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 paragraph (4) of this Code section, while tangible negotiable documents, goods, instruments, money, or tangible chattel paper 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;  
(C) Perfection of a security interest in crops; and  
(D) The effect of perfection or nonperfection and the priority of a nonpossessory security interest in the collateral; and  
(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.  

History
(Code 1981, § 11-9-301, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-23/HB 451.)

Annotations
The 2010 amendment, effective May 27, 2010, inserted "tangible" in the middle of the introductory language of paragraph (3). See the Editor's notes for applicability.  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Failure to perfect after relocation of debtor. - Since the security interest was not perfected upon transfer of debtor's corporate offices to Georgia, the security interest was deemed unperfected upon the expiration of four months after the relocation to Georgia. United States v. Specialty Contracting & Supply, Inc., 140 Bankr. 922 (Bankr. N.D. Ga. 1992) (decided under former Code Section 11-9-103).  

Transfer of collateral. - Former Code Section 11-9-407(7), not former paragraph (3)(e) of this Code section was applicable when a debtor had transferred collateral encumbered by a security interest to another debtor. NCNB Nat'l Bank v. Major Leasing, Inc., 140 Bankr. 826 (Bankr. N.D. Ga. 1991) (decided under former Code Section 11-9-103).  


RESEARCH REFERENCES

C.J.S. - 79 C.J.S., Secured Transactions, § 88 et seq.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-301.  

11-9-302. Law governing perfection and priority of agricultural liens.

Statute text
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.  

History
(Code 1981, § 11-9-302, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-302.  

11-9-303. Law governing perfection and priority of security interests in goods covered by a certificate of title.

Statute text
(a)  Applicability of Code section. This Code 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.  
(b)  When goods covered by certificate of title. 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.  
(c)  Applicable law. 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.  

History
(Code 1981, § 11-9-303, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Security interest in car, perfected in another state. - Where creditor of car owner had perfected security interest in the car, and name of creditor as holder of security interest was shown on existing certificate of title issued by jurisdiction where car was located when security interest attached, creditors security interest perfected in North Carolina continued perfected in Georgia, and was valid against subsequent transferees. United Carolina Bank v. Sistrunk, 158 Ga. App. 107, 279 S.E.2d 272 (1981).  

Applying Canadian law to the facts of the case, a remote purchaser could not prevail over a creditor who had perfected its purchase money security interest in a truck within the time specified by Canadian law. Paccar Fin. Servs., Ltd. v. Johnson, 195 Ga. App. 412, 393 S.E.2d 685 (1990).  

Cited in Provident Bank v. Morequity, Inc., 262 Ga. App. 331, 585 S.E.2d 625 (2003).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-303.  

11-9-304. Law governing perfection and priority of security interests in deposit accounts.

Statute text
(a)  Law of bank's jurisdiction governs. 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 maintained with that bank.  
(b)  Bank's jurisdiction. The following rules determine a bank's jurisdiction for purposes of this part:  
(1) If an agreement between the bank and its customer governing the deposit account expressly provides that a particular jurisdiction is the bank's jurisdiction for purposes of this part, this article, or this title, that jurisdiction is the bank's jurisdiction;  
(2) If paragraph (1) of this subsection does not apply and an agreement between the bank and its customer governing the deposit account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the bank's jurisdiction;  
(3) If neither paragraph (1) nor (2) of this subsection applies and an agreement between the bank and its customer governing the deposit account expressly provides that the deposit account is maintained at an office in a particular jurisdiction, that jurisdiction is the bank's jurisdiction;  
(4) If none of the preceding paragraphs of this subsection 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; and  
(5) If none of the preceding paragraphs of this subsection applies, the bank's jurisdiction is the jurisdiction in which the chief executive office of the bank is located.  

History
(Code 1981, § 11-9-304, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2002, p. 995, § 4.)

Annotations
The 2002 amendment, effective July 1, 2002, substituted "its customer" for "the debtor" near the beginning of paragraph (b)(1).  

  Editor's notes. - Ga. L. 2002, p. 995, §  8, not codified by the General Assembly, provides that: "This Act shall become effective July 1, 2002, and shall apply to a letter of credit that is issued on or after July 1, 2002. This Act does not apply to a transaction, event, obligation, or duty arising out of or associated with a letter of credit that was issued before July 1, 2002."  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-304.  

11-9-305. Law governing perfection and priority of security interests in investment property.

Statute text
(a)  Governing law; general rules. Except as otherwise provided in subsection (c) of this Code section, the following rules apply:  
(1) 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;  
(2) The local law of the issuer's jurisdiction as specified in subsection (d) of Code Section 11-8-110 governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security;  
(3) The local law of the securities intermediary's jurisdiction as specified in subsection (e) of Code Section 11-8-110 governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account; and  
(4) 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.  
(b)  Commodity intermediary's jurisdiction. The following rules determine a commodity intermediary's jurisdiction for purposes of this part:  
(1) 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 this part, this article, or this title, that jurisdiction is the commodity intermediary's jurisdiction;  
(2) If paragraph (1) of this subsection 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;  
(3) If neither paragraph (1) nor (2) of this subsection 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;  
(4) If none of the preceding paragraphs of this subsection 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; and  
(5) If none of the preceding paragraphs of this subsection applies, the commodity intermediary's jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is located.  
(c)  When perfection governed by law of jurisdiction where debtor located. The local law of the jurisdiction in which the debtor is located governs:  
(1) Perfection of a security interest in investment property by filing;  
(2) Automatic perfection of a security interest in investment property created by a broker or securities intermediary; and  
(3) Automatic perfection of a security interest in a commodity contract or commodity account created by a commodity intermediary.  

History
(Code 1981, § 11-9-305, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 75-84, 841.  

C.J.S. - 82 C.J.S., Statutes, § 309.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-305.  

11-9-306. Law governing perfection and priority of security interests in letter of credit rights.

Statute text
(a)  Governing law; issuer's or nominated person's jurisdiction. Subject to subsection (c) of this Code section, 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.  
(b)  Issuer's or nominated person's jurisdiction. 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 Code Section 11-5-116.  
(c)  When Code section not applicable. This Code section does not apply to a security interest that is perfected only under subsection (d) of Code Section 11-9-308.  

History
(Code 1981, § 11-9-306, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-306.  

11-9-307. Location of debtor.

Statute text
(a)  "Place of business." As used in this Code section, the term "place of business" means a place where a debtor conducts its affairs.  
(b)  Debtor's location; general rules. Except as otherwise provided in this Code section, the following rules determine a debtor's location:  
(1) A debtor who is an individual is located at the individual's principal residence;  
(2) A debtor that is an organization and has only one place of business is located at its place of business; and  
(3) A debtor that is an organization and has more than one place of business is located at its chief executive office.  
(c)  Limitation of applicability of subsection (b) of this Code section. Subsection (b) of this Code section 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 (b) of this Code section does not apply, the debtor is located in the District of Columbia.  
(d)  Continuation of location; cessation of existence, etc. 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 (b) and (c) of this Code section.  
(e)  Location of registered organization organized under state law. A registered organization that is organized under the law of a state is located in that state.  
(f)  Location of registered organization organized under federal law; bank branches and agencies. Except as otherwise provided in subsection (i) of this Code section, 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:  
(1) In the state that the law of the United States designates, if the law designates a state of location;  
(2) 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 designating its main office, home office, or other comparable office; or  
(3) In the District of Columbia, if neither paragraph (1) nor (2) of this subsection applies.  
(g)  Continuation of location; change in status of registered organization. A registered organization continues to be located in the jurisdiction specified by subsection (e) or (f) of this Code section notwithstanding:  
(1) The suspension, revocation, forfeiture, or lapse of the registered organization's status as such in its jurisdiction of organization; or  
(2) The dissolution, winding up, or cancellation of the existence of the registered organization.  
(h)  Location of United States. The United States is located in the District of Columbia.  
(i)  Location of foreign bank branch or agency if licensed in only one state. 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.  
(j)  Location of foreign air carrier. A foreign air carrier under the Federal Aviation Act of 1958, as amended, is located at the designated office of the agent upon which service of process may be made on behalf of the carrier.  
(k)  Code section applies only to this part. This Code section applies only for purposes of this part.  

History
(Code 1981, § 11-9-307, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 3/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, added ", including by designating its main office, home office, or other comparable office" at the end of paragraph (f)(2).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-307.  


PART 2

PERFECTION


11-9-308. When security interest or agricultural lien is perfected; continuity of perfection.

Statute text
(a)  Perfection of security interest. Except as otherwise provided in this Code section and Code Section 11-9-309, a security interest is perfected if it has attached and all of the applicable requirements for perfection in Code Sections 11-9-310 through 11-9-316 have been satisfied. A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches.  
(b)  Perfection of agricultural lien. An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in Code Section 11-9-310 have been satisfied. An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective.  
(c)  Continuous perfection; perfection by different methods. A security interest or agricultural lien is perfected continuously if it is originally perfected by one method under this article and is later perfected by another method under this article, without an intermediate period when it was unperfected.  
(d)  Supporting obligation. Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.  
(e)  Lien securing right to payment. 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.  
(f)  Security entitlement carried in securities account. Perfection of a security interest in a securities account also perfects a security interest in the security entitlements carried in the securities account.  
(g)  Commodity contract carried in commodity account. Perfection of a security interest in a commodity account also perfects a security interest in the commodity contracts carried in the commodity account.  

History
(Code 1981, § 11-9-308, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations
Cross references. - When instruments requiring recording take effect, § 44-2-2.  
Law reviews. -  For note examining the conflict between the floating lien in after-acquired property under the Uniform Commercial Code and the voidable preferences provisions of the Bankruptcy Act, see 9 Ga. L. Rev. 685 (1975).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Perfection, generally. - Security interest is perfected when it has attached under former § 11-9-204(1) and when all applicable steps required for perfection have been taken under former § 11-9-312(4). Continental Oil Co. Agrico Chem. Co. Div. v. Sutton, 126 Ga. App. 78, 189 S.E.2d 925 (1972) (decided under former Code Section 11-9-303).  
To perfect a purchase money security interest and for it to be enforceable against debtor and third parties, there must be a written agreement, signed by debtor under former § 11-9-203(1)(b) and filing of financing statement under former § 11-9-302(1). Food Serv. Equip. Co. v. First Nat'l Bank, 121 Ga. App. 421, 174 S.E.2d 216 (1970) (decided under former Code Section 11-9-303).  

Judgment on note. - Judgment on debt for unpaid balance on note does not in itself operate to perfect security interest in collateral listed on note, and payee's rights are subordinate to those of lien creditor who has no knowledge of security interest. Fas-Pac, Inc. v. Fillingame, 123 Ga. App. 203, 180 S.E.2d 243 (1971) (decided under former Code Section 11-9-303).  

Extent of security interest. - In absence of special circumstances, security interest can attach only to extent of debtor's interest. First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284, 167 S.E.2d 190 (1969) (decided under former Code Section 11-9-303).  

Perfected security interest had priority over attempted reservation of title. - Peanut growers' attempted reservation of title when the growers delivered peanuts to a peanut company at a peanut broker's direction amounted to a security interest; however, the growers never perfected the growers' security interests. a cooperative bank's security interest in the peanuts was perfected as the growers had filed financing statements and the security interest had attached so that the bank's perfected security interest had priority over the growers' unperfected security interests. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).  

Cited in Mack Trucks, Inc. v. Ryder Truck Rental, Inc., 110 Ga. App. 68, 137 S.E.2d 718 (1964); Green v. King Edward Employees' Fed. Credit Union, 373 F.2d 613 (5th Cir. 1967); Johnson v. Dempsey, 117 Ga. App. 722, 161 S.E.2d 889 (1968); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134, 169 S.E.2d 720 (1969); Bank of Madison v. Tri-County Livestock Auction Co., 123 Ga. App. 768, 182 S.E.2d 687 (1971); Enterprises Now, Inc. v. Citizens & S. Dev. Corp., 135 Ga. App. 602, 218 S.E.2d 309 (1975); Tuftco Sales Corp. v. Garrison Carpet Mills, Inc., 158 Ga. App. 674, 282 S.E.2d 159 (1981); GTE Leasing Corp. v. Load-It, Inc., 860 F.2d 393 (11th Cir. 1988); Southern Horizons Aviation v. F & M Bank, 231 Ga. App. 55, 497 S.E.2d 637 (1998).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 288-293, 310, 311, 412-448.  

C.J.S. - 6A C.J.S., Assignments, §§ 79, 80, 85. 72 C.J.S., Pledges, § 22.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-308.  

11-9-309. Security interest perfected upon attachment.

Statute text
The following security interests are perfected when they attach:  

(1) A purchase money security interest in consumer goods, except as otherwise provided in subsection (b) of Code Section 11-9-311 with respect to consumer goods that are subject to a statute or treaty described in subsection (a) of Code Section 11-9-311;  
(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 Code Section 11-2-401 or 11-2-505, subsection (3) of Code Section 11-2-711, or subsection (5) of Code Section 11-2A-508, until the debtor obtains possession of the collateral;  
(7) A security interest of a collecting bank arising under Code Section 11-4-210;  
(8) A security interest of an issuer or nominated person arising under Code Section 11-5-118;  
(9) A security interest arising in the delivery of a financial asset under subsection (c) of Code Section 11-9-206;  
(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; and  
(13) A security interest created by an assignment of a beneficial interest in a decedent's estate.  

History
(Code 1981, § 11-9-309, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  Commercial Law, see 53 Mercer L. Rev. 153 (2001).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-309.  

ALR. - Creation and perfection of security interests in insurance proceeds under Article 9 of Uniform Commercial Code, 47 A.L.R.6th 347.  

11-9-310. When filing required to perfect security interest or agricultural lien; security interests and agricultural liens to which filing provisions do not apply.

Statute text
(a)  General rule; perfection by filing. Except as otherwise provided in subsection (b) of this Code section and subsection (b) of Code Section 11-9-312, a financing statement must be filed to perfect all security interests and agricultural liens.  
(b)  Exceptions; filing not necessary. The filing of a financing statement is not necessary to perfect a security interest:  
(1) That is perfected under subsection (d), (e), (f), or (g) of Code Section 11-9-308;  
(2) That is perfected under Code Section 11-9-309 when it attaches;  
(3) In property subject to a statute, regulation, or treaty described in subsection (a) of Code Section 11-9-311;  
(4) In goods in possession of a bailee which is perfected under paragraph (1) or (2) of subsection (d) of Code Section 11-9-312;  
(5) In certificated securities, documents, goods, or instruments which is perfected without filing, control, or possession under subsection (e), (f), or (g) of Code Section 11-9-312;  
(6) In collateral in the secured party's possession under Code Section 11-9-313;  
(7) In a certificated security which is perfected by delivery of the security certificate to the secured party under Code Section 11-9-313;  
(8) In deposit accounts, electronic chattel paper, electronic documents, investment property, or letter of credit rights which is perfected by control under Code Section 11-9-314;  
(9) In proceeds which is perfected under Code Section 11-9-315; or  
(10) That is perfected under Code Section 11-9-316.  
(c)  Assignment of perfected security interest. If a secured party assigns a perfected security interest or agricultural lien, a filing under this article is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor.  

History
(Code 1981, § 11-9-310, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-24/HB 451.)

Annotations
The 2010 amendment, effective May 27, 2010, inserted ", control," in paragraph (b)(5); and inserted "electronic documents," in paragraph (b)(8). See the Editor's notes for applicability.  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  
Law reviews. -  For article discussing the classification of a continuing security interest in changing collateral as an unenforceable preference under Section 60a of the Bankruptcy Act, see 1 Ga. L. Rev. 257 (1967). For article, "Security Transfers by Secured Parties," see 4 Ga. L. Rev. 527 (1970). For article, "Commercial Law," see 53 Mercer L. Rev. 153 (2001).  

  For note examining the conflict between the floating lien in after-acquired property under the Uniform Commercial Code and the voidable preferences provisions of the Bankruptcy Act, see 9 Ga. L. Rev. 685 (1975).  

  For comment on Maley v. National Acceptance Co., 250 F. Supp. 841 (N.D. Ga. 1966), see 3 Ga. St. B.J. 248 (1966).  


JUDICIAL DECISIONS
 
		ANALYSIS
   	General Consideration
   	Perfection by Possession
   	Consumer Goods
   	Assignments of Accounts
   	Motor Vehicles
 


 General Consideration


Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Filing of financing statement can perfect only those interests acquired through security agreements. Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393 (1971) (decided under former Code Section 11-9-302).  

Financing statements and security agreements distinguished. - Financing statement merely gives notice of existence of security interest but in itself does not create a security interest, for which a security agreement is required. Trust Co. v. Associated Grocers Co-Op., 152 Ga. App. 701, 263 S.E.2d 676 (1979) (decided under former Code Section 11-9-302).  

Requirements to perfect purchase money security interests. - To perfect a purchase money security interest and for it to be enforceable against debtor and third parties, there must be a written agreement, signed by debtor under former § 11-9-203(1)(b) and filing of financing statement under former § 11-9-302(1) (see now § 11-9-310). Food Serv. Equip. Co. v. First Nat'l Bank, 121 Ga. App. 421, 174 S.E.2d 216 (1970) (decided under former Code Section 11-9-302).  

Creditor did not file financing statement. - Georgia's Article 9 of the Uniform Commercial Code requires proper filing of a financing statement in order to perfect an interest in personal property. The creditor did not dispute that a financing statement indicating the creditor's security interest in any of the debtor's personal property had not been filed and, therefore, the creditor held an unperfected security interest in the debtor's personal property, including the debtor's inventory and its proceeds; thus, the creditor was not an entity with an interest in cash collateral within the meaning of 11 U.S.C. § 363. In re Shree Meldikrupa Inc.,    Bankr.    (Bankr. S.D. Ga. Jan. 15, 2016).  

Computer information and programming. - Computer information and programming recorded on magnetic tape were "general intangibles" which are not included in the types of collateral in which security interests can be perfected by possession under former § 11-9-305 (see now § 11-9-313), and a security interest therein could therefore only be perfected by filing a financing statement. Dabney v. Information Exch., Inc., 98 Bankr. 603 (Bankr. N.D. Ga. 1989) (decided under former Code Section 11-9-302).  

Pre-petition enforcement. - Creditor had a valid post-petition lien in rents, profits, and proceeds from a Chapter 11 debtor's hotel operations, though the creditor took no pre-petition enforcement action under Georgia law, as its lien in the pre-petition rents was valid from the time of recording, and the lien in post-petition rents was valid from the time of the bankruptcy filing. In re Resort Inns, Inc.,    Bankr.    (Bankr. S.D. Ga. Aug. 30, 2004).  

Security interest in accounts. - This section required filing of financing statement to perfect security interest in accounts. M.D. Hodges Enters., Inc. v. First Ga. Bank, 243 Ga. 664, 256 S.E.2d 350 (1979) (decided under former Code Section 11-9-302).  

Equipment lessors. - To take precedence over previously recorded loan deed covering subsequently purchased equipment, equipment lessor must perfect security interest. Citizens & S. Equip. Leasing, Inc. v. Atlanta Fed. Sav. & Loan Ass'n, 144 Ga. App. 800, 243 S.E.2d 243 (1978) (decided under former Code Section 11-9-302).  

Banks. - Bank perfected security interest by filing UCC financing statement. See Trust Co. Bank v. Walker, 35 Bankr. 237 (Bankr. N.D. Ga. 1983) (decided under former Code Section 11-9-302).  


 Perfection by Possession


Security interest in money is perfected by possession. - Security interest in money (either originally given or received as proceeds from negotiation of instrument) is perfected by possession. In re Atlanta Times, Inc., 259 F. Supp. 820 (N.D. Ga. 1966), aff'd sub. nom. Sanders v. National Acceptance Co. of Am., 383 F.2d 606 (5th Cir. 1967) (decided under former Code Section 11-9-302).  

Perfected security interest had priority over attempted reservation of title. - Peanut growers' attempted reservation of title when the growers delivered peanuts to a peanut company at a peanut broker's direction amounted to a security interest; however, the growers never perfected the growers' security interests. A cooperative bank's security interest in the peanuts was perfected as the bank had filed financing statements and the security interest had attached so that the bank's perfected security interest had priority over the growers' unperfected security interests. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).  


 Consumer Goods


Constitutionality. - This section, pursuant to which purchase money security interest in consumer goods is perfected without filing, does not violate equal protection, is a rational classification, and does not violate due process because it does not provide notice by filing, since existence of exception is sufficient to put corporate entities on notice. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-302).  

Purpose of description in unfiled security agreement. - Purchase money security agreements on consumer goods are not required to be filed, and purpose of description of collateral in unfiled security agreement is not to give notice, as on a financing statement, but is to provide identification of collateral so as to avoid disputes over its identity. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-302).  

Interest in consumer goods cannot exceed price. - Purchase money security interest must be in the item purchased, and if vendor of consumer goods is to be protected despite absence of filing security interest cannot exceed price of item purchased in transaction out of which it arose. Roberts Furn. Co. v. Pierce, 507 F.2d 990 (5th Cir. 1975) (decided under former Code Section 11-9-302).  

Household goods. - A purchase-money security interest in household goods is automatically perfected without filing. Dennis v. W.S. Badcock Corp., 31 Bankr. 128 (Bankr. M.D. Ga. 1983) (decided under former Code Section 11-9-302).  


 Assignments of Accounts


Filing requirements. - Financing statement must be filed to perfect all security interests unless assignment to assignee does not transfer a significant part of outstanding contract rights of assignor. Park Ave. Bank v. Bassford, 232 Ga. 216, 205 S.E.2d 861 (1974) (decided under former Code Section 11-9-302).  

Exceptions from filing requirements. - Official comment to this section indicates that exception from filing for isolated or casual assignment of accounts is not available to "any person who regularly takes assignments of any debtor's account"; a bank which regularly loans money and accepts accounts as security must file to perfect its security interests and cannot rely on automatic perfection. M.D. Hodges Enters., Inc. v. First Ga. Bank, 243 Ga. 664, 256 S.E.2d 350 (1979) (decided under former Code Section 11-9-302).  

Assignment of future proceeds. - Debtor's assignment to bank of specific amounts from future proceeds from debtor's business was not exempted from this article and was required to be perfected by the filing of a financing statement. Bank of Cave Spring v. Gold Kist, Inc., 173 Ga. App. 679, 327 S.E.2d 800 (1985) (decided under former Code Section 11-9-302).  


 Motor Vehicles


Inventory. - Security interest in automobiles in dealer's inventory must be perfected under this article. Staley v. Phelan Fin. Corp., 116 Ga. App. 1, 156 S.E.2d 201 (1967). But see In re Chappell, 224 Bankr. 507 (Bankr. M.D. Ga. 1998).  

Motor Vehicle Certificate of Title Act. - Security interest in motor vehicle may be perfected under Motor Vehicle Certificate of Title Act, Ga. L. 1968, p. 68 et seq., if created by other than a dealer or manufacturer or under Uniform Commercial Code if by a dealer or manufacturer. Guardian Disct. Co. v. Settles, 114 Ga. App. 418, 151 S.E.2d 530 (1966) (decided under former Code Section 11-9-302).  
As a result of adoption of former § 11-9-302 and the UCC, the only way to perfect security interest in motor vehicles is by filing under Motor Vehicle Certificate of Title Act, Ga. L. 1968, p. 68 et seq. Staley v. Phelan Fin. Corp., 116 Ga. App. 1, 156 S.E.2d 201 (1967); General Fin. Corp. v. Hester, 141 Ga. App. 28, 232 S.E.2d 375 (1977); Freeman v. Bentley, 205 Ga. App. 409, 422 S.E.2d 435 (1992). But see In re Chappell, 224 Bankr. 507 (Bankr. M.D. Ga. 1998).  

Centralized method of filing security interests in vehicles. - Legal result of passage of Uniform Commercial Code was to replace prior law and provide for only one centralized method of filing security interests in pre-1963 motor vehicles. Any such security interest filed subsequent to effective date of Uniform Commercial Code, to be valid, must be filed pursuant to provisions of the Georgia Motor Vehicle Certificate of Title Act, Ga. L. 1968, p. 68 et seq. Maley v. National Acceptance Co., 250 F. Supp. 841 (N.D. Ga. 1966). But see In re Chappell, 224 Bankr. 507 (Bankr. M.D. Ga. 1998).  

Innocent third-party purchaser protected. - Under this section and the Motor Vehicle Certificate of Title Act, O.C.G.A. §§ 40-3-20, 40-3-50, 40-3-51, the rights of the holder of an unperfected security interest in an automobile are subordinate to the rights of an innocent third party who acquires the automobile for value. A party who purchases a car from another party, who purchased the car at a judicial sale after the car, which had an unperfected security interest on it, was sold to satisfy a judgment against the owner's spouse, is such an innocent party. May v. Macioce, 200 Ga. App. 542, 409 S.E.2d 45, cert. denied, 200 Ga. App. 896, 409 S.E.2d 45 (1991) (decided under former Code Section 11-9-302).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 15, 39-69, 104, 106, 110, 127, 128, 149, 150, 192 et seq., 282, 288 et seq., 304, 306, 323, 437-461, 796, 907.  

C.J.S. - 6A C.J.S., Assignments, §§ 79, 80, 85. 72 C.J.S., Pledges, § 23.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-310.  

ALR. - Rights of holders of different notes in respect of collateral securing them, 52 A.L.R. 1391.  
Retention of check received by drawee bank for collection as payment of check, 68 A.L.R. 862.  
Assignees for creditors as within protection of statute requiring filing or recording of conditional-sale contract or chattel mortgage, 71 A.L.R. 981.  
Assignability of contemplated debt before execution of agreement by which it is to be created, 116 A.L.R. 955.  
Federal government or agencies of federal government as subject to payment of tax or fee imposed upon, or for, recording or filing instrument, 124 A.L.R. 1267.  
Coverage of "nonrecording" or "nonfiling" insurance against loss from failure to record chattel mortgage, conditional sale, or other security instrument, 51 A.L.R.2d 325.  
Construction and effect of UCC Article 9, dealing with secured transactions, sales of accounts, contract rights, and chattel paper, 30 A.L.R.3d 9; 67 A.L.R.3d 308; 69 A.L.R.3d 1162; 76 A.L.R.3d 11; 99 A.L.R.3d 807; 99 A.L.R.3d 1080; 100 A.L.R.3d 10; 100 A.L.R.3d 940; 7 A.L.R.4th 308; 11 A.L.R.4th 241; 25 A.L.R.5th 696.  
Determination of purchase price of farm equipment for purposes of UCC § 9-302(1)(c) excusing filing of financing statement, 85 A.L.R.3d 1037.  
When is filing of financing statement necessary to perfect an assignment of accounts under UCC § 9-302(1)(e), 85 A.L.R.3d 1050.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  
Construction and effect of "future advances" clauses under UCC Article 9, 90 A.L.R.4th 859.  
Creation and perfection of security interests in insurance proceeds under Article 9 of Uniform Commercial Code, 47 A.L.R.6th 347.  

11-9-311. Perfection of security interests in property subject to certain statutes, regulations, and treaties.

Statute text
(a)  Security interest subject to other law. Except as otherwise provided in subsection (d) of this Code section, the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:  
(1) 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 (a) of Code Section 11-9-310;  
(2) Chapter 3 of Title 40; or  
(3) 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.  
(b)  Compliance with other law. Compliance with the requirements of a statute, regulation, or treaty described in subsection (a) of this Code section for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this article. Except as otherwise provided in subsection (d) of this Code section, in Code Section 11-9-313, and in subsections (d) and (e) of Code Section 11-9-316 for goods covered by a certificate of title, a security interest in property subject to a statute, regulation, or treaty described in subsection (a) of this Code section 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.  
(c)  Duration and renewal of perfection. Except as otherwise provided in subsection (d) of this Code section and subsections (d) and (e) of Code Section 11-9-316, 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 (a) of this Code section are governed by the statute, regulation, or treaty. In other respects, the security interest is subject to this article.  
(d)  Inapplicability to certain inventory. During any period in which collateral subject to a statute specified in paragraph (2) of subsection (a) of this Code section 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 Code section does not apply to a security interest in that collateral created by that person.  

History
(Code 1981, § 11-9-311, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 4/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, in paragraph (a)(3), deleted "certificate of title" preceding "statute" at the beginning and substituted "a certificate of title" for "the certificate" near the middle.  


JUDICIAL DECISIONS

 Security interest unperfected. - Where the creditor's security interest was never recorded on the certificates of title and the vehicles were required to have certificates of title under O.C.G.A. §§ 40-3-4 and 40-3-20, under O.C.G.A. § 11-9-311(a)(2), the filing of a financing statement was not effective to perfect the security interest in the vehicles; thus, the debtor's bankruptcy trustee could avoid the creditor's security interest in the vehicles. Tidwell v. First Cmty. Bank (In re Charley's Auto., Inc.),    Bankr.    (Bankr. M.D. Ga. May 8, 2003).  

Property subject to motor vehicle certificate of title act. - Georgia Code is very clear that the filing of a financing statement is not effective to perfect a security interest in property subject to the Motor Vehicle Certificate of Title Act, O.C.G.A. T. 40, C. 3. In re Blair,    Bankr.    (Bankr. S.D. Ga. June 2, 2005).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-311.  

11-9-312. Perfection of security interests in chattel paper, deposit accounts, documents, goods covered by documents, instruments, investment property, letter of credit rights, and money; perfection by permissive filing; temporary perfection without filing or transfer of possession.

Statute text
(a)  Perfection by filing permitted. A security interest in chattel paper, negotiable documents, instruments, or investment property may be perfected by filing.  
(b)  Control or possession of certain collateral. Except as otherwise provided in subsections (c) and (d) of Code Section 11-9-315 for proceeds:  
(1) A security interest in a deposit account may be perfected only by control under Code Section 11-9-314;  
(2) Except as otherwise provided in subsection (d) of Code Section 11-9-308, a security interest in a letter of credit right may be perfected only by control under Code Section 11-9-314; and  
(3) A security interest in money may be perfected only by the secured party's taking possession under Code Section 11-9-313.  
(c)  Goods covered by negotiable document. While goods are in the possession of a bailee that has issued a negotiable document covering the goods:  
(1) A security interest in the goods may be perfected by perfecting a security interest in the document; and  
(2) 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.  
(d)  Goods covered by nonnegotiable document. While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by:  
(1) Issuance of a document in the name of the secured party;  
(2) The bailee's receipt of notification of the secured party's interest; or  
(3) Filing as to the goods.  
(e)  Temporary perfection; new value. A security interest in certificated securities, negotiable documents, or instruments is perfected without filing or the taking of possession or control for a period of 20 days from the time it attaches to the extent that it arises for new value given under an authenticated security agreement.  
(f)  Temporary perfection; goods or documents made available to debtor. 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 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of:  
(1) Ultimate sale or exchange; or  
(2) Loading, unloading, storing, shipping, transshipping, manufacturing, processing, or otherwise dealing with them in a manner preliminary to their sale or exchange.  
(g)  Temporary perfection; delivery of security certificate or instrument to debtor. A perfected security interest in a certificated security or instrument remains perfected for 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:  
(1) Ultimate sale or exchange; or  
(2) Presentation, collection, enforcement, renewal, or registration of transfer.  
(h)  Expiration of temporary perfection. After the 20 day period specified in subsection (e), (f), or (g) of this Code section expires, perfection depends upon compliance with this article.  

History
(Code 1981, § 11-9-312, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-25/HB 451.)

Annotations
The 2010 amendment, effective May 27, 2010, inserted "or control" in the middle of subsection (e). See the Editor's notes for applicability.  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  
Law reviews. -  For article, "Security Transfers by Secured Parties," see 4 Ga. L. Rev. 527 (1970).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 18, 38, 51-53, 109, 288 et seq., 304, 310, 311, 445, 448, 455, 495-509, 534-537, 926-930.  

C.J.S. - 6A C.J.S., Assignments, §§ 79, 80, 85. 72 C.J.S., Pledges, § 22.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-312.  

ALR. - Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  
Perfection of security interests by possession, delivery, or control under revised Article 9 of Uniform Commercial Code, 53 A.L.R.6th 159.  

11-9-313. When possession by or delivery to secured party perfects security interest without filing.

Statute text
(a)  Perfection by possession or delivery. Except as otherwise provided in subsection (b) of this Code section, a secured party may perfect a security interest in tangible negotiable documents, goods, instruments, money, or tangible chattel paper 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 Code Section 11-8-301.  
(b)  Goods covered by certificate of title. 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 (d) of Code Section 11-9-316.  
(c)  Collateral in possession of person other than debtor. 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:  
(1) The person in possession authenticates a record acknowledging that it holds possession of the collateral for the secured party's benefit; or  
(2) The person takes possession of the collateral after having authenticated a record acknowledging that it will hold possession of collateral for the secured party's benefit.  
(d)  Time of perfection by possession; continuation of perfection. If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs no earlier than the time the secured party takes possession and continues only while the secured party retains possession.  
(e)  Time of perfection by delivery; continuation of perfection. A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under Code Section 11-8-301 and remains perfected by delivery until the debtor obtains possession of the security certificate.  
(f)  Acknowledgment not required. A person in possession of collateral is not required to acknowledge that it holds possession for a secured party's benefit.  
(g)  Effectiveness of acknowledgment; no duties or confirmation. If a person acknowledges that it holds possession for the secured party's benefit:  
(1) The acknowledgment is effective under subsection (c) of this Code section or subsection (a) of Code Section 11-8-301, even if the acknowledgment violates the rights of a debtor; and  
(2) Unless the person otherwise agrees or law other than this article otherwise provides, the person does not owe any duty to the secured party and is not required to confirm the acknowledgment to another person.  
(h)  Secured party's delivery to person other than debtor. 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:  
(1) To hold possession of the collateral for the secured party's benefit; or  
(2) To redeliver the collateral to the secured party.  
(i)  Effect of delivery under subsection (h) of this Code section; no duties or confirmation. A secured party does not relinquish possession, even if a delivery under subsection (h) of this Code section violates the rights of a debtor. A person to which collateral is delivered under subsection (h) of this Code section 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 article otherwise provides.  

History
(Code 1981, § 11-9-313, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-26/HB 451.)

Annotations
The 2010 amendment, effective May 27, 2010, inserted "tangible" in the middle of the first sentence of subsection (a). See the Editor's notes for applicability.  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  
Law reviews. -  For note, "Limits on Residential Mortgage Lender Protection Section 1322(b) of the Bankruptcy Code," see 9 Ga. St. U.L. Rev. 647 (1993).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Scope of section. - This section deals with perfection of security interests so as to protect and give priority to secured creditors over claims of third parties in personal property taken as security; it does not govern creation of property rights or security interests. McCrackin v. Hayes, 118 Ga. App. 267, 163 S.E.2d 246 (1968) (decided under former Code Section 11-9-305).  

Money. - Security interest in money (either originally given or received as proceeds from negotiation of instrument) is perfected by possession. In re Atlanta Times, Inc., 259 F. Supp. 820 (N.D. Ga. 1966), aff'd sub nom. Sanders v. National Acceptance Co. of Am., 383 F.2d 606 (5th Cir. 1967) (decided under former Code Section 11-9-305).  

Escrow account. - Creditor's security interest in escrow account perfected by possession. Dent v. Associates Equity Servs. Co., 130 Bankr. 623 (Bankr. S.D. Ga. 1991) (decided under former Code Section 11-9-305).  

Rights vested. - This provision does not nullify rule that "transfer of instrument vests in transferee such rights as transferor has." McCrackin v. Hayes, 118 Ga. App. 267, 163 S.E.2d 246 (1968) (decided under former Code Section 11-9-305).  

Ring. - Creditor perfected its security interest in a diamond ring by taking possession of it. First Am. Bank & Trust Co. v. Harris (In re Stewart), 74 Bankr. 350 (Bankr. M.D. Ga. 1987) (decided under former Code Section 11-9-305).  

Computer information and programming. - Computer information and programming recorded on magnetic tape were "general intangibles" which are not included in the types of collateral in which security interests can be perfected by possession under former § 11-9-305 (see now § 11-9-313), and a security interest therein could therefore only be perfected by filing a financing statement. Dabney v. Information Exch., Inc., 98 Bankr. 603 (Bankr. N.D. Ga. 1989) (decided under former Code Section 11-9-305).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 16, 49, 55, 109, 288 et seq., 444-479.  

C.J.S. - 6A C.J.S., Assignments, §§ 79, 80, 85. 72 C.J.S., Pledges, § 22.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-313.  

ALR. - Rights of holders of different notes in respect of collateral securing them, 52 A.L.R. 1391.  
Perfection of security interests by possession, delivery, or control under revised Article 9 of Uniform Commercial Code, 53 A.L.R.6th 159.  

11-9-314. Perfection by control.

Statute text
(a)  Perfection by control. A security interest in investment property, deposit accounts, letter of credit rights, electronic chattel paper, or electronic documents may be perfected by control of the collateral under Code Section 11-7-106, 11-9-104, 11-9-105, 11-9-106, or 11-9-107.  
(b)  Specified collateral; time of perfection by control; continuation of perfection. A security interest in deposit accounts, electronic chattel paper, letter of credit rights, or electronic documents is perfected by control under Code Section 11-7-106, 11-9-104, 11-9-105, or 11-9-107 when the secured party obtains control and remains perfected by control only while the secured party retains control.  
(c)  Investment property; time of perfection by control; continuation of perfection. A security interest in investment property is perfected by control under Code Section 11-9-106 from the time the secured party obtains control and remains perfected by control until:  
(1) The secured party does not have control; and  
(2) One of the following occurs:  
(A) If the collateral is a certificated security, the debtor has or acquires possession of the security certificate;  
(B) If the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner; or  
(C) If the collateral is a security entitlement, the debtor is or becomes the entitlement holder.  

History
(Code 1981, § 11-9-314, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-27/HB 451.)

Annotations
The 2010 amendment, effective May 27, 2010, in subsection (a), substituted "electronic chattel paper, or electronic documents" for "or electronic chattel paper" and inserted "11-7-106,"; and, in subsection (b), substituted "letter of credit rights, or electronic documents" for "or letter of credit rights" near the beginning and inserted "11-7-106". See the Editor's notes for applicability.  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-314.  

ALR. - Perfection of security interests by possession, delivery, or control under revised Article 9 of Uniform Commercial Code, 53 A.L.R.6th 159.  

11-9-315. Secured party's rights on disposition of collateral and in proceeds.

Statute text
(a)  Disposition of collateral; continuation of security interest or agricultural lien; proceeds. Except as otherwise provided in this article and in subsection (2) of Code Section 11-2-403:  
(1) 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  
(2) A security interest attaches to any identifiable proceeds of collateral.  
(b)  When commingled proceeds identifiable. Proceeds that are commingled with other property are identifiable proceeds:  
(1) If the proceeds are goods, to the extent provided by Code Section 11-9-336; and  
(2) 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 article with respect to commingled property of the type involved.  
(c)  Perfection of security interest in proceeds. A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.  
(d)  Continuation of perfection. A perfected security interest in proceeds becomes unperfected on the twenty-first day after the security interest attaches to the proceeds unless:  
(1) The following conditions are satisfied:  
(A) A filed financing statement covers the original collateral;  
(B) 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  
(C) The proceeds are not acquired with cash proceeds;  
(2) The proceeds are identifiable cash proceeds; or  
(3) The security interest in the proceeds is perfected other than under subsection (c) of this Code section when the security interest attaches to the proceeds or within 20 days thereafter.  
(e)  When perfected security interest in proceeds becomes unperfected. If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under paragraph (1) of subsection (d) of this Code section becomes unperfected at the later of:  
(1) When the effectiveness of the filed financing statement lapses under Code Section 11-9-515 or is terminated under Code Section 11-9-513; or  
(2) The twenty-first day after the security interest attaches to the proceeds.  

History
(Code 1981, § 11-9-315, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing the classification of a continuing security interest in changing collateral as an unenforceable preference under Section 60a of the Bankruptcy Act, see 1 Ga. L. Rev. 257 (1967). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981). For article, "Preparing the Georgia Farmer (or Other Smaller Entrepreneur) for Bankruptcy," see 22 Ga. State Bar J. 186 (1986). For annual survey article on commercial law, see 50 Mercer L. Rev. 193 (1998).  

  For note discussing creditor's remedy of direct collection of accounts and instruments owed to the defaulting debtor, see 3 Ga. L. Rev. 198 (1968).  

  For comment on Sherrock v. Commercial Credit Corp., 290 A.2d 648 (Del. S. Ct. 1972), see 10 Ga. St. B.J. 110 (1973).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Construction. - This statute is in derogation of common law and must be strictly construed and followed. Citizens & S. Nat'l Bank v. Weyerhaeuser Co., 152 Ga. App. 176, 262 S.E.2d 485 (1979) (decided under former Code Section 11-9-306).  

Security interest in money. - Security interest in money (either originally given or received as proceeds from negotiation of instrument) is perfected by possession. In re Atlanta Times, Inc., 259 F. Supp. 820 (N.D. Ga. 1966), aff'd sub nom. Sanders v. National Acceptance Co. of Am., 383 F.2d 606 (5th Cir. 1967) (decided under former Code Section 11-9-306).  

Continuation of security interest. - Security interest continues in collateral notwithstanding sale, exchange, or other disposition, unless authorized by secured party. Commercial Credit Equip. Corp. v. Bates, 159 Ga. App. 910, 285 S.E.2d 560 (1981) (decided under former Code Section 11-9-306).  
Security interest remains perfected in property transferred without secured creditor's knowledge or consent. Abney v. Nikko Audio (In re Environmental Elec. Sys.), 2 Bankr. 583 (N.D. Ga. 1980) (decided under former Code Section 11-9-306).  
Any time a debtor sells collateral and the sale is not authorized by a secured party, the lien continues in the property in hands of third-party purchaser. Moister v. National Bank (In re Guaranteed Muffler Supply Co.), 1 Bankr. 324 (Bankr. N.D. Ga. 1979) (decided under former Code Section 11-9-306).  
Where contract for the use of equipment was correctly held to be a sales contract which created a security interest, such security interest continued in collateral notwithstanding sale to a third party where the disposition was not authorized by the secured party as would have been evident from the filing of a financing statement. Mann Inv. Co. v. Columbia Nitrogen Corp., 173 Ga. App. 77, 325 S.E.2d 612 (1984) (decided under former Code Section 11-9-306).  
Georgia bank's perfected security interest was not terminated when it consented to the sale of the equipment to the debtor subject to its security interest. Loeb v. Franchise Distribs., Inc. (In re Franchise Sys.), 46 Bankr. 158 (Bankr. N.D. Ga. 1985) (decided under former Code Section 11-9-306).  

Bankruptcy debtor's unearned postpetition income. - Bankruptcy debtor's unearned postpetition income under a contract for employment did not constitute "proceeds" of creditor's prepetition interest in accounts receivable. In re Rumker, 184 Bankr. 621 (Bankr. S.D. Ga. 1995).  

Unauthorized disposition of collateral. - When debtor makes unauthorized disposition of collateral, secured party may maintain action for conversion against subsequent purchaser. United States v. McCleskey Mills, Inc., 409 F.2d 1216 (5th Cir. 1969) (decided under former Code Section 11-9-306).  

Commingled funds. - In event of insolvency proceedings by or against debtor, secured party's perfected security interest extends to all cash and bank accounts of debtor, if cash proceeds have been commingled or deposited with other funds in such accounts, subject, however, to any right of setoff. Citizens & S. Nat'l Bank v. Weyerhaeuser Co., 152 Ga. App. 176, 262 S.E.2d 485 (1979) (decided under former Code Section 11-9-306).  
Under former subsection (4)(d)(ii), when a debtor has commingled proceeds of collateral with other cash or in a deposit account, the ceiling on the secured creditor's recovery from the account is the amount of cash proceeds received by the debtor within the ten days prior to the filing of the petition, regardless of whether such proceeds were actually deposited in the account. Small v. Collegedale Distribs. (In re Unity Foods, Inc.), 75 Bankr. 222 (Bankr. N.D. Ga. 1987) (decided under former Code Section 11-9-306).  

Insurance benefits considered "proceeds" and subject to lender's security interest. - Insurance benefits payable from a third-party tortfeasor's insurer upon the destruction of a vehicle became "proceeds," subject to a lender's security interest, before payment to the victims. JCS Enter., Inc. v. Vanliner Ins., 227 Ga. App. 371, 489 S.E.2d 95 (1997).  
Bankruptcy court found that under the security deed the credit company held a valid security interest in the destroyed property and the security deed provided sufficient language to grant the credit company a security interest in the proceeds of the collateral, including any insurance proceeds. Altegra Credit Co. v. Ford Motor Credit Co. (In re Brantley), 286 Bankr. 918 (Bankr. S.D. Ga. 2002).  

Proceeds of collateral. - Under former Georgia law, proceeds included insurance payable by reason of loss or damage to collateral but returned or unearned insurance premiums are in no sense a substitute for specified collateral and cannot be held to constitute its proceeds. Blalock v. Aetna Fin. Co., 511 F. Supp. 33 (N.D. Ga. 1980) (decided under former Code Section 11-9-306).  
Creditor that had purchased the debtor's accounts receivable did not hold the first priority lien against the assets, and could not assert equitable subrogation, because the creditor exercised inexcusable neglect in failing to perfect the creditor's own lien. Debtor's estate retained an interest in receivables under O.C.G.A. § 11-9-315(a)(1). Kerr v. Commer. Credit Group, Inc. (In re Siskey Hauling Co.), 456 Bankr. 597 (Bankr. N.D. Ga. 2011).  

Lien attached to proceeds. - The Farmers Home Administration, which had a prepetition security agreement extending to the livestock, farm products, increases, replacements, substitutions and additions of the bankruptcy debtors, had a lien which attached to the proceeds of the sales of milk produced and sold after the bankruptcy filing. United States v. Hollie, 42 Bankr. 111 (Bankr. M.D. Ga. 1984) (decided under former Code Section 11-9-306).  
As a cotton gin bought a farmer's cotton crop with actual knowledge, as defined by O.C.G.A. § 11-1-201(25), (27), of a bank's security interest therein, but still withheld some of the proceeds of the sale under O.C.G.A. § 11-9-315(a)(1), the gin was liable to the bank for conversion and was not entitled to summary judgment. Bank of Dawson v. Worth Gin Co., 295 Ga. App. 256, 671 S.E.2d 279 (2008).  

Debtor not a fiduciary. - Where a farmer did not require that the proceeds of the debtor's sales of the farmer's seeds be kept in a separate account, and the debtor paid the debtor's company's operating expenses with the proceeds of the sale of the farmer's seeds, the debtor was not a fiduciary under 11 U.S.C. § 523(a)(4) and the debt was discharged in the debtor's bankruptcy; neither O.C.G.A. § 11-9-315(a)(1) nor O.C.G.A. § 11-7-204(1) imposed any fiduciary duties on the debtor. Bennett v. Wright (In re Wright), 282 Bankr. 510 (Bankr. M.D. Ga. 2002).  

Releases. - Creditor's execution of a partial release, giving up its interest in debtor's "accounts receivable and proceeds of inventory sold in the normal course of business," eliminated any secured interest in the accounts receivable or proceeds it otherwise would have had. Ray's Mobile Home Repair Serv., Inc. v. Presidential Fin. Corp., 192 Ga. App. 682, 386 S.E.2d 48 (1989) (decided under former Code Section 11-9-306).  
Release of an "Assignment of Proceeds from the Sale of Dairy Products" constituted a waiver of the lienholder's security interest in milk products. Thomas v. Ralston Purina Co., 43 Bankr. 201 (Bankr. M.D. Ga. 1984) (decided under former Code Section 11-9-306).  

Change of location. - Where the transfer of debtor's radio tower, consented to by creditor, merely constituted a change of location, it was not a "sale, exchange, or other disposition" within the meaning of former subsection (2) of this section. Tidwell v. Slocumb (In re Ga. Steel, Inc.), 71 Bankr. 903 (Bankr. M.D. Ga. 1987) (decided under former Code Section 11-9-306).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 85-100, 121, 291-293, 482-486, 527, 550-554, 962-982.  

C.J.S. - 72 C.J.S., Pledges, §§ 28, 36.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-315.  

ALR. - Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.  
Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  
Effect of UCC Article 9 upon conflict, as to funds in debtor's bank account, between secured creditor and bank claiming right of setoff, 3 A.L.R.4th 998.  
What is "commercially reasonable" disposition of collateral required by UCC § 9-504(3), 7 A.L.R.4th 308.  
What constitutes secured party's authorization to transfer collateral free of lien under UCC § 9-306(2), 37 A.L.R.4th 787.  
Secured transactions: government agricultural program payments as "proceeds" of agricultural products under UCC § 9-306, 79 A.L.R.4th 903.  
Causes of action governed by limitations period in UCC § 2-725, 49 A.L.R.5th 1.  
Creation and perfection of security interests in insurance proceeds under Article 9 of Uniform Commercial Code, 47 A.L.R.6th 347.  

11-9-316. Effect of change in governing law.

Statute text
(a)  General rule; effect on perfection of change in governing law. A security interest perfected pursuant to the law of the jurisdiction designated in paragraph (1) of Code Section 11-9-301 or subsection (c) of Code Section 11-9-305 remains perfected until the earliest of:  
(1) The time perfection would have ceased under the law of that jurisdiction;  
(2) The expiration of four months after a change of the debtor's location to another jurisdiction; or  
(3) The expiration of one year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction.  
(b)  Security interest perfected or unperfected under law of new jurisdiction. If a security interest described in subsection (a) of this Code section 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.  
(c)  Possessory security interest in collateral moved to new jurisdiction. 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:  
(1) The collateral is located in one jurisdiction and subject to a security interest perfected under the law of that jurisdiction;  
(2) Thereafter the collateral is brought into another jurisdiction; and  
(3) Upon entry into the other jurisdiction, the security interest is perfected under the law of the other jurisdiction.  
(d)  Goods covered by certificate of title from this state. Except as otherwise provided in subsection (e) of this Code section, 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.  
(e)  When subsection (d) of this Code section security interest becomes unperfected against purchasers. A security interest described in subsection (d) of this Code section 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 (b) of Code Section 11-9-311 or Code Section 11-9-313 are not satisfied before the earlier of:  
(1) 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  
(2) The expiration of four months after the goods had become so covered.  
(f)  Change in jurisdiction of bank, issuer, nominated person, securities intermediary, or commodity intermediary. A security interest in deposit accounts, letter of credit rights, or investment property which is perfected under the law of 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:  
(1) The time the security interest would have become unperfected under the law of that jurisdiction; or  
(2) The expiration of four months after a change of the applicable jurisdiction to another jurisdiction.  
(g)  Subsection (f) of this Code section security interest perfected or unperfected under law of new jurisdiction. If a security interest described in subsection (f) of this Code section 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.  
(h)  Effect on filed financing statement of change in governing law. The following rules apply to collateral to which a security interest attaches within four months after the debtor changes its location to another jurisdiction:  
(1) A financing statement filed before the change pursuant to the law of the jurisdiction designated in paragraph (1) of Code Section 11-9-301 or subsection (c) of Code Section 11-9-305 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 had the debtor not changed its location; and  
(2) If a security interest perfected by a financing statement that is effective under paragraph (1) of this subsection 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 paragraph (1) of Code Section 11-9-301 or subsection (c) of Code Section 11-9-305 or the expiration of the four-month 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.  
(i)  Effect of change in governing law on financing statement filed against original debtor.  If a financing statement naming an original debtor is filed pursuant to the law of the jurisdiction designated in paragraph (1) of Code Section 11-9-301 or subsection (c) of Code Section 11-9-305 and the new debtor is located in another jurisdiction, the following rules apply:  
(1) 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 (d) of Code Section 11-9-203 if the financing statement would have been effective to perfect a security interest in the collateral had the collateral been acquired by the original debtor; and  
(2) A security interest perfected by the financing statement and which 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 paragraph (1) of Code Section 11-9-301 or subsection (c) of Code Section 11-9-305 or the expiration of the four-month period 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.  

History
(Code 1981, § 11-9-316, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 5/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, substituted "Effect of change" for "Continued perfection of security interest following change" in the catchline; and added subsections (h) and (i).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-316.  


PART 3

PRIORITY


11-9-317. Interests that take priority over or take free of security interest or agricultural lien.

Statute text
(a)  Conflicting security interests and rights of lien creditors. A security interest or agricultural lien is subordinate to the rights of:  
(1) A person entitled to priority under Code Section 11-9-322; and  
(2) Except as otherwise provided in subsection (e) of this Code section, a person that becomes a lien creditor before the earlier of the time:  
(A) The security interest or agricultural lien is perfected; or  
(B) A financing statement covering the collateral is filed.  
(b)  Buyers that receive delivery. Except as otherwise provided in subsection (e) of this Code section, a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instruments, 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.  
(c)  Lessees that receive delivery. Except as otherwise provided in subsection (e) of this Code section, 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.  
(d)  Licensees and buyers of certain collateral. A licensee of a general intangible or a buyer, other than a secured party, of collateral other than tangible chattel paper, tangible documents, goods, instruments, 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.  
(e)  Purchase money security interest. Except as otherwise provided in Code Sections 11-9-320 and 11-9-321, if a person files a financing statement with respect to a purchase money security interest before or within 20 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.  

History
(Code 1981, § 11-9-317, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-28/HB 451; Ga. L. 2013, p. 690, § 6/SB 185.)

Annotations
The 2010 amendment, effective May 27, 2010, inserted "tangible" near the middle of subsection (b); and inserted "electronic documents," in the middle of subsection (d). See the Editor's notes for applicability.  

The 2013 amendment, effective July 1, 2013, substituted "certificated security" for "security certificate" in subsection (b); and substituted "collateral other than tangible chattel paper, tangible documents, goods, instruments, or a" for "accounts, electronic chattel paper, electronic documents, general intangibles, or investment property other than a" in subsection (d).  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  


JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the provisions, decisions under former Article 9 are included in the annotations of this section.  

Effect of perfection. - Following perfection of security interest, other creditors enjoy no priority over such security interest. General Lithographing Co. v. Sight & Sound Projectors, Inc., 128 Ga. App. 304, 196 S.E.2d 479 (1973) (decided under former Code Section 11-9-301).  

Knowledge of security interest. - Where security interest in an automobile was not properly recorded and was documented only in divorce decree's incorporated agreement, the secured party failed to carry the burden of proving that buyer had actual knowledge of the secured party's interest, even assuming the buyer had knowledge of the divorce. Freeman v. Bentley, 205 Ga. App. 409, 422 S.E.2d 435 (1992) (decided under former Code Section 11-9-301).  
As a cotton gin bought a farmer's cotton crop with actual knowledge, as defined by O.C.G.A. § 11-1-201(25), (27), of a bank's security interest therein, but still withheld some of the proceeds of the sale, under O.C.G.A. § 11-9-315(a)(1), the gin was liable to the bank for conversion and was not entitled to summary judgment. Bank of Dawson v. Worth Gin Co., 295 Ga. App. 256, 671 S.E.2d 279 (2008).  

Effect of filing. - Filing of financing statement can perfect only those interests acquired through security agreements. Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393 (1971) (decided under former Code Section 11-9-301).  

Unperfected security interests. - Surety, under master surety agreement in which bankrupt had signed as principal, could not assert priority over trustee with respect to equipment of bankrupt on basis of equitable lien upon retained contract funds following surety's completion of construction contract; without such equitable lien, surety, without perfected security interest, stood as general unsecured creditor which must defer to trustee. In re Merts Equip. Co., 438 F. Supp. 295 (M.D. Ga. 1977) (decided under former Code Section 11-9-301).  
Unperfected security interest is subordinate to rights of lien creditors who acquire liens without knowledge of prior security interest and before its perfection; this operates in favor of creditor who has acquired lien on property involved by attachment, levy or the like. Mack Trucks, Inc. v. Ryder Truck Rental, Inc., 110 Ga. App. 68, 137 S.E.2d 718 (1964) (decided under former Code Section 11-9-301).  

Deemed unperfected security interests. - Although a bank's security interests in equipment were properly perfected and remained so throughout a buyer's acquisition of the equipment from the debtor, those security interests were deemed never to have been perfected as against a purchaser for value when the bank failed to file timely continuation statements, under O.C.G.A. § 11-9-515(b), and the buyer took free of the security interests under O.C.G.A. § 11-9-317(b) because the buyer did not have actual knowledge of the security interests. Four County Bank v. Tidewater Equip. Co., 331 Ga. App. 753, 771 S.E.2d 437 (2015).  

Judgment on note. - Judgment on debt for unpaid balance on note does not in itself operate to perfect security interest in collateral listed on note, and payee's rights are subordinate to those of lien creditor who has no knowledge of security interest. Fas-Pac, Inc. v. Fillingame, 123 Ga. App. 203, 180 S.E.2d 243 (1971) (decided under former Code Section 11-9-301).  

Judgment liens are subordinate. - The legislature intended to make judgment liens subordinate to purchase money security interests perfected within the grace period contained in former subsection (2) of this section. Crossroads Bank v. Corim, Inc., 262 Ga. 364, 418 S.E.2d 601 (1992) (decided under former Code Section 11-9-301).  

Purchase money security interests. - A purchase money security interest has priority over a prior judgment lien only to the extent permitted by former subsection (2) of this section, which established a 15-day grace period for filing the purchase money security interest. Crossroads Bank v. Corim, Inc., 262 Ga. 364, 418 S.E.2d 601 (1992) (decided under former Code Section 11-9-301).  
Unperfected and untimely-perfected purchase money security interests are subordinate to a judgment lien. Crossroads Bank v. Corim, Inc., 262 Ga. 364, 418 S.E.2d 601 (1992) (decided under former Code Section 11-9-301).  

Applying Canadian law. - to the facts of the case, a remote purchaser could not prevail over a creditor who had perfected its purchase money security interest in a truck within the time specified by Canadian law. Paccar Fin. Servs., Ltd. v. Johnson, 195 Ga. App. 412, 393 S.E.2d 685 (1990).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-317.  

11-9-318. 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.

Statute text
(a)  Seller retains no interest. 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.  
(b)  Deemed rights of debtor if buyer's security interest unperfected. 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.  

History
(Code 1981, § 11-9-318, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  Commercial Law, see 53 Mercer L. Rev. 153 (2001).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-318.  

11-9-319. Rights and title of consignee with respect to creditors and purchasers.

Statute text
(a)  Consignee has consignor's rights. Except as otherwise provided in subsection (b) of this Code section, 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.  
(b)  Applicability of other law. For purposes of determining the rights of a creditor of a consignee, law other than this article 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.  

History
(Code 1981, § 11-9-319, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-319.  

11-9-320. Buyer of goods.

Statute text
(a)  Buyer in ordinary course of business. Except as otherwise provided in subsection (e) of this Code section, 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.  
(b)  Buyer of consumer goods. Except as otherwise provided in subsection (e) of this Code section, 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:  
(1) Without knowledge of the security interest;  
(2) For value;  
(3) Primarily for the buyer's personal, family, or household purposes; and  
(4) Before the filing of a financing statement covering the goods.  
(c)  Effectiveness of filing for subsection (b) of this Code section. To the extent that it affects the priority of a security interest over a buyer of goods under subsection (b) of this Code section, the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by subsections (a) and (b) of Code Section 11-9-316.  
(d)  Buyer in ordinary course of business at wellhead or minehead. 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.  
(e)  Possessory security interest not affected. Subsections (a) and (b) of this Code section do not affect a security interest in goods in the possession of the secured party under Code Section 11-9-313.  

History
(Code 1981, § 11-9-320, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981).  

  For note, "U.C.C. Section 9-307(1) and the Non-Possessory Buyer: Is the Good Faith Purchaser Always Right?," see 19 Ga. L. Rev. 123 (1984). For note on 1993 amendment of this section, see 10 Ga. St. U.L. Rev. 41 (1993).  

  For comment on Sherrock v. Commercial Credit Corp., 290 A.2d 648 (Del. S. Ct. 1972), see 10 Ga. St. B.J. 110 (1973).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Legislative intent. - Guiding principle in former subsection (1) of this section is to protect buyer in ordinary course of business from dealer against reservation of title or other hidden interest in goods. Commercial Credit Equip. Corp. v. Bates, 154 Ga. App. 71, 267 S.E.2d 469 (1980) (decided under former Code Section 11-9-307).  

Statute was intended to protect buyers in the ordinary course from the lien claims of creditors who financed floor plan arrangements for the dealer. Superior Bank, FSB v. Human Servs. Emples. Credit Union, 252 Ga. App. 489, 556 S.E.2d 155 (2001) (decided under former Code Section 11-9-307).  

Protection of buyers. - Buyers in ordinary course of business take free of previously perfected security interests for the sake of untrammeled commercial dealing. United States v. McCleskey Mills, Inc., 409 F.2d 1216 (5th Cir. 1969) (decided under former Code Section 11-9-307).  

Applicability. - This provision not operative where perfection of security interest is required under Ch. 3, T. 40. First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. 284, 167 S.E.2d 190 (1969) (decided under former Code Section 11-9-307).  

Floor-plan financed vehicle. - Where there is floor-plan financing of vehicle, perfection of security interest in inventory would come under Uniform Commercial Code and as to such security interest created by a dealer priority is governed by former § 11-9-307 (see now § 11-9-320). Rome Bank & Trust Co. v. Bradshaw, 143 Ga. App. 153, 237 S.E.2d 612 (1977) (decided under former Code Section 11-9-307).  

Knowledge of violation of security interest. - A buyer who merely knows of a security interest of another party covering certain goods constitutes a buyer in ordinary course of business and takes free of that security interest, whereas a buyer who knows that the sale actually violates some term of the security agreement not waived by the secured party takes subject to that security interest. First Nat'l Bank v. Atlanta Classic Cars, Inc., 184 Ga. App. 784, 363 S.E.2d 16 (1987) (decided under former Code Section 11-9-307).  

Sale of collateral. - Bona fide purchaser's, a corporation, purchase of a machine did not fall within an exception to the general rule that a security interest continued after the sale of the collateral, as a similar argument in Superior Bank v. Human Services Employees Credit Union, 252 Ga. App. 489, 556 S.E.2d 155 (2001) was rejected. Intermet Corp. v. Fin. Fed. Credit, Inc., 263 Ga. App. 622, 588 S.E.2d 810 (2003).  

Purchase of used car from car-leasing business. - Where sale of used cars upon termination of leases was merely incidental to leasing business, former subsection (1) had no application to such incidental sales and purchaser at such sale did not purchase from a person engaged in business of selling cars and was therefore not entitled to protection afforded to buyers in the ordinary course of business. United Carolina Bank v. Capital Auto. Co., 163 Ga. App. 796, 294 S.E.2d 661 (1982) (decided under former Code Section 11-9-307).  

Attachment proceedings. - Where plaintiffs in attachment proceedings are seeking refund of down payment after recission of contract, fact that debt is to be satisfied by execution sale of attached mobile home does not make them buyers in ordinary course of business. Troy Lumber Co. v. Williams, 124 Ga. App. 636, 185 S.E.2d 580 (1971) (decided under former Code Section 11-9-307).  

Cited in Capital Auto. Co. v. GMAC, 119 Ga. App. 186, 166 S.E.2d 584 (1969); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134, 169 S.E.2d 720 (1969); United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970); Bank of Madison v. Tri-County Livestock Auction Co., 123 Ga. App. 768, 182 S.E.2d 687 (1971); Greater S. Distrib. Co. v. Usry, 124 Ga. App. 525, 184 S.E.2d 486 (1971); Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393 (1971); International Harvester Credit Corp. v. Commercial Credit Equip. Corp., 125 Ga. App. 477, 188 S.E.2d 110 (1972); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488, 211 S.E.2d 430 (1974); Sterling Nat'l Bank & Trust Co. v. Southwire Co., 713 F.2d 684 (11th Cir. 1983); Owensboro Nat'l Bank v. Jenkins, 173 Ga. App. 775, 328 S.E.2d 399 (1985); Hanington v. Palmer, 103 Bankr. 348 (Bankr. M.D. Ga. 1989).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 70, 71, 269, 550, 780-800, 895-925.  

Status as "Buyer in Ordinary Course of Business," 2 POF2d 165.  

C.J.S. - 72 C.J.S., Pledges, § 43.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-320.  

ALR. - Rights as between holder of "trust receipt" and purchaser of goods from one who gave it, 31 A.L.R. 937.  
Chattel mortgage on live stock as including increase, 39 A.L.R. 153.  
Relative rights as between assignee of conditional seller and a subsequent buyer from the conditional seller after repossession or the like, 72 A.L.R.2d 342.  
Who is "person in business of selling goods of that kind" within provision of UCC § 1-201(9) defining buyer in ordinary course of business for purposes of UCC § 9-307(1), 73 A.L.R.3d 338.  
Construction of UCC § 9-307(e) providing that under certain conditions a buyer, other than a buyer in the ordinary course of business, takes free of a security interest securing "future advances", 35 A.L.R.4th 390.  

11-9-321. Licensee of general intangible and lessee of goods in ordinary course of business.

Statute text
(a)  "Licensee in ordinary course of business." As used in this Code section, the term "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.  
(b)  Rights of licensee in ordinary course of business. 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.  
(c)  Rights of lessee in ordinary course of business. 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.  

History
(Code 1981, § 11-9-321, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-321.  

11-9-322. Priorities among conflicting security interests in and agricultural liens on same collateral.

Statute text
(a)  General priority rules. Except as otherwise provided in this Code section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:  
(1) 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;  
(2) A perfected security interest or agricultural lien has priority over a conflicting unperfected security interest or agricultural lien; and  
(3) The first security interest or agricultural lien to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected.  
(b)  Time of perfection: proceeds and supporting obligations. For the purposes paragraph (1) of subsection (a) of this Code section:  
(1) 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  
(2) 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.  
(c)  Special priority rules: proceeds and supporting obligations. Except as otherwise provided in subsection (f) of this Code section, a security interest in collateral which qualifies for priority over a conflicting security interest under Code Section 11-9-327, 11-9-328, 11-9-329, 11-9-330, or 11-9-331 also has priority over a conflicting security interest in:  
(1) Any supporting obligation for the collateral; and  
(2) Proceeds of the collateral if:  
(A) The security interest in proceeds is perfected;  
(B) The proceeds are cash proceeds or of the same type as the collateral; and  
(C) 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.  
(d)  First to file priority rule for certain collateral. Subject to subsection (e) of this Code section and except as otherwise provided in subsection (f) of this Code section, 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.  
(e)  Applicability of subsection (d) of this Code section. Subsection (d) of this Code section applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter of credit rights.  
(f)  Limitations on subsections (a) through (e) of this Code section. Subsections (a) through (e) of this Code section are subject to:  
(1) Subsection (g) of this Code section and the other provisions of this part;  
(2) Code Section 11-4-210 with respect to a security interest of a collecting bank;  
(3) Code Section 11-5-118 with respect to a security interest of an issuer or nominated person; and  
(4) Code Section 11-9-110 with respect to a security interest arising under Article 2 or 2A of this title.  
(g)  Priority under agricultural lien statute. A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides.  

History
(Code 1981, § 11-9-322, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981). For article, "Preparing the Georgia Farmer (or Other Smaller Entrepreneur) for Bankruptcy," see 22 Ga. State Bar J. 186 (1986).  

  For note examining the conflict between the floating lien in after-acquired property under the Uniform Commercial Code and the voidable preferences provisions of the Bankruptcy Act, see 9 Ga. L. Rev. 685 (1975).  

  For comment discussing good faith performance and priorities of secured parties, see 36 Emory L.J. 948 (1987).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Determining priority. - Under  former subsection (5) determining priority involves a two-prong determination: (1) how security interest is to be perfected and (2) whether security interest has in fact been so perfected. Enterprises Now, Inc. v. Citizens & S. Dev. Corp., 135 Ga. App. 602, 218 S.E.2d 309 (1975) (decided under former Code Section 11-9-312).  

 Determining priority in destroyed property covered by insurance. - Bankruptcy court found that under the security deed the credit company held a valid security interest in the destroyed property and the security deed provided sufficient language to grant the credit company a security interest in the proceeds of the collateral, including any insurance proceeds. Altegra Credit Co. v. Ford Motor Credit Co. (In re Brantley), 286 Bankr. 918 (Bankr. S.D. Ga. 2002).  

Order of filing determinative. - When competing security interests are all perfected by filing, order of filing determines priority. Tuftco Sales Corp. v. Garrison Carpet Mills, Inc., 158 Ga. App. 674, 282 S.E.2d 159 (1981) (decided under former Code Section 11-9-312).  
Where financing statement giving notice of interest of entruster in office machines entrusted to bankrupt is signed by debtor, incorporates security agreement, and adequately describes collateral, is filed prior to filing of bank's financing statement covering inventory, equipment, furniture, and fixtures, prior security interest must prevail. First Nat'l Bank & Trust Co. v. Olivetti Corp. of Am., 130 Ga. App. 896, 204 S.E.2d 781 (1974) (decided under former Code Section 11-9-312).  

Perfected security interest had priority over attempted reservation of title. - Peanut growers' attempted reservation of title when the growers' delivered peanuts to a peanut company at a peanut broker's direction amounted to a security interest; however, the growers never perfected their security interests. A cooperative bank's security interest in the peanuts was perfected as the grower had filed financing statements and the security interest had attached so that the bank's perfected security interest had priority over the growers' unperfected security interests. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).  

Correction of errors in financing statement. - Once the secured party files an effective financing statement, it is relieved, to a certain extent, of the burden of correcting misleading errors, and a prospective creditor is obligated to inquire into the debtor's source of title. Western Auto Supply Co. v. McKenzie, 227 Ga. App. 477, 489 S.E.2d 537 (1997).  

Security interest in check exchanged for goods. - An experienced, informed seller who has sold goods in exchange for a check and who then files a security interest in the check under the former provisions of this Code section will enjoy priority over even subsequent good faith purchasers. Dixie Bonded Whse. & Grain Co. v. Allstate Fin. Corp., 755 F. Supp. 1543 (M.D. Ga.), aff'd, 944 F.2d 819 (11th Cir. 1991) (decided under former Code Section 11-9-312).  

Factor's interest in accounts receivable. - Factor's interest as a good faith purchaser of a cotton buyer's accounts receivable was superior to the interests asserted by unsecured aggrieved sellers, where the factor's actions with respect to the sellers could be characterized as nothing other than honesty in fact and good faith under Article Two of the UCC. Dixie Bonded Whse. & GrainGraniteville Co. v. Bleckley Lumber Co., 755 F. Supp. 1543 (M.D. Ga.), aff'd, 944 F.2d 819 (11th Cir. 1991) (decided under former Code Section 11-9-312).  

Possession of collateral. - For the purposes of subsection (4), a buyer takes possession at the time of the decision to buy, not at the time of technical physical possession if physical possession was obtained earlier. Orix Credit Alliance, Inc. v. CIT Group/Equipment Fin., Inc., 230 Bankr. 213 (Bankr. M.D. Ga. 1998).  

Timely perfection of interest. - Where lease agreements with option to purchase specifically dated back to the time of delivery when debtor took possession, it was held that debtor acquired possession of three scrapers for purposes of subsection (4) at the time they were delivered by seller, rather than the time that debtor and seller entered into the lease agreements for the three scrapers, and because seller did not file its financing statement on two of the scrapers within 15 days of the time debtor took possession, as required by subsection (4), seller failed to timely perfect its purchase money security interest in these two scrapers, so bank's prior security interest in equipment, including after-acquired property, had priority over seller's purchase money security interest in these two scrapers pursuant to subsection (5)(a), but because it timely perfected its purchase money security interest in the third scraper, seller had priority over the bank pursuant to subsection (4). Iron Peddlers, Inc. v. Ivie & Assocs., 84 Bankr. 882 (Bankr. N.D. Ga. 1988).  
Where a bank's perfected security interest in a skidder did not qualify as a purchase money security interest because the funds it lent were not used by a logging company to purchase the skidder, and where the logging company received possession and became indebted for the purchase price on the date the purchase money lender paid the seller directly, the purchase money lender was the only creditor holding a purchase money security interest, and its perfection of that interest by filing its financing statement within 15 days after the acquisition of ownership and execution by the purchaser of the note evidencing its obligation to pay the purchase price gave that purchase money lender priority. Citizens Bank of Americus v. Federal Fin. Servs., Inc., 235 Ga. App. 482, 509 S.E.2d 339 (1998).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-322.  

ALR. - Priority where senior instrument affecting real property is recorded after execution but before recording of junior instrument, 32 A.L.R. 344.  
Construction and effect of provisions of Uniform Conditional Sales Law regarding refiling when goods are removed from district where contract is filed, 68 A.L.R. 554.  
Priority as between holders of different notes or obligations secured by the same mortgage (or vendor's lien) or mortgages executed contemporaneously, 115 A.L.R. 40.  
Applicability of proceeds of sale of collateral security to barred portion of debt secured, 139 A.L.R. 478.  
Priority as between seller or conditional seller of personalty and claimant under after-acquired-property clause of mortgage or other instrument, 86 A.L.R.2d 1152.  
Equitable estoppel of secured party's right to assert prior, perfected security interest against other secured creditor or subsequent purchaser under Article 9 of Uniform Commercial Code, 9 A.L.R.5th 708.  

11-9-322.1. Crops produced with new value.

Statute text
A perfected security interest in growing crops for new value given to enable the debtor to produce the crops during the production season and given not more than three months before the crops become growing crops by planting or otherwise takes priority over an earlier perfected security interest or agricultural lien to the extent that such earlier interest or lien secures obligations incurred more than six months before the crops become growing crops by planting or otherwise, even though the person giving new value had knowledge of the earlier security interest or agricultural lien.  

History
(Code 1981, § 11-9-322.1, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2002, p. 995, § 5.)

Annotations
The 2002 amendment, effective July 1, 2002, inserted "growing" near the beginning, inserted "or agricultural lien" and "or lien" near the middle and added "or agricultural lien" at the end.  

  Editor's notes. - Ga. L. 2002, p. 995, § 8, not codified by the General Assembly, provides that: "This Act shall become effective July 1, 2002, and shall apply to a letter of credit that is issued on or after July 1, 2002. This Act does not apply to a transaction, event, obligation, or duty arising out of or associated with a letter of credit that was issued before July 1, 2002."  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Necessity for new value. - Where additional collateral is given to secure antecedent debt, new value is not necessary before security interest will attach. However, where there is purchase money security interest in crop to be grown, new value is necessary. United States v. Big Z Whse., 311 F. Supp. 283 (S.D. Ga. 1970) (decided under former Code Section 11-9-312).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 15, 70, 71, 96-100, 106, 149, 231 et seq., 248, 291, 293, 310, 311, 313, 440-467, 780-791, 836-868.  

Value of Growing Crop, 20 POF2d 115.  

C.J.S. - 72 C.J.S., Pledges, § 23.  

11-9-323. Future advances.

Statute text
(a)  When priority based on time of advance. Except as otherwise provided in subsection (b) of this Code section, for purposes of determining the priority of a perfected security interest under paragraph (1) of subsection (a) of Code Section 11-9-322, perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:  
(1) Is made while the security interest is perfected only:  
(A) Under Code Section 11-9-309 when it attaches; or  
(B) Temporarily under subsection (e), (f), or (g) of Code Section 11-9-312; and  
(2) Is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under Code Section 11-9-309 or subsection (e), (f), or (g) of Code Section 11-9-312.  
(b)  Buyer of receivables. Subsection (a) of this Code section does 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.  
(c)  Buyer of goods. Except as otherwise provided in subsection (d) of this Code section, a buyer of goods other than a buyer in ordinary course of business takes free of a security interest to the extent that it secures advances made after the earlier of:  
(1) The time the secured party acquires knowledge of the buyer's purchase; or  
(2) Forty-five days after the purchase.  
(d)  Advances made pursuant to commitment; priority of buyer of goods. Subsection (c) of this Code section 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 45 day period.  
(e)  Lessee of goods. Except as otherwise provided in subsection (f) of this Code section, a lessee of goods, other than a lessee in ordinary course of business, takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of:  
(1) The time the secured party acquires knowledge of the lease; or  
(2) Forty-five days after the lease contract becomes enforceable.  
(f)  Advances made pursuant to commitment; priority of lessee of goods. Subsection (e) of this Code section 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 45 day period.  

History
(Code 1981, § 11-9-323, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-323.  

11-9-324. Priority of purchase money security interests.

Statute text
(a)  General rule; purchase money priority. Except as otherwise provided in subsection (g) of this Code section, 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 Code Section 11-9-327, 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 20 days thereafter.  
(b)  Inventory purchase money priority. Subject to subsection (c) of this Code section and except as otherwise provided in subsection (g) of this Code section, 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 Code Section 11-9-330, and, except as otherwise provided in Code Section 11-9-327, 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:  
(1) The purchase money security interest is perfected when the debtor receives possession of the inventory;  
(2) The purchase money secured party sends an authenticated notification to the holder of the conflicting security interest;  
(3) The holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and  
(4) 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.  
(c)  Holders of conflicting inventory security interests to be notified. Paragraphs (2) through (4) of subsection (b) of this Code section apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:  
(1) If the purchase money security interest is perfected by filing, before the date of the filing; or  
(2) If the purchase money security interest is temporarily perfected without filing or possession under subsection (f) of Code Section 11-9-312, before the beginning of the 20 day period thereunder.  
(d)  Livestock purchase money priority. Subject to subsection (e) of this Code section and except as otherwise provided in subsection (g) of this Code section, 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 Code Section 11-9-327, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:  
(1) The purchase money security interest is perfected when the debtor receives possession of the livestock;  
(2) The purchase money secured party sends an authenticated notification to the holder of the conflicting security interest;  
(3) The holder of the conflicting security interest receives the notification within six months before the debtor receives possession of the livestock; and  
(4) 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.  
(e)  Holders of conflicting livestock security interests to be notified. Paragraphs (2) through (4) of subsection (d) of this Code section apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:  
(1) If the purchase money security interest is perfected by filing, before the date of the filing; or  
(2) If the purchase money security interest is temporarily perfected without filing or possession under subsection (f) of Code Section 11-9-312, before the beginning of the 20 day period thereunder.  
(f)  Software purchase money priority. Except as otherwise provided in subsection (g) of this Code section, 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 Code Section 11-9-327, 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 Code section.  
(g)  Conflicting purchase money security interests. If more than one security interest qualifies for priority in the same collateral under subsection (a), (b), (d), or (f) of this Code section:  
(1) 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  
(2) In all other cases, subsection (a) of Code Section 11-9-322 applies to the qualifying security interests.  

History
(Code 1981, § 11-9-324, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981). For article, "Preparing the Georgia Farmer (or Other Smaller Entrepreneur) for Bankruptcy," see 22 Ga. State Bar J. 186 (1986).  

  For note examining the conflict between the floating lien in after-acquired property under the Uniform Commercial Code and the voidable preferences provisions of the Bankruptcy Act, see 9 Ga. L. Rev. 685 (1975).  

  For comment discussing good faith performance and priorities of secured parties, see 36 Emory L.J. 948 (1987).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Time of notification. - While 1978 "amendments" to former section made changes in notification procedure they did not effectuate change in timing of notification; that notification need not precede filing is clear, if for no other reason than that former paragraph (3)(d) contemplates that notification may state that purchase money security interest "has" been acquired in debtor's inventory. King's Appliance & Elecs., Inc. v. Citizens & S. Bank, 157 Ga. App. 857, 278 S.E.2d 733 (1981) (decided under former Code Section 11-9-312).  

Filing may precede notification envisioned under former subsection (3) of section. King's Appliance & Elecs., Inc. v. Citizens & S. Bank, 157 Ga. App. 857, 278 S.E.2d 733 (1981) (decided under former Code Section 11-9-312).  
Under former paragraph (3)(c) of section, notification is timely if holder of conflicting prior security interest receives it no more than five years before date debtor receives possession of inventory. King's Appliance & Elecs., Inc. v. Citizens & S. Bank, 157 Ga. App. 857, 278 S.E.2d 733 (1981) (decided under former Code Section 11-9-312).  

Limitation on floating liens. - "Floating lien" theory, by which all subsequently acquired property comes under earlier security instrument, has been approved by former § 11-9-204, however, former paragraph (4) of this section provides seller of noninventory goods under purchase money contract with right to retain priority provided the seller perfects the security interest before delivery or within ten days (now 15 days) after delivery. Babson Credit Plan, Inc. v. Cordele Prod. Credit Ass'n, 146 Ga. App. 266, 246 S.E.2d 354 (1978) (decided under former Code Section 11-9-312).  

Priority between perfected and unperfected interests. - Where seller of personal property which is later affixed to realty retains security interest in the goods, which is not perfected, seller's security interest attaches upon delivery and is superior to another creditor's prior perfected security interest in the personalty and "after-acquired" "personal property" and "equipment of every description" of the common debtor, when such "after-acquired" personalty is affixed to realty as fixtures. Babson Credit Plan, Inc. v. Cordele Prod. Credit Ass'n, 146 Ga. App. 266, 246 S.E.2d 354 (1978) (decided under former Code Section 11-9-312).  

When status of "debtor" attaches. - Buyer of cows who had milked and cared for the cows for several weeks prior to obtaining a loan for their purchase, but who did not finally decide to purchase the cows until after obtaining the loan, was not a "debtor," and did not take possession, until the loan was closed. United States v. Hooks, 40 Bankr. 715 (Bankr. M.D. Ga. 1984) (decided under former Code Section 11-9-312).  

Possession of collateral. - For the purposes of former subsection (4), a buyer takes possession at the time of the decision to buy, not at the time of technical physical possession if physical possession was obtained earlier. Orix Credit Alliance, Inc. v. CIT Group/Equipment Fin., Inc., 230 Bankr. 213 (Bankr. M.D. Ga. 1998) (decided under former Code Section 11-9-312).  

Timely perfection of interest. - Where lease agreements with option to purchase specifically dated back to the time of delivery when debtor took possession, it was held that debtor acquired possession of three scrapers for purposes of former subsection (4) at the time they were delivered by seller, rather than the time that debtor and seller entered into the lease agreements for the three scrapers, and because seller did not file its financing statement on two of the scrapers within 15 days of the time debtor took possession, as required by former subsection (4), seller failed to timely perfect its purchase money security interest in these two scrapers, so bank's prior security interest in equipment, including after-acquired property, had priority over seller's purchase money security interest in these two scrapers pursuant to former subsection (5)(a), but because it timely perfected its purchase money security interest in the third scraper, seller had priority over the bank pursuant to former subsection (4). Iron Peddlers, Inc. v. Ivie & Assocs., 84 Bankr. 882 (Bankr. N.D. Ga. 1988) (decided under former Code Section 11-9-312).  
Where a bank's perfected security interest in a skidder did not qualify as a purchase money security interest because the funds it lent were not used by a logging company to purchase the skidder, and where the logging company received possession and became indebted for the purchase price on the date the purchase money lender paid the seller directly, the purchase money lender was the only creditor holding a purchase money security interest, and its perfection of that interest by filing its financing statement within 15 days after the acquisition of ownership and execution by the purchaser of the note evidencing its obligation to pay the purchase price gave that purchase money lender priority. Citizens Bank of Americus v. Federal Fin. Servs., Inc., 235 Ga. App. 482, 509 S.E.2d 339 (1998).  

 Security interest unperfected. - Where the creditor's security interest in vehicles was not noted on the certificates of title under Georgia's Motor Vehicle Certificate of Title Act, even if it was a purchase money security interest, the creditor was unperfected and O.C.G.A. § 11-9-324(a) did not apply; the debtor's bankruptcy trustee could avoid the security interests under 11 U.S.C.S. 544(a)(1). Tidwell v. First Cmty. Bank (In re Charley's Auto., Inc.),    Bankr.    (Bankr. M.D. Ga. May 8, 2003).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 15, 70, 71, 96-100, 106, 149, 231 et seq., 248, 291, 293, 310, 311, 313, 440-467, 780-791, 836-868.  

C.J.S. - 72 C.J.S., Pledges, § 23.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-324.  

ALR. - Priority where senior instrument affecting real property is recorded after execution but before recording of junior instrument, 32 A.L.R. 344.  
Construction and effect of provisions of Uniform Conditional Sales Law regarding refiling when goods are removed from district where contract is filed, 68 A.L.R. 554.  
Priority as between holders of different notes or obligations secured by the same mortgage (or vendor's lien) or mortgages executed contemporaneously, 115 A.L.R. 40.  
Applicability of proceeds of sale of collateral security to barred portion of debt secured, 139 A.L.R. 478.  
Priority as between seller or conditional seller of personalty and claimant under after-acquired-property clause of mortgage or other instrument, 86 A.L.R.2d 1152.  
Equitable estoppel of secured party's right to assert prior, perfected security interest against other secured creditor or subsequent purchaser under Article 9 of Uniform Commercial Code, 9 A.L.R.5th 708.  

11-9-325. Priority of security interests in transferred collateral.

Statute text
(a)  Subordination of security interest in transferred collateral. Except as otherwise provided in subsection (b) of this Code section, a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if:  
(1) The debtor acquired the collateral subject to the security interest created by the other person;  
(2) The security interest created by the other person was perfected when the debtor acquired the collateral; and  
(3) There is no period thereafter when the security interest is unperfected.  
(b)  Limitation of subsection (a) of this Code section subordination. Subsection (a) of this Code section subordinates a security interest only if the security interest:  
(1) Otherwise would have priority solely under subsection (a) of Code Section 11-9-322 or Code Section 11-9-324; or  
(2) Arose solely under subsection (3) of Code Section 11-2-711 or subsection (5) of Code Section 11-2A-508.  

History
(Code 1981, § 11-9-325, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-325.  

11-9-326. Priority of security interests created by new debtor.

Statute text
(a)  Subordination of security interest created by new debtor. Subject to subsection (b) of this Code section, a security interest that is created by a new debtor in collateral in which the new debtor has or acquires rights and is perfected solely by a filed financing statement that would be ineffective to perfect the security interest but for the application of paragraph (1) of subsection (i) of Code Section 11-9-316 or Code Section 11-9-508 is subordinate to a security interest in the same collateral which is perfected other than by such a filed financing statement.  
(b)  Priority under other provisions; multiple original debtors. 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 (a) of this Code section. 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.  

History
(Code 1981, § 11-9-326, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 7/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, rewrote subsection (a), which formerly read: "Subordination of security interests created by new debtor. Subject to subsection (b) of this Code section, a security interest created by a new debtor which is perfected by a filed financing statement that is effective solely under Code Section 11-9-508 in collateral in which a new debtor has or acquires rights is subordinate to a security interest in the same collateral which is perfected other than by a filed financing statement that is effective solely under Code Section 11-9-508."; and substituted "described in subsection (a) of this Code section" for "that are effective solely under Code Section 11-9-508" in the first sentence of subsection (b).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-326.  

11-9-327. Priority of security interests in deposit account.

Statute text
The following rules govern priority among conflicting security interests in the same deposit account:  

(1) A security interest held by a secured party having control of the deposit account under Code Section 11-9-104 has priority over a conflicting security interest held by a secured party that does not have control;  
(2) Except as otherwise provided in paragraphs (3) and (4) of this Code section, security interests perfected by control under Code Section 11-9-314 rank according to priority in time of obtaining control;  
(3) Except as otherwise provided in paragraph (4) of this Code section, a security interest held by the bank with which the deposit account is maintained has priority over a conflicting security interest held by another secured party; and  
(4) A security interest perfected by control under paragraph (3) of subsection (a) of Code Section 11-9-104 has priority over a security interest held by the bank with which the deposit account is maintained.  

History
(Code 1981, § 11-9-327, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-327.  

11-9-328. Priority of security interests in investment property.

Statute text
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 Code Section 11-9-106 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 paragraphs (3) and (4) of this Code section, conflicting security interests held by secured parties each of which has control under Code Section 11-9-106 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:  
(i) If the secured party obtained control under paragraph (1) of subsection (d) of Code Section 11-8-106, the secured party's becoming the person for which the securities account is maintained;  
(ii) If the secured party obtained control under paragraph (2) of subsection (d) of Code Section 11-8-106, 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  
(iii) If the secured party obtained control through another person under paragraph (3) of subsection (d) of Code Section 11-8-106, the time on which priority would be based under this paragraph 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 paragraph (2) of subsection (b) of Code Section 11-9-106 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 (a) of Code Section 11-9-313 and not by control under Code Section 11-9-314 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 Code Section 11-9-106 rank equally; and  
(7) In all other cases, priority among conflicting security interests in investment property is governed by Code Sections 11-9-322 and 11-9-323.  

History
(Code 1981, § 11-9-328, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-328.  

11-9-329. Priority of security interests in letter of credit right.

Statute text
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 Code Section 11-9-107 has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control; and  
(2) Security interests perfected by control under Code Section 11-9-314 rank according to priority in time of obtaining control.  

History
(Code 1981, § 11-9-329, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-329.  

11-9-330. Priority of purchaser of chattel paper or instrument.

Statute text
(a)  Purchaser's priority; security interest claimed merely as proceeds. 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:  
(1) In good faith and in the ordinary course of the purchaser's business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under Code Section 11-9-105; and  
(2) The chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser.  
(b)  Purchaser's priority; other security interests. 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 and takes possession of the chattel paper or obtains control of the chattel paper under Code Section 11-9-105 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.  
(c)  Chattel paper purchaser's priority in proceeds. Except as otherwise provided in Code Section 11-9-327, a purchaser having priority in chattel paper under subsection (a) or (b) of this Code section also has priority in proceeds of the chattel paper to the extent that:  
(1) Code Section 11-9-322 provides for priority in the proceeds; or  
(2) 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.  
(d)  Instrument purchaser's priority. Except as otherwise provided in subsection (a) of Code Section 11-9-331, 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.  
(e)  Holder of purchase money security interest gives new value. For purposes of subsections (a) and (b) of this Code section, the holder of a purchase money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.  
(f)  Indication of assignment gives knowledge. For purposes of subsections (b) and (d) of this Code section, if chattel paper or an instrument indicates that it 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.  

History
(Code 1981, § 11-9-330, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 43-55, 85-100, 550, 796-807, 819, 895-930.  

C.J.S. - 6A C.J.S., Assignments, §§ 79, 80, 85. 72 C.J.S., Pledges, § 42.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-330.  

11-9-331. Priority of rights of purchasers of instruments, documents, and securities under other articles; priority of interests in financial assets and security entitlements under Article 8 of this title.

Statute text
(a)  Rights under Articles 3, 7, and 8 of this title not limited. This article 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, or a protected purchaser of a security. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Articles 3, 7, and 8 of this title.  
(b)  Protection under Article 8 of this title. This article 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 Article 8 of this title.  
(c)  Filing not notice. Filing under this article does not constitute notice of a claim or defense to the holders or purchasers or persons described in subsections (a) and (b) of this Code section.  

History
(Code 1981, § 11-9-331, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 49, 55, 109, 225-230, 269, 444-455, 550, 895-909.  

C.J.S. - 6A C.J.S., Assignments, § 101. 72 C.J.S., Pledges, § 43.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-331.  

ALR. - Rights as between holder of 'trust receipt' and purchaser of goods from one who gave it, 31 A.L.R. 937.  

11-9-332. Transfer of money; transfer of funds from deposit account.

Statute text
(a)  Transferee of money. A transferee of money takes the money free of a security interest unless the transferee acts in collusion with the debtor in violating the rights of the secured party.  
(b)  Transferee of funds from deposit account. A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party.  

History
(Code 1981, § 11-9-332, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-332.  

11-9-333. Priority of certain liens.

Statute text
(a)  Year's support; property taxes; other state taxes; other taxes or judgments. Except as is expressly provided to the contrary elsewhere in this article and in subsection (b) of this Code section, a perfected security interest in collateral takes priority over each and all of the liens, claims, and rights described in Code Section 44-14-320, relating to the establishment of certain liens, as now or hereafter amended; former Code Section 53-7-91 as such existed on December 31, 1997, if applicable; and Code Section 53-7-40, relating to the priority of debts against the estate of a decedent, as now or hereafter amended; provided, nevertheless, that:  
(1) Year's support to the family, duly set apart in the collateral prior to the perfection of the subject security interest, takes priority over such security interest;  
(2) A lien for property taxes duly assessed upon the subject collateral, either prior or subsequent to the perfection of the subject security interest, takes priority over security interest;  
(3) A lien for all state taxes takes priority over such security interest, except where such security interest is perfected by filing a financing statement relative thereto prior to such time as the execution for such state taxes shall be filed in the manner provided by law; provided, nevertheless, that, with respect to priority rights between such tax liens and security interests where under this article the same are perfected other than by filing a financing statement, the same shall be determined as provided by law prior to January 1, 1964; and  
(4) A lien for other unpaid taxes or a duly rendered judgment of a court having jurisdiction shall have the same priority with regard to a security interest as it would have if the tax lien or judgment were a conflicting security interest within the meaning of Code Section 11-9-322 or an encumbrance within the meaning of Code Section 11-9-334, which conflicting security interest was perfected by filing or which encumbrance arose at the time the tax lien or judgment was duly recorded in the place designated by statute applicable thereto.  
(b)  Mechanics' liens on farm machinery. A mechanics' lien on farm machinery or equipment arising on or after July 1, 1985, shall have priority over any perfected security interest in such farm machinery or equipment unless a financing statement has been filed as provided in Code Section 11-9-501 and unless the financing statement describes the particular piece of farm machinery or equipment to which the perfected security interest applies. Such description may include the make, model, and serial number of the piece of farm machinery or equipment. However, such description shall be sufficient whether or not it is specific if it reasonably identifies what is described and a mistake in such description shall not invalidate the description if it provides a key to identifying the farm machinery or equipment.  

History
(Code 1981, § 11-9-333, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2011, p. 752, § 11/HB 142; Ga. L. 2017, p. 723, § 10/HB 337.)

Annotations
The 2011 amendment, effective May 13, 2011, part of an Act to revise, modernize, and correct the Code, substituted "hereafter amended; former Code Section 53-7-91 as such existed on December 31, 1997, if applicable; and Code Section 53-7-40," for "hereafter amended, and Code Section 53-7-91 of the 'Pre-1998 Probate Code,' if applicable, or Code Section 53-7-40 of the 'Revised Probate Code of 1998,'" in subsection (a).  

The 2017 amendment, effective January 1, 2018, in paragraph (a)(3), deleted "other" preceding "state taxes" near the beginning, and substituted "filed" for "entered on the execution docket in the place and" in the middle.  

  Editor's notes. - Ga. L. 2017, p. 723, § 1/HB 337, not codified by the General Assembly, provides that:  "This Act shall be known and may be cited as the 'State Tax Execution Modernization Act.'"  
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For annual survey of state and local tax law, see 35 Mercer L. Rev. 281 (1983). For annual survey of commercial law, see 43 Mercer L. Rev. 119 (1991). For survey article on commercial law, see 44 Mercer L. Rev. 99 (1992).  

  For comment on United States v. Crittenden, 563 F.2d 678 (5th Cir. 1977), see 12 Ga. L. Rev. 692 (1977). For comment on United States v. Crittenden, 600 F.2d 478 (5th Cir. 1979), discussing the priority of a mechanic's lien in Georgia, see 14 Ga. L. Rev. 628 (1980).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Subordinate security interests. - Unperfected and untimely-perfected purchase money security interests are subordinate to a judgment lien. Crossroads Bank v. Corim, Inc., 262 Ga. 364, 418 S.E.2d 601 (1992) (decided under former Code Section 11-9-310).  

Priority over prior judgment liens. - A purchase money security interest has priority over a prior judgment lien only to the extent permitted by subsection (2) of former § 11-9-301, which established a 15-day grace period for filing the purchase money security interest. Crossroads Bank v. Corim, Inc., 262 Ga. 364, 418 S.E.2d 601 (1992) (decided under former Code Section 11-9-310).  
A bank's security interest in the inventory of a carpet manufacturer took priority over a mechanic's lien. Nationsbank v. Hardwick Carpets Int'l, Inc., 233 Ga. App. 894, 506 S.E.2d 174 (1998) (decided under former Code Section 11-9-310).  

Identification of collateral. - All that former subsection (2) required is a reasonable identification, and even a mistaken description will suffice so long as a key to identification is provided. Goodwin v. South Atl. Prod. Credit Ass'n, 201 Ga. App. 35, 410 S.E.2d 159 (1991) (decided under former Code Section 11-9-310).  
Financing statement which identified the collateral as "all farm machinery and equipment, tractors, tilling and harvesting tools of every kind and description owned by debtors" satisfied the requirements of former subsection (2). Goodwin v. South Atl. Prod. Credit Ass'n, 201 Ga. App. 35, 410 S.E.2d 159 (1991) (decided under former Code Section 11-9-310).  

Bailee's lien inferior to recorded security interest. - Bailee's lien was inferior to a cooperative banks' duly recorded security interest. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).  

Priority of year's support award. - In the absence of evidence that defendants had a perfected security interest in corporate stock prior to the death of the owner, where the stock had been set aside as year's support for the owner's wife by order of the probate court, defendants' interest in the stock was extinguished at the time the year's support award was made. Auto Alignment Servs., Inc. v. Bray, 214 Ga. App. 53, 446 S.E.2d 753 (1994).  

Cited in Mack Trucks, Inc. v. Ryder Truck Rental, Inc., 110 Ga. App. 68, 137 S.E.2d 718 (1964); Troy Lumber Co. v. Williams, 124 Ga. App. 636, 185 S.E.2d 580 (1971); Park Ave. Bank v. Bassford, 232 Ga. 216, 205 S.E.2d 861 (1974); Amoco Oil Co. v. G. Sims & Assocs., 162 Ga. App. 307, 291 S.E.2d 128 (1982); Davidson v. Smith Can. Peat, Inc., 163 Ga. App. 367, 294 S.E.2d 582 (1982); Newton Ford Tractor Co. v. JI Case Credit Corp., 163 Ga. App. 497, 294 S.E.2d 723 (1982); GECC v. Capital Ford Truck Sales, Inc., 164 Ga. App. 468, 298 S.E.2d 159 (1982); Tuggle v. IRS, 22 Bankr. 439 (Bankr. N.D. Ga. 1982); Sterling Nat'l Bank & Trust Co. v. Southwire Co., 713 F.2d 684 (11th Cir. 1983); State v. Mozley, 171 Ga. App. 1, 318 S.E.2d 647 (1984); First Bulloch Bank & Trust Co. v. Inca Materials, Inc., 880 F.2d 1307 (11th Cir. 1989).  


OPINIONS OF THE ATTORNEY GENERAL

Ad valorem tax lien on mobile home follows it into hands of bona fide purchaser. - Ad valorem tax lien attaches to property, a mobile home being no exception; the lien follows property even into hands of bona fide purchaser for value and attempted transfer of mobile home to evade tax would be void. 1970 Op. Att'y Gen. No. U70-208.  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 138, 139, 167, 168, 811-816, 869-894, 931-941.  

C.J.S. - 8 C.J.S., Bailments, §§ 80-85. 56 C.J.S., Mechanics' Liens, § 220. 72 C.J.S., Pledges, § 23.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-333.  

ALR. - Priority as between federal tax lien and mortgage to secure future advances or expenditures by mortgagee, 90 A.L.R.2d 1179.  
Secured transactions: priorities as between previously perfected security interest and repairman's lien on motor vehicle under Uniform Commercial Code, 69 A.L.R.3d 1162.  
Secured transactions: Priority as between statutory landlord's lien and security interest perfected in accordance with Uniform Commercial Code, 99 A.L.R.3d 1006.  

11-9-334. Priority of security interests in fixtures and crops.

Statute text
(a)  Security interest in fixtures under this article. A security interest under this article may be created in goods that are fixtures or may continue in goods that become fixtures. A security interest does not exist under this article in ordinary building materials incorporated into an improvement on land.  
(b)  Security interest in fixtures under real property law. This article does not prevent creation of an encumbrance upon fixtures under real property law.  
(c)  General rule; subordination of security interest in fixtures. In cases not governed by subsections (d) through (h) of this Code section, 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.  
(d)  Fixtures purchase money priority. Except as otherwise provided in subsection (h) of this Code section, 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:  
(1) The security interest is a purchase money security interest;  
(2) The interest of the encumbrancer or owner arises before the goods become fixtures; and  
(3) The security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter.  
(e)  Priority of security interest in fixtures over interests in real property. A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if:  
(1) The debtor has an interest of record in the real property or is in possession of the real property and the security interest:  
(A) Is perfected by a fixture filing before the interest of the encumbrancer or owner is of record; and  
(B) Has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner;  
(2) Before the goods become fixtures, the security interest is perfected by any method permitted by this article and the fixtures are readily removable:  
(A) Factory or office machines;  
(B) Equipment that is not primarily used or leased for use in the operation of the real property; or  
(C) Replacements of domestic appliances that are consumer goods; or  
(3) 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 article.  
(f)  Priority based on consent, disclaimer, or right to remove. 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:  
(1) The encumbrancer or owner has, in an authenticated record, consented to the security interest or disclaimed an interest in the goods as fixtures; or  
(2) The debtor has a right to remove the goods as against the encumbrancer or owner.  
(g)  Continuation of subsection (f) of this Code section priority. The priority of the security interest under paragraph (2) of subsection (f) of this Code section continues for a reasonable time if the debtor's right to remove the goods as against the encumbrancer or owner terminates.  
(h)  Priority of construction mortgage. 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 (e) and (f) of this Code section, 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.  
(i)  Priority of security interest in crops. A perfected security interest in or agricultural lien upon 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.  

History
(Code 1981, § 11-9-334, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing U.C.C. provisions establishing a security interest in fixtures as a means of protecting sellers, see 16 Mercer L. Rev. 404 (1965). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article surveying recent judicial developments in commercial law, see 31 Mercer L. Rev. 13 (1979). For article, "Fixture Financing Under Georgia's New Article 9" (Part 1), see 16 Ga. St. B.J. 110 (1980). For article, "Fixture Financing Under Georgia's New Article 9" (Part 2), see 16 Ga. St. B.J. 160 (1980).  

  For note, "Limits on Residential Mortgage Lender Protection Section 1322(b) of the Bankruptcy Code," see 9 Ga. St. U.L. Rev 647 (1993).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

General rule. - The general rule in Georgia is that personal property which is actually or constructively attached to real property is considered part of the realty so that an interest arises in it under real estate law. Wright v. C & S Family Credit, Inc., 128 Bankr. 838 (Bankr. N.D. Ga. 1991) (decided under former Code Section 11-9-313).  

Nature of fixtures. - Fixture is not a separate, exclusive classification of goods, but rather a unique category of property. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-313).  
Section clearly recognized that fixtures may be subject to two different types of security interest: a chattel interest and a real estate interest; and this recognition is in accord with dual nature of a fixture, a chattel which has become real property; indeed, existence of both chattel interest and real estate interest in fixtures gives rise to need for this former section which attempted to equitably resolve conflicts between these two interests. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-313).  

Priority of real estate interests. - Section dealt with priority of real estate interest vis-a-vis chattel interest in fixtures. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-313).  

Creation of real estate interests in fixtures. - The former provisions of this section did not apply to creation of real estate interests in fixtures; that is a matter left to real estate law. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-313).  

Consumer goods may be fixtures. - Former provisions of Article 9 applied to transactions creating security interests in fixtures, but only to extent that provision was made for fixtures in this section, and, considering Uniform Commercial Code's definition and classification of goods, it appears that it contemplates that consumer goods may also be fixtures at least insofar as fixtures are subject to Uniform Commercial Code under this section. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-313).  

Radio tower as personal property, not fixture. - Where the intention of the parties was unclear as to whether a radio tower was to be a fixture and the radio tower was bolted to concrete slabs with bolts in each of the radio tower's three legs, no guy wires secured the radio tower, the radio tower apparently could be removed from the realty without damage to the land or to the radio tower by removing these bolts and disassembling the radio tower, and the radio tower had already been removed once, the radio tower was personal property rather than a fixture. Tidwell v. Slocumb (In re Ga. Steel, Inc.), 71 Bankr. 903 (Bankr. M.D. Ga. 1987) (decided under former Code Section 11-9-313).  

Unperfected security interest in fixtures was superior. - Where seller of personal property which is later affixed to realty retains security interest in goods, which is not perfected, seller's security interest attaches upon delivery and is superior to another creditor's prior deed to secure debt on same realty which has been perfected, to extent of advances made by prior creditor to common debtor before attachment of security interest of seller of personalty, but not to advances made after attachment of latter security interest. Babson Credit Plan, Inc. v. Cordele Prod. Credit Ass'n, 146 Ga. App. 266, 246 S.E.2d 354 (1978) (decided under former Code Section 11-9-313).  

Character of personalty after annexation to realty. - Personalty purchased under retail installment contract, which is to be attached to realty, may by specific agreement of parties retain personalty classification where it is intent of seller and the purchaser that personalty is not to become a fixture, but an "accession." Babson Credit Plan, Inc. v. Cordele Prod. Credit Ass'n, 146 Ga. App. 266, 246 S.E.2d 354 (1978) (decided under former Code Section 11-9-313).  

Conflict on whether goods are to become fixtures. - Where personalty is sold under contract which provides that goods are to remain personal property and not become fixture, but seller checks block on financing statement that described goods are affixed or are to be affixed to certain real estate, question of intent of parties and whether goods remain personalty or became fixtures upon affixation is for the trier of fact. Babson Credit Plan, Inc. v. Cordele Prod. Credit Ass'n, 146 Ga. App. 266, 246 S.E.2d 354 (1978) (decided under former Code Section 11-9-313).  

Interest of security holder in fixtures not subject to summary judgment. - Trial court erred by granting the landlord summary judgment on the security interest holder's claims for conversion and reasonable hire because for some reasonable period of time the tenant's interest in the trade fixture took priority over whatever interest the landlord might have received under O.C.G.A. § 44-7-12 when the landlord took possession of the premises; what constituted a reasonable time was not subject to summary judgment. Heany v. Bennett Street Properties, L.P., 336 Ga. App. 290, 785 S.E.2d 1 (2016).  

Cited in Stokes v. First Ga. Bank, 500 F.2d 393 (5th Cir. 1974); Goger v. United States, 4 Bankr. 4 (N.D. Ga. 1979); Brown v. United States, 512 F. Supp. 24 (N.D. Ga. 1980).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 54, 155 et seq., 304, 607-614, 942-954.  

C.J.S. - 36A C.J.S., Fixtures, §§ 1, 42, 43, 44, 49, 51.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-334.  

ALR. - Rights of seller of fixtures retaining title thereto, or a lien thereon, as against purchasers or encumbrancers of the realty, 13 A.L.R. 448; 73 A.L.R. 748; 88 A.L.R. 1318; 111 A.L.R. 362; 141 A.L.R. 1283.  
Pavement, flooring, platform, walks, and the like as fixtures, 13 A.L.R. 1454.  
Right as between landlord and conditional seller of property to tenant, 45 A.L.R. 967; 98 A.L.R. 628.  
Storage tank or other apparatus of gasoline station as fixture, 52 A.L.R. 798; 99 A.L.R. 69.  
Right of conditional seller of chattels attached to realty to claim lien on the realty, 58 A.L.R. 1121.  
Chattel annexed to realty as subject to prior mortgage, 99 A.L.R. 144.  
Doctrine of constructive annexation as applied to plumbing material and heating apparatus delivered to premises but not installed, 10 A.L.R.2d 207.  

11-9-335. Accessions.

Statute text
(a)  Creation of security interest in accession. A security interest may be created in an accession and continues in collateral that becomes an accession.  
(b)  Perfection of security interest. If a security interest is perfected when the collateral becomes an accession, the security interest remains perfected in the collateral.  
(c)  Priority of security interest. Except as otherwise provided in subsection (d) of this Code section, the other provisions of this part determine the priority of a security interest in an accession.  
(d)  Compliance with certificate of title statute. 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 (b) of Code Section 11-9-311.  
(e)  Removal of accession after default. After default, subject to Part 6 of this article, 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.  
(f)  Reimbursement following removal. A secured party that removes an accession from other goods under subsection (e) of this Code section 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.  

History
(Code 1981, § 11-9-335, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977). For article surveying developments in the Georgia torts law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 247 (1981).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Nature of accessions. - Accessions are goods of such nature as to form "integral part" of whole good and are so attached to it, that they are one and the same thing under the accession rule. Glenn v. Trust Co., 152 Ga. App. 314, 262 S.E.2d 590 (1979); Stratton Indus., Inc. v. Northwest Ga. Bank, 191 Ga. App. 683, 382 S.E.2d 721 (1989) (decided under former Code Section 11-9-314).  
Lesser chattel must form such an integral part of greater chattel and must be so attached to it as to constitute one and the same thing in order to constitute an accession. Mixon v. Georgia Bank & Trust Co., 154 Ga. App. 32, 267 S.E.2d 483 (1980) (decided under former Code Section 11-9-314).  

Personalty annexed to realty may retain character as personalty. - Personalty purchased under retail installment contract, which is to be attached to realty, may by specific agreement of the parties, retain the personalty classification for the property where it is the intent of the seller and the purchaser that the personalty is not to become a fixture, but an "accession." Babson Credit Plan, Inc. v. Cordele Prod. Credit Ass'n, 146 Ga. App. 266, 246 S.E.2d 354 (1978) (decided under former Code Section 11-9-314).  

Interests exceeding "accessions" contemplated by section. - Since a security agreement endowed a loan company with a security interest broader than that created under former subsection (1) of this section, the company was obligated under federal law to reveal in its disclosure statement the extent to which its interests exceeded the scope of "accessions" contemplated by this statutory provision. Varner v. Century Fin. Co., 738 F.2d 1143 (11th Cir. 1984) (decided under former Code Section 11-9-314).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 101, 102, 155 et seq., 607-614, 955-958.  

C.J.S. - 1 C.J.S., Accession, §§ 9, 10.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-335.  

ALR. - Accession to property which is the subject of a conditional sale or chattel mortgage, 68 A.L.R. 1242.  

11-9-336. Commingled goods.

Statute text
(a)  "Commingled goods." As used in this Code section, the term "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.  
(b)  No security interest in commingled goods as such. 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.  
(c)  Attachment of security interest to product or mass. If collateral becomes commingled goods, a security interest attaches to the product or mass.  
(d)  Perfection of security interest. 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 (c) of this Code section is perfected.  
(e)  Priority of security interest. Except as otherwise provided in subsection (f) of this Code section, the other provisions of this part determine the priority of a security interest that attaches to the product or mass under subsection (c) of this Code section.  
(f)  Conflicting security interests in product or mass. If more than one security interest attaches to the product or mass under subsection (c) of this Code section, the following rules determine priority:  
(1) A security interest that is perfected under subsection (d) of this Code section has priority over a security interest that is unperfected at the time the collateral becomes commingled goods; and  
(2) If more than one security interest is perfected under subsection (d) of this Code section, the security interests rank equally in proportion to the value of the collateral at the time it became commingled goods.  

History
(Code 1981, § 11-9-336, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Applicability of section. - The former provisions of this section applied to combined inventory where one business is merged with another. Sowards v. State, 137 Ga. App. 423, 224 S.E.2d 85 (1976) (decided under former Code Section 11-9-315).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 58, 955-961.  

C.J.S. - 15A C.J.S., Confusion of Goods, §§ 3-9.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-336.  

11-9-337. Priority of security interests in goods covered by certificate of title.

Statute text
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 (b) of Code Section 11-9-311, after issuance of the certificate and without the conflicting secured party's knowledge of the security interest.  

History
(Code 1981, § 11-9-337, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Trial court erred in concluding that the security interest holder had a valid, perfected security interest in the vehicle that the car buyer purchased; ordinarily, its security interest would have been noted on the certificate of title issued at time of purchase, but the state motor vehicle department made a clerical error and did not include the security interest holder's security interest on the certificate of title and, as a result, the buyer was able to purchase the car free of the security interest holder's security interest pursuant to O.C.G.A. § 11-9-337, which provided an exception to enforcement of a security interest pursuant to O.C.G.A. § 40-3-50 for people taking delivery of a good without knowledge of a security interest. Metzger v. Americredit Fin. Svcs., 273 Ga. App. 453, 615 S.E.2d 120 (2005).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-337.  

11-9-338. Priority of security interest or agricultural lien perfected by filed financing statement providing certain incorrect information.

Statute text
If a security interest or agricultural lien is perfected by a filed financing statement providing information described in paragraph (5) of subsection (b) of Code Section 11-9-516 which is incorrect at the time the financing statement is filed:  

(1) The security interest or agricultural lien 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 or agricultural lien 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.  

History
(Code 1981, § 11-9-338, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-29/HB 451.)

Annotations
The 2010 amendment, effective May 27, 2010, substituted "tangible chattel paper, tangible documents" for "chattel paper, documents" near the end of paragraph (2). See the Editor's notes for applicability.  

  Editor's notes. - Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.  
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-338.  

11-9-339. Priority subject to subordination.

Statute text
This article does not preclude subordination by agreement by a person entitled to priority.  

History
(Code 1981, § 11-9-339, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations
Cross references. - Subordination of obligations, § 11-1-209.  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 160 et seq., 792-795.  

C.J.S. - 72 C.J.S., Pledges, § 23.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-339.  


PART 4

RIGHTS OF BANK


11-9-340. Effectiveness of right of recoupment or set-off against deposit account.

Statute text
(a)  Exercise of recoupment or set-off. Except as otherwise provided in subsection (c) of this Code section, a bank with which a deposit account is maintained may exercise any right of recoupment or set-off against a secured party that holds a security interest in the deposit account.  
(b)  Recoupment or set-off not affected by security interest. Except as otherwise provided in subsection (c) of this Code section, the application of this article to a security interest in a deposit account does not affect a right of recoupment or set-off of the secured party as to a deposit account maintained with the secured party.  
(c)  When set-off ineffective. The exercise by a bank of a set-off against a deposit account is ineffective against a secured party that holds a security interest in the deposit account which is perfected by control under paragraph (3) of subsection (a) of Code Section 11-9-104, if the set-off is based on a claim against the debtor.  

History
(Code 1981, § 11-9-340, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Bank's right of setoff superior. - In a case predicated on the Georgia tort law of conversion, a district court's entry of summary judgment in favor of a bank was affirmed because O.C.G.A. §§ 11-9-109(a)(1) and (d)(10)(A), and 11-9-340 governed the effectiveness of setoff rights in deposit accounts, brought the case expressly within the authority of the Uniform Commercial Code, and provided that the bank's setoff right was superior to any security interest of a company in a predecessor company's deposited funds. Eleison Composites, LLC v. Wachovia Bank, N.A.,    F.3d    (11th Cir. Mar. 7, 2008)(Unpublished).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-340.  

11-9-341. Bank's rights and duties with respect to deposit account.

Statute text
Except as otherwise provided in subsection (c) of Code Section 11-9-340, and unless the bank otherwise agrees in an authenticated record, a bank's rights and duties with respect to a deposit account 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;  
(2) The bank's knowledge of the security interest; or  
(3) The bank's receipt of instructions from the secured party.  

History
(Code 1981, § 11-9-341, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-341.  

11-9-342. Bank's right to refuse to enter into or disclose existence of control agreement.

Statute text
This article does not require a bank to enter into an agreement of the kind described in paragraph (2) of subsection (a) of Code Section 11-9-104, 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.  

History
(Code 1981, § 11-9-342, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-342.  

——————————
PART 4
RIGHTS OF THIRD PARTIES

Annotations
Law reviews. -  For annual survey of commercial law, see 38 Mercer L. Rev. 85 (1986).  


RESEARCH REFERENCES

C.J.S. - 79 C.J.S., Secured Transactions, §§ 25, 63 et seq., 134.  

11-9-401. Alienability of debtor's rights.

Statute text
(a)  Other law governs alienability; exceptions. Except as otherwise provided in subsection (b) of this Code section and Code Sections 11-9-406, 11-9-407, 11-9-408, and 11-9-409, whether a debtor's rights in collateral may be voluntarily or involuntarily transferred is governed by law other than this article.  
(b)  Agreement does not prevent transfer. 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.  

History
(Code 1981, § 11-9-401, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For note discussing procedures required to effect a levy of execution, see 12 Ga. L. Rev. 814 (1978).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 121, 122, 269, 510, 550, 553.  

C.J.S. - 72 C.J.S., Pledges, § 43.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-401.  

ALR. - Rights of pledgor of collateral note as affected by its transfer by the pledgee to the maker, 99 A.L.R. 26.  
Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.  
Construction and effect of UCC § 9-311 giving debtor right to transfer his interest in collateral, 45 A.L.R.4th 411.  

11-9-402. Secured party not obligated on contract of debtor or in tort.

Statute text
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.  

History
(Code 1981, § 11-9-402, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 510, 554, 926-930.  

C.J.S. - 77A C.J.S., Sales, § 291.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-402.  

11-9-403. Agreement not to assert defenses against assignee.

Statute text
(a)  "Value." As used in this Code section, the term "value" has the meaning provided in subsection (a) of Code Section 11-3-303.  
(b)  Agreement not to assert claim or defense. Except as otherwise provided in this Code 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:  
(1) For value;  
(2) In good faith;  
(3) Without notice of a claim of a property or possessory right to the property assigned; and  
(4) 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 (a) of Code Section 11-3-305.  
(c)  When subsection (b) of this Code section not applicable. Subsection (b) of this Code section does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under subsection (b) of Code Section 11-3-305.  
(d)  Omission of required statement in consumer transaction. In a consumer transaction, if a record evidences the account debtor's obligation, law other than this article 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:  
(1) The record has the same effect as if the record included such a statement; and  
(2) The account debtor may assert against an assignee those claims and defenses that would have been available if the record included such a statement.  
(e)  Rule for individual under other law. This Code section is subject to law other than this article 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.  
(f)  Other law not displaced. Except as otherwise provided in subsection (d) of this Code section, this Code section does not displace law other than this article which gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee.  

History
(Code 1981, § 11-9-403, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article supporting the retention of waiver of defense clauses in credit card agreements, see 10 Ga. St. B.J. 17 (1973). For article discussing the implied warranty of fitness for a particular purpose, see 9 Ga. L. Rev. 149 (1974). For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981).  

  For note analyzing consumer protection in retail installment contracts with reference to waiver of defenses by purchaser and the denial of holder in due course status to assignee of contract, in light of Geiger Fin. Co. v. Graham, 123 Ga. App. 771, 182 S.E.2d 521 (1971), see 23 Mercer L. Rev. 673 (1972).  

  For comment on Geiger Fin. Co. v. Graham, 123 Ga. App. 771, 182 S.E.2d 521 (1971), see 8 Ga. St. B.J. 400 (1972).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Applicability of section. - Former Section 11-9-206 is applicable to all transactions unless there is a different provision for consumer goods. Massey-Ferguson Credit Corp. v. Wiley, 655 F. Supp. 655 (M.D. Ga. 1987) (decided under former Code Section 11-9-206).  

Assignment of security interest. - Former Section 11-9-206 created holder in due course status for an assignee who takes a security agreement with a "waiver of defenses" clause even if the security agreement is assigned in the absence of the assignment of an Article III negotiable instrument in the same transaction. Massey-Ferguson Credit Corp. v. Wiley, 655 F. Supp. 655 (M.D. Ga. 1987) (decided under former Code Section 11-9-206).  

Breach of warranty. - Claim for breach of warranty is assertable only against the manufacturer and not against an assignee. Harrison v. Massey-Ferguson Credit Corp., 168 Ga. App. 788, 310 S.E.2d 544 (1983) (decided under former Code Section 11-9-206).  

Sale-lease back agreements. - Fact that sale-lease back agreement was not a secured transaction did not preclude application of the former provisions of this section. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981) (decided under former Code Section 11-9-206).  

Common law governs waiver of defense clauses in leases. - Georgia's version of § 9-206 (former § 11-9-206, see now § 11-9-406) of Uniform Commercial Code does not include phrases "or lessee(s)" and "or lessor" because Georgia did not adopt 1962 revision of Uniform Commercial Code which extended § 9-206 (former § 11-9-206, see now § 11-9-406) to leases; thus, in Georgia, common law rather than § 9-206 (former § 11-9-206, see now § 11-9-406) governs effect of waiver of defense clauses in leases. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981) (decided under former Code Section 11-9-206).  

Party-to-the-transaction rule. - For a discussion of the party-to-the-transaction rule as a defense to the holder in due course status, see Design Eng'g, Constr. Int'l, Inc. v. Cessna Fin. Corp., 164 Ga. App. 159, 296 S.E.2d 195 (1982) (decided under former Code Section 11-9-206).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 13, 14, 65-67, 106, 110-112, 145, 192 et seq., 282-284, 514, 538 et seq.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-403.  

ALR. - Validity, in contract for installment sale of consumer goods, or commercial paper given in connection therewith, of provision waiving, as against assignee, defenses good against seller, 39 A.L.R.3d 518.  

11-9-404. Rights acquired by assignee; claims and defenses against assignee.

Statute text
(a)  Assignee's rights subject to terms, claims, and defenses; exceptions. Unless an account debtor has made an enforceable agreement not to assert defenses or claims and subject to subsections (b) through (e) of this Code section, the rights of an assignee are subject to:  
(1) 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  
(2) Any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives a notification of the assignment authenticated by the assignor or the assignee.  
(b)  Account debtor's claim reduces amount owed to assignee. Subject to subsection (c) of this Code section and except as otherwise provided in subsection (d) of this Code section, the claim of an account debtor against an assignor may be asserted against an assignee under subsection (a) of this Code section only to reduce the amount the account debtor owes.  
(c)  Rule for individual under other law. This Code section is subject to law other than this article 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.  
(d)  Omission of required statement in consumer transaction. In a consumer transaction, if a record evidences the account debtor's obligation, law other than this article 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.  
(e)  Inapplicability to health care insurance receivable. This Code section does not apply to an assignment of a health care insurance receivable.  

History
(Code 1981, § 11-9-404, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981).  


JUDICIAL DECISIONS

Notice of assignment sufficient. - Under former O.C.G.A. § 11-9-318(3), appellee assignee's notice to appellant county that a third party providing custodial services to appellant had assigned its invoice payments to appellee was sufficient to inform appellant that it was required to make invoice payments to appellee and any further payments made to the third party were made at appellant's peril. Fulton County v. Am. Factors of Nashville, Inc., 250 Ga. App. 366, 551 S.E.2d 781 (2001).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 39-53, 539-554, 796-800.  

C.J.S. - 6A C.J.S., Assignments, §§ 65, 66, 99. 72 C.J.S., Pledges, § 41.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-404.  

ALR. - Payment of judgment by debtor without notice of its assignment, 32 A.L.R. 1021.  
Waiver or estoppel with respect to debtor's assertion, as to setoff or counterclaim against assignee, of claim valid as against assignor, 51 A.L.R.2d 886.  

11-9-405. Modification of assigned contract.

Statute text
(a)  Effect of modification on assignee. 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 (b) through (d) of this Code section.  
(b)  Applicability of subsection (a) of this Code section. Subsection (a) of this Code section applies to the extent that:  
(1) The right to payment or a part thereof under an assigned contract has not been fully earned by performance; or  
(2) 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 (a) of Code Section 11-9-406.  
(c)  Rule for individual under other law. This Code section is subject to law other than this article 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.  
(d)  Inapplicability to health care insurance receivable. This Code section does not apply to an assignment of a health care insurance receivable.  

History
(Code 1981, § 11-9-405, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 39-53, 539-554, 796-800.  

C.J.S. - 6A C.J.S., Assignments, §§ 65, 66, 99. 72 C.J.S., Pledges, § 41.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-405.  

ALR. - Payment of judgment by debtor without notice of its assignment, 32 A.L.R. 1021.  
Waiver or estoppel with respect to debtor's assertion, as to setoff or counterclaim against assignee, of claim valid as against assignor, 51 A.L.R.2d 886.  

11-9-406. 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.

Statute text
(a)  Discharge of account debtor; effect of notification. Subject to subsections (b) through (i) of this Code section, 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, authenticated 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.  
(b)  When notification ineffective. Subject to subsection (h) of this Code section, notification is ineffective under subsection (a) of this Code section:  
(1) If it does not reasonably identify the rights assigned;  
(2) 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 article; or  
(3) 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:  
(A) Only a portion of the account, chattel paper, or payment intangible has been assigned to that assignee;  
(B) A portion has been assigned to another assignee; or  
(C) The account debtor knows that the assignment to that assignee is limited.  
(c)  Proof of assignment. Subject to subsection (h) of this Code section, 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 (a) of this Code section.  
(d)  Term restricting assignment generally ineffective. Except as otherwise provided in subsection (e) of this Code section and Code Sections 11-2A-303, 11-9-407, and 53-12-80 through 53-12-83 and subject to subsection (h) of this Code section, a term in an agreement between an account debtor and an assignor or in a promissory note shall be ineffective to the extent that it:  
(1) 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  
(2) 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, chattel paper, payment intangible, or promissory note.  
(e)  Inapplicability of subsection (d) of this Code section to certain sales. Subsection (d) of this Code section does not apply to the sale of a payment intangible or promissory note, other than a sale pursuant to a disposition under Code Section 11-9-610 or an acceptance of collateral under Code Section 11-9-620.  
(f)  Legal restrictions on assignment generally ineffective. Except as otherwise provided in Code Sections 11-2A-303 and 11-9-407 and subject to subsections (h) and (i) of this Code section, 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:  
(1) 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  
(2) 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.  
(g)  Paragraph (3) of subsection (b) not waivable. Subject to subsection (h) of this Code section, an account debtor may not waive or vary its option under paragraph (3) of subsection (b) of this Code section.  
(h)  Rule for individual under other law. This Code section is subject to law other than this article 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.  
(i)  Inapplicability to health care insurance receivable. This Code section does not apply to an assignment of a health care insurance receivable.  

History
(Code 1981, § 11-9-406, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 579, § 6/SB 131; Ga. L. 2013, p. 690, § 8/SB 185.)

Annotations
The 2010 amendment, effective July 1, 2010, in the introductory paragraph of subsection (d), substituted "and 53-12-80 through 53-12-83" for "and 53-12-28" in the middle and substituted "shall be" for "is" near the end.  

The 2013 amendment, effective July 1, 2013, added ", other than a sale pursuant to a disposition under Code Section 11-9-610 or an acceptance of collateral under Code Section 11-9-620" at the end of subsection (e).  
Law reviews. -  For article, "Commercial Law," see 53 Mercer L. Rev. 153 (2001).  


JUDICIAL DECISIONS

Assignment to surety. - Trial court properly granted a surety's motion for summary judgment because the security interest in the accounts owed was covered by the Uniform Commercial Code, and to the extent that the anti-assignment clauses of the construction contract could be construed to prohibit the roofing company from assigning the surety's right to those accounts to the surety, the contracts were unenforceable as a matter of law under O.C.G.A. § 11-9-406(d)(1). State Dep't of Corr. v. Developers Sur. & Indem. Co., 324 Ga. App. 371, 750 S.E.2d 697 (2013).  

Cited in Callaway Blue Springs, LLLP v. West Basin Capital, LLC, 341 Ga. App. 535, 801 S.E.2d 325 (2017).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-406.  

ALR. - Construction and application of U.C.C. § 9-406 and former U.C.C. § 9-318(3) providing that account debtor is authorized to pay assignor until receipt of notification to pay assignee, 35 A.L.R.6th 437.  

11-9-407. Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest.

Statute text
(a)  Term restricting assignment generally ineffective. Except as otherwise provided in subsection (b) of this Code section, a term in a lease agreement is ineffective to the extent that it:  
(1) 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  
(2) 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.  
(b)  Effectiveness of certain terms. Except as otherwise provided in subsection (7) of Code Section 11-2A-303, a term described in paragraph (2) of subsection (a) of this Code section is effective to the extent that there is:  
(1) A transfer by the lessee of the lessee's right of possession or use of the goods in violation of the term; or  
(2) A delegation of a material performance of either party to the lease contract in violation of the term.  
(c)  Security interest not material impairment. 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 Code Section 11-2A-303 unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor.  

History
(Code 1981, § 11-9-407, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-407.  

11-9-408. Restrictions on assignment of promissory notes, health care insurance receivables, and certain general intangibles ineffective.

Statute text
(a)  Term restricting assignment generally ineffective. Except as otherwise provided in subsection (b) of this Code section or in Code Section 53-12-80, 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, shall be ineffective to the extent that the term:  
(1) Would impair the creation, attachment, or perfection of a security interest; or  
(2) 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.  
(b)  Applicability of subsection (a) of this Code section to sales of certain rights to payment. Subsection (a) of this Code section 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 Code Section 11-9-610 or an acceptance of collateral under Code Section 11-9-620.  
(c)  Legal restrictions on assignment generally ineffective.  Except as otherwise provided in Code Section 53-12-80, 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, shall be ineffective to the extent that the rule of law, statute, or regulation:  
(1) Would impair the creation, attachment, or perfection of a security interest; or  
(2) 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.  
(d)  Limitation on ineffectiveness under subsections (a) and (c) of this Code section. 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 (c) of this Code section would be effective under law other than this article but is ineffective under subsection (a) or (c) of this Code section, the creation, attachment, or perfection of a security interest in the promissory note, health care insurance receivable, or general intangible:  
(1) Is not enforceable against the person obligated on the promissory note or the account debtor;  
(2) Does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;  
(3) 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;  
(4) 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;  
(5) 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  
(6) Does not entitle the secured party to enforce the security interest in the promissory note, health care insurance receivable, or general intangible.  

History
(Code 1981, § 11-9-408, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 579, § 7/SB 131; Ga. L. 2013, p. 690, § 9/SB 185.)

Annotations
The 2010 amendment, effective July 1, 2010, in the introductory paragraphs of subsections (a) and (c), substituted "Code Section 53-12-80" for "Code Section 53-12-28" and substituted "shall be ineffective" for "is ineffective" near the end; deleted "assignment, transfer," preceding "creation, attachment," in paragraph (c)(1); and inserted "assignment, transfer," near the beginning of paragraph (c)(2).  

The 2013 amendment, effective July 1, 2013, added ", other than a sale pursuant to a disposition under Code Section 11-9-610 or an acceptance of collateral under Code Section 11-9-620" at the end of subsection (b).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-408.  

11-9-409. Restrictions on assignment of letter of credit rights ineffective.

Statute text
(a)  Term or law restricting assignment generally ineffective. 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:  
(1) Would impair the creation, attachment, or perfection of a security interest in the letter of credit right; or  
(2) 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 letter of credit right.  
(b)  Limitation on ineffectiveness under subsection (a) of this Code section. To the extent that a term in a letter of credit is ineffective under subsection (a) of this Code section but would be effective under law other than this article 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:  
(1) Is not enforceable against the applicant, issuer, nominated person, or transferee beneficiary;  
(2) Imposes no duties or obligations on the applicant, issuer, nominated person, or transferee beneficiary; and  
(3) 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.  

History
(Code 1981, § 11-9-409, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-409.  

——————————
PART 5
FILING


Annotations
Cross references. - Applicability of part to default by buyer of goods sold in "home solicitation sale," as defined in § 10-1-2, § 10-1-10.  
Respective rights of buyer, seller, etc., following repossession of motor vehicle sold under retail installment contract, § 10-1-36.  
Law reviews. -  For article discussing secured creditors' legal and equitable remedies and debtors' protections under the Uniform Commercial Code, see 3 Ga. L. Rev. 198 (1968). For annual survey of commercial law, see 38 Mercer L. Rev. 85 (1986). For article, "Nonjudicial Foreclosures in Georgia: Fresh Doubts, Issues and Strategies," see 23 Ga. St. B.J. 123 (1987).  


JUDICIAL DECISIONS

Prerequisites for deficiency claim allowable under this article. - O.C.G.A. § 10-1-36 provides cumulative additional rights and remedies which must be fulfilled before any deficiency claim under this former article and former part will lie against a buyer. Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980).  


RESEARCH REFERENCES

C.J.S. - 79 C.J.S., Secured Transactions, § 144 et seq.  


PART 1

FILING OFFICE; CONTENTS AND EFFECTIVENESS OF FINANCING STATEMENT


11-9-501. Filing office.

Statute text
(a)  Filing offices. Except as otherwise provided in subsection (b) of this Code section, if the 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:  
(1) The office designated for the filing or recording of a record of a mortgage on the related real property, if:  
(A) The collateral is as-extracted collateral, growing crops, or timber to be cut; or  
(B) The financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; or  
(2) The office of the clerk of the superior court of any county of this 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.  
(b)  Filing office for transmitting utilities. 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 clerk of the superior court of any county of this 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.  

History
(Code 1981, § 11-9-501, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2002, p. 995, § 6.)

Annotations
The 2002 amendment, effective July 1, 2002, inserted "growing" in the middle of subparagraph (a)(1)(A).  

  Editor's notes. - Ga. L. 2002, p. 995, § 8, not codified by the General Assembly, provides that: "This Act shall become effective July 1, 2002, and shall apply to a letter of credit that is issued on or after July 1, 2002. This Act does not apply to a transaction, event, obligation, or duty arising out of or associated with a letter of credit that was issued before July 1, 2002."  
Law reviews. -  For article, "Real Property and the Federal Tax Lien Act of 1966," see 3 Ga. St. B.J. 459 (1967). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For survey article on commercial law, see 34 Mercer L. Rev. 31 (1982). For annual survey article discussing central filing system, see 46 Mercer L. Rev. 95 (1994).  

  For comment on In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd per curiam, 460 F.2d 1405 (5th Cir. 1972), holding that the proper place for debtor corporation to file financial statement is the "factual" principal place of business, see 9 Ga. St. B.J. 388 (1973).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Underlying purpose of this section was the establishment of purely local filing system. In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd, 460 F.2d 1405 (5th Cir. 1972) (decided under former Code Section 11-9-401).  

Purpose of former subsection (1)(b). - Policy of former subsection (1)(b) of this section was to require filing in place or places where creditor would normally look for information concerning interests created by debtor. In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd, 460 F.2d 1405 (5th Cir. 1972) (decided under former Code Section 11-9-401).  

Compliance. - Trial court properly granted summary judgment pursuant to O.C.G.A. § 9-11-56 to colt possessors in a tortious interference with a contract claim by a horse trainer, wherein the trainer alleged that the trainer had a contract to keep the recently born colt in exchange for continued services to the mare's owner; the court found that there was no showing that the possessors were aware of a contract regarding the ownership of the colt, the possessors had followed the necessary procedures for filing a financing statement under O.C.G.A. §§ 11-9-501 through 11-9-504, they had allegedly foreclosed on their lien on the mare by the time that they became aware of the trainer's claim, pursuant to O.C.G.A. § 44-14-490, and the trainer did not record a lien against the colt pursuant to O.C.G.A. § 44-14-511. Medlin v. Morganstern, 268 Ga. App. 116, 601 S.E.2d 359 (2004).  

Apparent intent of words "not an individual" is to differentiate individual proprietorships from other business entities. Retreading Equip., Inc. v. Murphy, 5 Bankr. 596 (N.D. Ga. 1980) (decided under former Code Section 11-9-401).  

Proper place to file financing statement. - The proper place to file financing statement under former subsection (1)(b) of this section was county of debtor corporation's factual principal place of business. In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd, 460 F.2d 1405 (5th Cir. 1972) (decided under former Code Section 11-9-401).  

Meaning of "principal place of business". - Failure of legislature in enacting this section to make specific reference to "principal office" concept indicates it did not intend that "principal office" of corporate charter should be equivalent to "principal place of business." In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd, 460 F.2d 1405 (5th Cir. 1972) (decided under former Code Section 11-9-401).  
By using term "principal place of business" in this section, legislature intended that proper place for filing of financing statement be the "factual" principal place of business and not "principal office" as designated in corporate charter. In re Carmichael Enters., Inc., 334 F. Supp. 94 (N.D. Ga. 1971), aff'd, 460 F.2d 1405 (5th Cir. 1972) (decided under former Code Section 11-9-401).  

Knowledge of contents of financing statement. - Knowledge of claimed security interest is not equivalent to knowledge of contents of financing statement. United States v. Waterford No. 2 Office Center, 246 Ga. 475, 271 S.E.2d 790 (1980) (decided under former Code Section 11-9-401).  

Preservation of chattel interest in fixtures. - This former section and §§ 11-9-402 and 11-9-403 (see now §§ 11-9-502 et seq. and 11-9-601 et seq.) provide for fixture filing to enable secured party with chattel interest in goods which are or are to become fixtures to preserve that interest. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-401).  

Liability of negligent title researcher. - Failure of law firm's title researcher to find improperly indexed deed to secure debt in personalty docket, or a Uniform Commercial Code financing statement not cross-indexed to realty docket does not make law firm for title insurer a joint tort-feasor with grantor who breaches warranty of title to grantee, as the tort is the breach of warranty and causation for such breach of warranty lies solely at hands of defendants. The law firm's delict, if any, was failure to detect defendants' delict. Pease & Elliman Realty Trust v. Gaines, 160 Ga. App. 125, 286 S.E.2d 448 (1981) (decided under former Code Section 11-9-401).  

Harvested peanut crops. - Plaintiffs' filing of their financing statement in the proper county gave defendant legal notice of plaintiffs' security interests and liens in peanut crops defendant purchased, even though the clerk incorrectly recorded the financing statement, and the perfected security interests remained effective even though the crops were harvested. Bartolan, Inc. v. Columbian Peanut Co., 727 F. Supp. 1444 (M.D. Ga. 1989) (decided under former Code Section 11-9-401).  

The effective date for the statewide filing and central indexing system for financing statements was January 1, 1995. Trust Co. Bank v. Georgia Superior Court Clerks' Coop. Auth., 265 Ga. 390, 456 S.E.2d 571 (1995) (decided under former Code Section 11-9-401).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 304, 323, 378 et seq.  

C.J.S. - 6A C.J.S., Assignments, § 52. 72 C.J.S., Pledges, § 14.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-501.  

ALR. - Withdrawal of paper after delivery to proper officer as affecting question whether it is filed, 37 A.L.R. 670.  
What amounts to notice which will subject one's rights to an unrecorded conditional sale contract, 159 A.L.R. 669.  
Necessity that mortgage covering oil and gas lease be recorded as real-estate mortgage, and/or filed or recorded as chattel mortgage, 34 A.L.R.2d 902.  

11-9-502. Contents of financing statement; record of mortgage as fixture filing or financing statement; time of filing financing statement.

Statute text
(a)  Sufficiency of financing statement. Subject to subsection (b) of this Code section, a financing statement is sufficient only if it:  
(1) Provides the name of the debtor;  
(2) Provides the name of the secured party or a representative of the secured party;  
(3) Indicates the collateral covered by the financing statement; and  
(4) Where both (A) the collateral described consists only of consumer goods as defined in paragraph (24) of subsection (a) of Code Section 11-9-102 and (B) the secured obligation is originally $5,000.00 or less, gives the maturity date of the secured obligation or specifies that such obligation is not subject to a maturity date.  
(b)  Real property related financing statements. Except as otherwise provided in subsection (b) of Code Section 11-9-501, to be sufficient, a financing statement that covers as-extracted collateral, growing crops, 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 (a) of this Code section and also:  
(1) Indicate that it covers this type of collateral;  
(2) Indicate that it is to be filed for record in the real property records;  
(3) 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  
(4) If the debtor does not have an interest of record in the real property, provide the name of a record owner.  
(c)  Record of mortgage as fixture filing or financing statement. A record of a mortgage filed prior to January 1, 1995, which was effective as a fixture filing when recorded remains effective as a fixture filing, and a record of a mortgage recorded on or after July 1, 2013, 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:  
(1) The record indicates the goods or accounts that it covers;  
(2) 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;  
(3) The record satisfies the requirements for a financing statement in this Code section, but:  
(A) The record need not indicate that it is to be filed in the real property records; and  
(B) The record sufficiently provides the name of a debtor who is an individual if it 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 paragraph (4) of subsection (a) of Code Section 11-9-503 applies; and  
(4) The record is duly recorded.  
(d)  Filing before security agreement or attachment. A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.  

History
(Code 1981, § 11-9-502, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2002, p. 995, § 7; Ga. L. 2013, p. 690, § 10/SB 185.)

Annotations
The 2002 amendment, effective July 1, 2002, inserted "growing" near the middle of the introductory language of subsection (b).  

The 2013 amendment, effective July 1, 2013, substituted the present provisions of subsection (c) for the former provisions, which read: "Real estate mortgages as fixture filings. A real estate mortgage may not be filed as a fixture filing, but one filed prior to January 1, 1995, which was effective as a fixture filing when filed, remains effective as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real estate."  

  Editor's notes. - Ga. L. 2002, p. 995, § 8, not codified by the General Assembly, provides that: "This Act shall become effective July 1, 2002, and shall apply to a letter of credit that is issued on or after July 1, 2002. This Act does not apply to a transaction, event, obligation, or duty arising out of or associated with a letter of credit that was issued before July 1, 2002."  
Law reviews. -  For article discussing Uniform Commercial Code provisions establishing a security interest in fixtures as a means of protecting sellers, see 16 Mercer L. Rev. 404 (1965). For article discussing the Uniform Commercial Code provisions regarding the sufficiency of "The Description of Collateral in Security Agreements and Financing Statements," see 28 Mercer L. Rev. 611 (1977). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "Fixture Financing Under Georgia's New Article 9," see 16 Ga. St. B.J. 110 (1980). For article, "H.B. 712: New Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 22 Ga. St. B.J. 6 (1985). For article, "H.B. 1364: Revised Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 23 Ga. St. B.J. 50 (1986). For annual survey of law of real property, see 38 Mercer L. Rev. 319 (1986). For annual survey article on commercial law, see 50 Mercer L. Rev. 193 (1998).  

  For comment on United States v. Crittenden, 563, F.2d 678 (5th Cir. 1977), appearing below, see 12 Ga. L. Rev. 692 (1977).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Applicability to financing statements, not security agreements. - Requirement that identification of collateral indicate type of collateral is applicable to financing statements, not security agreements. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-402).  

"Type" of collateral construed. - This section allowed a secured party to file a financing statement which describes the property only by its "type." A type of collateral is, for example, goods, accounts, chattel paper, general intangibles, etc. Woodrum v. Ford Motor Credit Co., 940 F.2d 1507 (11th Cir. 1991) (decided under former Code Section 11-9-402).  

Serial number alone does not "indicate the type" of collateral. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-402).  

Question of fact as to whether financing statement seriously misleading. - In a suit involving the defendant defaulting on loans secured by property that was allegedly tortuously converted by sale, the grant of summary judgment to the plaintiff was reversed, in part, because an issue of material fact remained as to whether the financing statement was valid as to the name provided on the financing statement and whether the incorrect name made the statement seriously misleading. Rebel Auction Co. v. Citizens Bank, 343 Ga. App. 81, 805 S.E.2d 913 (2017).  

Security interest not perfected. - Where a search of the county records did not reveal a financing statement due to a mistake in the name of the debtor shown on the financing statement, the security interest in the funds relating to the financing statement was not perfected, and the money was awarded to a judgment creditor in an interpleader action. Receivables Purchasing Co. v. R & R Directional Drilling, L.L.C., 263 Ga. App. 649, 588 S.E.2d 831 (2003).  
Because an attorney who handled a closing in the capacity of an escrow agent for the client's business had no actual or constructive notice of a creditor's security interest in the business due to the improper filing pursuant to O.C.G.A. §§ 11-9-502, 11-9-503, and 11-9-506, because the debtor's name was not properly listed and the interest was accordingly not perfected, claims as to conversion of the business closing proceeds failed. All Bus. Corp. v. Choi, 280 Ga. App. 618, 634 S.E.2d 400 (2006).  


OPINIONS OF THE ATTORNEY GENERAL

Editor's notes. - In the light of the similarity of the provisions, opinions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Duty of superior court clerks. - Clerks of superior court are not required to determine that property subject to a U.C.C. financing statement is properly described before recording the statement. 1982 Op. Att'y Gen. No. U82-38.  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 32, 192 et seq., 310, 311, 329 et seq., 352-354, 365, 395.  

C.J.S. - 76 C.J.S., Records, § 4.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-502.  

ALR. - What amounts to a conditional sale, 17 A.L.R. 1421; 43 A.L.R. 1247; 92 A.L.R. 304; 175 A.L.R. 1366.  
Violation of statute as to form of, or terms to be included in, conditional sale contract, as invalidating entire transaction or merely its effect to reserve title in vendor, 144 A.L.R. 1103.  
Priority as between federal tax lien and mortgage to secure future advances or expenditures by mortgagee, 90 A.L.R.2d 1179.  
Sufficiency of description of crops under UCC §§ 9-203(1)(b) and 9-402(1), 67 A.L.R.3d 308; 100 A.L.R.3d 10; 100 A.L.R.3d 940.  
Sufficiency of designation of debtor or secured party in security agreement or financing statement under UCC § 9-402, 99 A.L.R.3d 478.  
Sufficiency of address of debtor in financing statement required by UCC § 9-402(1), 99 A.L.R.3d 807.  
Sufficiency of address of secured party in financing statement required under UCC § 9-402(1), 99 A.L.R.3d 1080.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  
Sufficiency of secured party's signature on financing statement or security agreement under UCC § 9-402, 100 A.L.R.3d 390.  
Sufficiency of debtor's signature on security agreement or financing statement under UCC §§ 9-203 and 9-402, 3 A.L.R.4th 502.  

11-9-503. Name of debtor and secured party.

Statute text
(a)  Sufficiency of debtor's name. A financing statement sufficiently provides the name of the debtor:  
(1) Except as otherwise provided in paragraph (3) of this subsection, 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;  
(2) Subject to subsection (f) of this Code section, 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;  
(3) If the collateral is held in a trust that is not a registered organization, only if the financing statement:  
(A) Provides, as the name of the debtor:  
(i) If the organic record of the trust specifies a name for the trust, the name specified; or  
(ii) If the organic record of the trust does not specify a name for the trust, the name of the settlor or testator; and  
(B) In a separate part of the financing statement:  
(i) If the name is provided in accordance with division (3)(A)(i) of this subsection, indicates that the collateral is held in a trust; or  
(ii) If the name is provided in accordance with division (3)(A)(ii) of this subsection, 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;  
(4) Subject to subsection (g) of this Code section, if the debtor is an individual to whom this state has issued a driver's license that has not expired, only if the financing statement provides the name of the individual which is indicated on the driver's license;  
(5) If the debtor is an individual to whom paragraph (4) of this subsection 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  
(6) In other cases:  
(A) If the debtor has a name, only if the financing statement provides the organizational name of the debtor; and  
(B) If the debtor does not have a name, only if it 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.  
(b)  Additional debtor related information. A financing statement that provides the name of the debtor in accordance with subsection (a) of this Code section is not rendered ineffective by the absence of:  
(1) A trade name or other name of the debtor; or  
(2) Unless required under subparagraph (a)(6)(B) of this Code section, names of partners, members, associates, or other persons comprising the debtor.  
(c)  Debtor's trade name insufficient. A financing statement that provides only the debtor's trade name does not sufficiently provide the name of the debtor.  
(d)  Representative capacity. 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.  
(e)  Multiple debtors and secured parties. A financing statement may provide the name of more than one debtor and the name of more than one secured party.  
(f)  Name of decedent. 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 paragraph (2) of subsection (a) of this Code section.  
(g)  Multiple driver's licenses. If this state has issued to an individual more than one driver's license of a kind described in paragraph (4) of subsection (a) of this Code section, the one that was issued most recently is the one to which such paragraph refers.  
(h)  Definition. As used in this Code section, the term "name of the settlor or testator" means:  
(1) If the settlor is a registered organization, the name that is stated to be the settlor's name on the public organic record most recently filed with or issued or enacted by the settlor's jurisdiction of organization which purports to state, amend, or restate the settlor's name; or  
(2) In other cases, the name of the settlor or testator indicated in the trust's organic record.  

History
(Code 1981, § 11-9-503, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 11/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, substituted the present provisions of paragraphs (a)(1) through (a)(3), for the former provisions, which read: "(1) If the debtor is a registered organization, only if the financing statement provides the name of the debtor indicated on the public record of the debtor's jurisdiction of organization which shows the debtor to have been organized;  
"(2) If the debtor is a decedent's estate, only if the financing statement provides the name of the decedent and indicates that the debtor is an estate;  
"(3) If the debtor is a trust or a trustee acting with respect to property held in trust, only if the financing statement:  
"(A) Provides the name specified for the trust in its organic documents or, if no name is specified, provides the name of the settlor and additional information sufficient to distinguish the debtor from other trusts having one or more of the same settlors; and  
"(B) Indicates, in the debtor's name or otherwise, that the debtor is a trust or is a trustee acting with respect to property held in trust; and"; added present paragraphs (a)(4) and (a)(5); redesignated former paragraph (a)(4) as paragraph (a)(6); substituted "the financing statement provides the organizational" for "'it provides the individual or organizational" in subparagraph (a)(6)(A); added ", in a manner that each name provided would be sufficient if the person named were the debtor" at the end of subparagraph (a)(6)(B); substituted "subparagraph (a)(6)(B)" for "subparagraph (a)(4)(B)" in paragraph (b)(2); and added subsections (f) through (h).  
Law reviews. -  For article discussing Uniform Commercial Code provisions establishing a security interest in fixtures as a means of protecting sellers, see 16 Mercer L. Rev. 404 (1965). For article discussing the Uniform Commercial Code provisions regarding the sufficiency of "The Description of Collateral in Security Agreements and Financing Statements," see 28 Mercer L. Rev. 611 (1977). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "Fixture Financing Under Georgia's New Article 9," see 16 Ga. St. B.J. 110 (1980). For article, "H.B. 712: New Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 22 Ga. St. B.J. 6 (1985). For article, "H.B. 1364: Revised Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 23 Ga. St. B.J. 50 (1986). For annual survey of law of real property, see 38 Mercer L. Rev. 319 (1986). For annual survey article on commercial law, see 50 Mercer L. Rev. 193 (1998).  

  For comment on United States v. Crittenden, 563, F.2d 678 (5th Cir. 1977), appearing below, see 12 Ga. L. Rev. 692 (1977).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Name of debtor required. - This section contemplates a financing statement which shows name of debtor. Citizens Bank v. Ansley, 467 F. Supp. 51 (M.D. Ga.), aff'd, 604 F.2d 669 (5th Cir. 1979) (decided under former Code Section 11-9-402).  

Name indicated on driver's license. - Name "indicated on the driver's license" refers only to the name typed on the driver's license and does not include the name signed by the debtor. Pierce v. Farm Bureau Bank (In re Pierce), 581 Bankr. 912 (Bankr. S.D. Ga. 2018).  

Security interest not perfected. - Where a search of the county records did not reveal a financing statement due to a mistake in the name of the debtor shown on the financing statement, the security interest in the funds relating to the financing statement was not perfected, and the money was awarded to a judgment creditor in an interpleader action. Receivables Purchasing Co. v. R & R Directional Drilling, L.L.C., 263 Ga. App. 649, 588 S.E.2d 831 (2003).  
Because an attorney who handled a closing in the capacity of an escrow agent for the client's business had no actual or constructive notice of a creditor's security interest in the business due to the improper filing pursuant to O.C.G.A. §§ 11-9-502, 11-9-503, and 11-9-506, because the debtor's name was not properly listed and the interest was accordingly not perfected, claims as to conversion of the business closing proceeds failed. All Bus. Corp. v. Choi, 280 Ga. App. 618, 634 S.E.2d 400 (2006).  

Debtor's name only in trade name form. - Financing statement showing debtor's name only in unregistered trade name form is not legally sufficient to create security interest. In re Firth, 363 F. Supp. 369 (M.D. Ga. 1973) (decided under former Code Section 11-9-402).  
Filing of a financing statement under a corporate debtor's trade name, was sufficient, where business was done under the trade name and any reasonably prudent creditor would have searched the records under that name. In re Simpson Motor Co., 101 Bankr. 813 (Bankr. N.D. Ga. 1989) (decided under former Code Section 11-9-402).  
Creditor's filing of a financing statement on the debtor's automobiles in the debtor's trade name rather than its legal name was sufficient, even though the creditor knew the legal name but decided not to file under it, where the debtor did business only under one trade name. Willson v. Habersham Bank, 111 Bankr. 368 (N.D. Ga. 1990) (decided under former Code Section 11-9-402).  

Signature material aspect of financing statement. - Unless former subsection (2) of this section applies, the debtor's signature is a material aspect of the financing statement. USI Capital & Leasing v. Medical Oxygen Serv., Inc., 36 Bankr. 341 (Bankr. N.D. Ga. 1984) (decided under former Code Section 11-9-402).  

Signature by real debtor in individual capacity on behalf of fictitious entity. - Where real debtor has not signed financing statement in his individual capacity, but only on behalf of fictitious business entity, it is conceptually insufficient since signature of real debtor in his real name does not appear thereon. In re Firth, 363 F. Supp. 369 (M.D. Ga. 1973) (decided under former Code Section 11-9-402).  

Fictitious signature is insufficient notice to subsequent creditors. - While this section has effect of binding those persons who contract in fictitious names to contracts, so executed, it does not have effect of saying that financing statements given in fictitious names are sufficient to notify subsequent creditors of identity of party using the fictitious name. Were a court to hold otherwise, the purpose of statutory scheme of requiring security interest to be perfected by filing a financing statement - to give notice to future creditors of debtor - would be seriously undermined. In re Firth, 363 F. Supp. 369 (M.D. Ga. 1973) (decided under former Code Section 11-9-402).  

Signatures required for amendments. - Section was amended in 1978 specifically to require signatures of debtors to amendments to financing statements. Walter E. Heller & Co. v. Aetna Bus. Credit, Inc., 158 Ga. App. 249, 280 S.E.2d 144 (1981) (decided under former Code Section 11-9-402).  

Question of fact as to whether financing statement seriously misleading. - In a suit involving the defendant defaulting on loans secured by property that was allegedly tortuously converted by sale, the grant of summary judgment to the plaintiff was reversed, in part, because an issue of material fact remained as to whether the financing statement was valid as to the name provided on the financing statement and whether the incorrect name made the statement seriously misleading. Rebel Auction Co. v. Citizens Bank, 343 Ga. App. 81, 805 S.E.2d 913 (2017).  

Failure to file amended financing statement. - Where creditor failed to file an amended financing statement reflecting debtor's name change, its original filing was not effective to perfect a security interest in collateral acquired by debtor more than four months after it changed its name. Pettigrew v. Consultants United, Inc. (In re Specialcare, Inc.), 209 Bankr. 13 (Bankr. N.D. Ga. 1997) (decided under former Code Section 11-9-503).  

First lienholder still protected despite error in financing statement. - Even assuming a financing statement became seriously misleading due to a change in the debtor's name after dissolution of the corporation, the first lienholder was still protected as to collateral acquired through that time and up to four months thereafter. Western Auto Supply Co. v. McKenzie, 227 Ga. App. 477, 489 S.E.2d 537 (1997) (decided under former Code Section 11-9-503).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 32, 192 et seq., 310, 311, 329 et seq., 352-354, 365, 395.  

C.J.S. - 76 C.J.S., Records, § 4.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-503.  

ALR. - What amounts to a conditional sale, 17 A.L.R. 1421; 43 A.L.R. 1247; 92 A.L.R. 304; 175 A.L.R. 1366.  
Violation of statute as to form of, or terms to be included in, conditional sale contract, as invalidating entire transaction or merely its effect to reserve title in vendor, 144 A.L.R. 1103.  
Priority as between federal tax lien and mortgage to secure future advances or expenditures by mortgagee, 90 A.L.R.2d 1179.  
Sufficiency of description of crops under UCC §§ 9-203(1)(b) and 9-402(1), 67 A.L.R.3d 308; 100 A.L.R.3d 10; 100 A.L.R.3d 940.  
Sufficiency of designation of debtor or secured party in security agreement or financing statement under UCC § 9-402, 99 A.L.R.3d 478.  
Sufficiency of address of debtor in financing statement required by UCC § 9-402(1), 99 A.L.R.3d 807.  
Sufficiency of address of secured party in financing statement required under UCC § 9-402(1), 99 A.L.R.3d 1080.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  
Sufficiency of secured party's signature on financing statement or security agreement under UCC § 9-402, 100 A.L.R.3d 390.  
Sufficiency of debtor's signature on security agreement or financing statement under UCC §§ 9-203 and 9-402, 3 A.L.R.4th 502.  
Sufficiency and effectiveness of designation of debtor in financing statement under Uniform Commercial Code §§ 9-503 and 9-506 (revised 2000), 28 A.L.R.6th 461.  

11-9-504. Indication of collateral.

Statute text
A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:  

(1) A description of the collateral pursuant to Code Section 11-9-108; or  
(2) An indication that the financing statement covers all assets or all personal property.  

History
(Code 1981, § 11-9-504, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing Uniform Commercial Code provisions establishing a security interest in fixtures as a means of protecting sellers, see 16 Mercer L. Rev. 404 (1965). For article discussing the Uniform Commercial Code provisions regarding the sufficiency of "The Description of Collateral in Security Agreements and Financing Statements," see 28 Mercer L. Rev. 611 (1977). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "Fixture Financing Under Georgia's New Article 9," see 16 Ga. St. B.J. 110 (1980). For article, "H.B. 712: New Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 22 Ga. St. B.J. 6 (1985). For article, "H.B. 1364: Revised Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 23 Ga. St. B.J. 50 (1986). For annual survey of law of real property, see 38 Mercer L. Rev. 319 (1986). For annual survey article on commercial law, see 50 Mercer L. Rev. 193 (1998).  

  For comment on United States v. Crittenden, 563, F.2d 678 (5th Cir. 1977), appearing below, see 12 Ga. L. Rev. 692 (1977).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Construction with O.C.G.A. § 10-1-36. - Trial court properly granted judgment to a debtor, finding that a repossessor failed to comply with O.C.G.A. § 10-1-36, and therefore was precluded from collecting a deficiency from the debtor following the sale of the debtor's vehicle, as the repossessor waived strict compliance with § 10-1-36 by admitting that it received a facsimile notice sent by the debtor, and raised no issue as to the timeliness of the notice or whether it was received by the proper person, and failed to send the required notice thereunder to the debtor's address shown on the contract or later designated by the debtor, opting instead to send said notice to a post office box. Consumer Portfolio Servs. v. Rouse, 282 Ga. App. 314, 638 S.E.2d 442 (2006).  

Applicability to financing statements, not security agreements. - Requirement that identification of collateral indicate type of collateral is applicable to financing statements, not security agreements. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-402).  

"Type" of collateral construed. - This section allows a secured party to file a financing statement which describes the property only by its "type." A type of collateral is, for example, goods, accounts, chattel paper, general intangibles, etc. Woodrum v. Ford Motor Credit Co., 940 F.2d 1507 (11th Cir. 1991) (decided under former Code Section 11-9-402).  

Serial number alone does not "indicate the type" of collateral. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72 (1978) (decided under former Code Section 11-9-402).  

Notice not required to lessee of vehicle. - Lessor was not required to comply with the notice provisions of O.C.G.A. §§ 10-1-36 and 11-9-504 because the motor vehicle lease agreement the lessor entered into with the lessee was intended to be a true lease and not to evince a secured transaction; the lessor retained a meaningful reversionary interest in the car because the option price was more than nominal since the purchase option price was approximately one-third of the car's value, and the agreement contained no provision purporting to grant the lessee equity in the vehicle prior to exercise of the purchase option. Aniebue v. Jaguar Credit Corp., 308 Ga. App. 1, 708 S.E.2d 4 (2011).  


OPINIONS OF THE ATTORNEY GENERAL

Duty of superior court clerks. - Clerks of superior court are not required to determine that property subject to a U.C.C. financing statement is properly described before recording the statement. 1982 Op. Att'y Gen. No. U82-38.(decided under former Code Section 11-9-402).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 32, 192 et seq., 310, 311, 329 et seq., 352-354, 365, 395.  

C.J.S. - 76 C.J.S., Records, § 4.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-504.  

ALR. - What amounts to a conditional sale, 17 A.L.R. 1421; 43 A.L.R. 1247; 92 A.L.R. 304; 175 A.L.R. 1366.  
Violation of statute as to form of, or terms to be included in, conditional sale contract, as invalidating entire transaction or merely its effect to reserve title in vendor, 144 A.L.R. 1103.  
Priority as between federal tax lien and mortgage to secure future advances or expenditures by mortgagee, 90 A.L.R.2d 1179.  
Sufficiency of description of crops under UCC §§ 9-203(1)(b) and 9-402(1), 67 A.L.R.3d 308; 100 A.L.R.3d 10; 100 A.L.R.3d 940.  
Sufficiency of designation of debtor or secured party in security agreement or financing statement under UCC § 9-402, 99 A.L.R.3d 478.  
Sufficiency of address of debtor in financing statement required by UCC § 9-402(1), 99 A.L.R.3d 807.  
Sufficiency of address of secured party in financing statement required under UCC § 9-402(1), 99 A.L.R.3d 1080.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  
Sufficiency of secured party's signature on financing statement or security agreement under UCC § 9-402, 100 A.L.R.3d 390.  
Sufficiency of debtor's signature on security agreement or financing statement under UCC §§ 9-203 and 9-402, 3 A.L.R.4th 502.  

11-9-505. Filing and compliance with other statutes and treaties for consignments, leases, other bailments, and other transactions.

Statute text
(a)  Use of terms other than "debtor" and "secured party." 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 (a) of Code Section 11-9-311, 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".  
(b)  Effect of financing statement under subsection (a) of this Code section. This part applies to the filing of a financing statement under subsection (a) of this Code section and, as appropriate, to compliance that is equivalent to filing a financing statement under subsection (b) of Code Section 11-9-311, 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.  

History
(Code 1981, § 11-9-505, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-505.  

11-9-506. Effect of errors or omissions.

Statute text
(a)  Minor errors and omissions. A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.  
(b)  Financing statement seriously misleading. Except as otherwise provided in subsection (c) of this Code section, a financing statement that fails sufficiently to provide the name of the debtor in accordance with subsection (a) of Code Section 11-9-503 is seriously misleading.  
(c)  Financing statement not seriously misleading. 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 (a) of Code Section 11-9-503, the name provided does not make the financing statement seriously misleading.  
(d)  "Debtor's correct name." For purposes of subsection (b) of Code Section 11-9-508, the "debtor's correct name" as used in subsection (c) of this Code section means the correct name of the new debtor.  

History
(Code 1981, § 11-9-506, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing Uniform Commercial Code provisions establishing a security interest in fixtures as a means of protecting sellers, see 16 Mercer L. Rev. 404 (1965). For article discussing the Uniform Commercial Code provisions regarding the sufficiency of "The Description of Collateral in Security Agreements and Financing Statements," see 28 Mercer L. Rev. 611 (1977). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "Fixture Financing Under Georgia's New Article 9," see 16 Ga. St. B.J. 110 (1980). For article, "H.B. 712: New Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 22 Ga. St. B.J. 6 (1985). For article, "H.B. 1364: Revised Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 23 Ga. St. B.J. 50 (1986). For annual survey of law of real property, see 38 Mercer L. Rev. 319 (1986). For annual survey article on commercial law, see 50 Mercer L. Rev. 193 (1998).  

  For comment on United States v. Crittenden, 563, F.2d 678 (5th Cir. 1977), appearing below, see 12 Ga. L. Rev. 692 (1977).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Listing name of debtor's farm, not debtor's name. - Erroneously listing name of debtor's purported farm, rather than debtor's name, on security agreement is seriously misleading to subsequent creditors, and, as such, renders creditor's security interest in property so listed unperfected. Citizens Bank v. Ansley, 467 F. Supp. 51 (M.D. Ga.), aff'd, 604 F.2d 669 (5th Cir. 1979) (decided under former Code Section 11-9-402).  

Mistake in name of debtor. - Where a search of the county records did not reveal a financing statement due to a mistake in the name of the debtor shown on the financing statement, the security interest in the funds relating to the financing statement was not perfected, and the money was awarded to a judgment creditor in an interpleader action. Receivables Purchasing Co. v. R & R Directional Drilling, L.L.C., 263 Ga. App. 649, 588 S.E.2d 831 (2003).  
Because an attorney who handled a closing in the capacity of an escrow agent for the client's business had no actual or constructive notice of a creditor's security interest in the business due to the improper filing pursuant to O.C.G.A. §§ 11-9-502, 11-9-503, and 11-9-506, because the debtor's name was not properly listed and the interest was accordingly not perfected, claims as to conversion of the business closing proceeds failed. All Bus. Corp. v. Choi, 280 Ga. App. 618, 634 S.E.2d 400 (2006).  
Bank failed to provide in the bank's Financing Statement the name indicated on the debtor's driver's license as required by O.C.G.A. § 11-9-503(a)(4). Therefore, the bank's Financing Statement was seriously misleading under O.C.G.A. § 11-9-506(b). Pierce v. Farm Bureau Bank (In re Pierce), 581 Bankr. 912 (Bankr. S.D. Ga. 2018).  

Erroneous listing of agent, rather than owner. - Financing statement which erroneously listed the agent of the owner of rented land upon which secured crops were grown, rather than listing the actual owner, was not seriously misleading, and was therefore effective. United States v. Georgia Vegetables Co., 123 Bankr. 456 (M.D. Ga. 1990) (decided under former Code Section 11-9-402).  

Creditor's filing of financing statements under debtor's trade name only rather than under the debtor's legal, corporate name was seriously misleading and insufficient to perfect a security interest, where potential creditors would have been misled due to the name by which the debtor was listed in the financing statements. United States Cylinders, Inc. v. Vital Breathing Prods., Inc., 98 Bankr. 97 (Bankr. N.D. Ga. 1988) (decided under former Code Section 11-9-402).  

Failure to file amended financing statement. - Where creditor failed to file an amended financing statement reflecting debtor's name change, its original filing was not effective to perfect a security interest in collateral acquired by debtor more than four months after it changed its name. Pettigrew v. Consultants United, Inc. (In re Specialcare, Inc.), 209 Bankr. 13 (Bankr. N.D. Ga. 1997).  

First lienholder still protected despite error in financing statement. - Even assuming a financing statement became seriously misleading due to a change in the debtor's name after dissolution of the corporation, the first lienholder was still protected as to collateral acquired through that time and up to four months thereafter. Western Auto Supply Co. v. McKenzie, 227 Ga. App. 477, 489 S.E.2d 537 (1997).  

Transfer of collateral. - Where the financing statement was effective when it named "King's Tuft" as the debtor but the collateral was subsequently transferred to "Cohutta Mills," the statement became seriously misleading: because the two names were completely dissimilar, a searcher of "Cohutta Mills'" interests would not be alerted to inquire into "King's Tuft's" interests. Jones v. Small Bus. Admin. (In re Cohutta Mills, Inc.), 108 Bankr. 815 (N.D. Ga. 1989) (decided under former Code Section 11-9-402).  

Filing continuation statement. - Upon the lapse of a seriously misleading, though partially effective, financing statement, the secured party, acting in good faith, must file a continuation statement under the new debtor's name if it wishes to sustain its perfected status. Jones v. Small Bus. Admin. (In re Cohutta Mills, Inc.), 108 Bankr. 815 (N.D. Ga. 1989) (decided under former Code Section 11-9-402).  

Question of fact as to whether financing statement seriously misleading. - In a suit involving the defendant defaulting on loans secured by property that was allegedly tortuously converted by sale, the grant of summary judgment to the plaintiff was reversed, in part, because an issue of material fact remained as to whether the financing statement was valid as to the name provided on the financing statement and whether the incorrect name made the statement seriously misleading. Rebel Auction Co. v. Citizens Bank, 343 Ga. App. 81, 805 S.E.2d 913 (2017).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 32, 192 et seq., 310, 311, 329 et seq., 352-354, 365, 395.  

C.J.S. - 76 C.J.S., Records, § 4.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-506.  

ALR. - What amounts to a conditional sale, 17 A.L.R. 1421; 43 A.L.R. 1247; 92 A.L.R. 304; 175 A.L.R. 1366.  
Violation of statute as to form of, or terms to be included in, conditional sale contract, as invalidating entire transaction or merely its effect to reserve title in vendor, 144 A.L.R. 1103.  
Priority as between federal tax lien and mortgage to secure future advances or expenditures by mortgagee, 90 A.L.R.2d 1179.  
Sufficiency of description of crops under UCC §§ 9-203(1)(b) and 9-402(1), 67 A.L.R.3d 308; 100 A.L.R.3d 10; 100 A.L.R.3d 940.  
Sufficiency of designation of debtor or secured party in security agreement or financing statement under UCC § 9-402, 99 A.L.R.3d 478.  
Sufficiency of address of debtor in financing statement required by UCC § 9-402(1), 99 A.L.R.3d 807.  
Sufficiency of address of secured party in financing statement required under UCC § 9-402(1), 99 A.L.R.3d 1080.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  
Sufficiency of secured party's signature on financing statement or security agreement under UCC § 9-402, 100 A.L.R.3d 390.  
Sufficiency of debtor's signature on security agreement or financing statement under UCC §§ 9-203 and 9-402, 3 A.L.R.4th 502.  
Sufficiency and effectiveness of designation of debtor in financing statement under Uniform Commercial Code §§ 9-503 and 9-506 (revised 2000), 28 A.L.R.6th 461.  

11-9-507. Effect of certain events on effectiveness of financing statement.

Statute text
(a)  Disposition. 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.  
(b)  Information becoming seriously misleading. Except as otherwise provided in subsection (c) of this Code section and Code Section 11-9-508, 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 Code Section 11-9-506.  
(c)  Change in debtor's name. If the name that a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under subsection (a) of Code Section 11-9-503 so that the financing statement becomes seriously misleading under Code Section 11-9-506:  
(1) 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  
(2) 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 the financing statement became seriously misleading.  

History
(Code 1981, § 11-9-507, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 12/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, in subsection (c), substituted "the name that a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under subsection (a) of Code Section 11-9-503 so that the" for "a debtor so changes its name that a filed" at the beginning of the introductory language; substituted "filed financing statement becomes seriously misleading" for "change" in paragraphs (c)(1) and (c)(2); and substituted "financing statement became seriously misleading" for "change" at the end of paragraph (c)(2).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-507.  

11-9-508. Effectiveness of financing statement if new debtor becomes bound by security agreement.

Statute text
(a)  Financing statement naming original debtor. Except as otherwise provided in this Code 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.  
(b)  Financing statement becoming seriously misleading. 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 (a) of this Code section to be seriously misleading under Code Section 11-9-506:  
(1) 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 (d) of Code Section 11-9-203; and  
(2) 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 (d) of Code Section 11-9-203 unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time.  
(c)  When Code section not applicable. This Code section does not apply to collateral as to which a filed financing statement remains effective against the new debtor under subsection (a) of Code Section 11-9-507.  

History
(Code 1981, § 11-9-508, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-508.  

11-9-509. Persons entitled to file a record.

Statute text
(a)  Person entitled to file record. 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:  
(1) The debtor authorizes the filing in an authenticated record or pursuant to subsection (b) or (c) of this Code section; or  
(2) 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.  
(b)  Security agreement as authorization. By authenticating 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:  
(1) The collateral described in the security agreement; and  
(2) Property that becomes collateral under paragraph (2) of subsection (a) of Code Section 11-9-315, whether or not the security agreement expressly covers proceeds.  
(c)  Acquisition of collateral as authorization. By acquiring collateral in which a security interest or agricultural lien continues under paragraph (1) of subsection (a) of Code Section 11-9-315, a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under paragraph (2) of subsection (a) of Code Section 11-9-315.  
(d)  Person entitled to file certain amendments. 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:  
(1) The secured party of record authorizes the filing; or  
(2) 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 by subsection (a) or (c) of Code Section 11-9-513, the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.  
(e)  Multiple secured parties of record. 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 (d) of this Code section.  

History
(Code 1981, § 11-9-509, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-509.  

11-9-510. Effectiveness of filed record.

Statute text
(a)  Filed record effective if authorized. A filed record is effective only to the extent that it was filed by a person that may file it under Code Section 11-9-509.  
(b)  Authorization by one secured party of record. A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.  
(c)  Continuation statement not timely filed. A continuation statement that is not filed within the six-month period prescribed by subsection (c) of Code Section 11-9-515 is ineffective.  

History
(Code 1981, § 11-9-510, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "H.B. 712: New Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 22 Ga. St. B.J. 6 (1985). For article surveying commercial law in 1984-1985, see 37 Mercer L. Rev. 139 (1985). For article, "H.B. 1364: Revised Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 23 Ga. St. B.J. 50 (1986). For annual survey of law of real property, see 38 Mercer L. Rev. 319 (1986). For survey article on commercial law, see 44 Mercer L. Rev. 99 (1992).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Harvested peanut crops. - Plaintiffs' filing of their financing statement in the proper county gave defendant legal notice of plaintiffs' security interests and liens in peanut crops defendant purchased, even though the clerk incorrectly recorded the financing statement, and the perfected security interests remained effective even though the crops were harvested. Bartolan, Inc. v. Columbian Peanut Co., 727 F. Supp. 1444 (M.D. Ga. 1989).  

Document identified in handwriting as an "amendment," which contained a property description that varied markedly from that contained in the original financing statement and was signed by both the secured party's representative and the debtor's representative, was not merely mislabeled due to clerical error and was not legally effective as a continuation statement. Kubota Tractor Corp. v. Citizens & S. Nat'l Bank, 198 Ga. App. 830, 403 S.E.2d 218 (1991).  

Filing of continuation statements. - Former subsection (3) worked to allow filing officers (Superior Court Clerks) to refuse to accept continuation statements until the last 6 months of the previous filing's effectiveness. Once the new filing is accepted, however, it is in force for a period of five years, not from the filing date of the financing statement, but from the date of the filing of the new statement, under former subsection (8). In re Rainbow Mfg. Co., 150 Bankr. 857 (M.D. Ga. 1993).  
Continuation statement filed by a secured creditor prior to the six-month period set forth in former subsection (3) was effective for five years from the date of filing and extended the creditor's security interest in certain assets of the debtor beyond the original period of protection. Coats Am., Inc. v. Summit Nat'l Bank, 211 Bankr. 771 (N.D. Ga 1997).  

Second financing statement considered back-up, not continuation or amendment of original. - A second financing statement filed by the same creditor covering the same collateral could not be considered a continuation statement under this section, or an amendment to the original under former § 11-9-402 (see now § 11-9-502 et seq.), but was deemed to be a back-up financing statement with its own separately established priority, and, where the debtor's bankruptcy petition was filed while the first financing statement was still effective, creditor's first-in time priority status under the original statement was preserved. Giddens v. Pioneer Credit, 205 Bankr. 349 (Bankr. M.D. Ga. 1997).  

Effect of fixture filing. - Under Georgia law, a fixture filing contained sufficient information to put a purchaser on notice of the existence of a bond trustee's prior unrecorded interest in the real property under an indenture, and the references in the fixture filing to the assignment and pledge of the debtor's interest would excite the attention of a purchaser and trigger the duty to inquire further into the interest held by the bond trustee. That inquiry would include an examination of the indenture that would give the purchaser notice of the bond trustee's mortgage and, thus, the mortgage lien was enforceable against a bona fide purchaser, and the mortgage lien was not avoidable under the Bankruptcy Code. Detention Mgmt., LLC v. UMB Bank, NA (In re Mun. Corr., LLC), 501 Bankr. 119 (Bankr. N.D. Ga. 2013).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 310-314, 318, 405-419.  

C.J.S. - 76 C.J.S., Records, § 4.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-510.  

ALR. - Coverage of "nonrecording" or "nonfiling" insurance against loss from failure to record chattel mortgage, conditional sale, or other security instrument, 51 A.L.R.2d 325.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  

11-9-511. Secured party of record.

Statute text
(a)  Secured party of record. 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 (a) of Code Section 11-9-514, the assignee named in the initial financing statement is the secured party of record with respect to the financing statement.  
(b)  Amendment naming secured party of record. 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 (b) of Code Section 11-9-514, the assignee named in the amendment is a secured party of record.  
(c)  Amendment deleting secured party of record. A person remains a secured party of record until the filing of an amendment of the financing statement which deletes the person.  

History
(Code 1981, § 11-9-511, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 310-314, 318, 405-419.  

C.J.S. - 76 C.J.S., Records, § 4.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-511.  

ALR. - Coverage of "nonrecording" or "nonfiling" insurance against loss from failure to record chattel mortgage, conditional sale, or other security instrument, 51 A.L.R.2d 325.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  

11-9-512. Amendment of financing statement.

Statute text
(a)  Amendment of information in financing statement. Subject to Code Section 11-9-509, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to subsection (e) of this Code section, otherwise amend the information provided in a financing statement by filing an amendment that:  
(1) Identifies, by its file number, the initial financing statement to which the amendment relates; and  
(2) If the amendment relates to an initial financing statement filed or recorded in a filing office described in paragraph (1) of subsection (a) of Code Section 11-9-501, provides the information specified in subsection (b) of Code Section 11-9-502.  
(b)  Period of effectiveness not affected. Except as otherwise provided in Code Section 11-9-515, the filing of an amendment does not extend the period of effectiveness of the financing statement.  
(c)  Effectiveness of amendment adding collateral. 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.  
(d)  Effectiveness of amendment adding debtor. 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.  
(e)  Certain amendments ineffective. An amendment is ineffective to the extent it:  
(1) Purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing statement; or  
(2) Purports to delete all secured parties of record and fails to provide the name of a new secured party of record.  

History
(Code 1981, § 11-9-512, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-512.  

11-9-513. Termination statement.

Statute text
(a)  Consumer goods. A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if the financing statement covers consumer goods and:  
(1) There is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or  
(2) The debtor did not authorize the filing of the initial financing statement.  
(b)  Time for compliance with subsection (a) of this Code section. To comply with subsection (a) of this Code section, a secured party shall cause the secured party of record to file the termination statement:  
(1) Within one month after there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or  
(2) If earlier, within 20 days after the secured party receives an authenticated demand from a debtor.  
(c)  Other collateral. In cases not governed by subsection (a) of this Code section, within 90 days after there is no obligation secured by the collateral covered by or described in the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value or, if earlier, within 20 days after a secured party receives an authenticated demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if:  
(1) Except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value;  
(2) The financing statement covers accounts or chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation;  
(3) The financing statement covers goods that were the subject of a consignment to the debtor but are not in the debtor's possession; or  
(4) The debtor did not authorize the filing of the initial financing statement.  
(d)  Effect of filing termination statement. Except as otherwise provided in Code Section 11-9-510, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective.  

History
(Code 1981, § 11-9-513, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For article, "Security Transfers by Secured Parties," see 4 Ga. L. Rev. 527 (1970). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For survey article on commercial law, see 34 Mercer L. Rev. 31 (1982). For survey article on recent developments in Georgia law of remedies, see 34 Mercer L. Rev. 397 (1982).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

A loan, null and void as a matter of law, creates no "outstanding secured obligation," whether or not declared to be null and void by order of court. United States Life Credit Corp. v. Johnson, 248 Ga. 852, 287 S.E.2d 1 (1982).  

Loan agreement language held insufficient to terminate. - Although the provisions of a subsequent loan agreement stated: "It is understood that this Loan Agreement supersedes and cancels any previous Loan Agreements," this language did not cancel the security agreements or financial statements previously executed by the parties, but merely served to consolidate the previous loan agreements between the parties, and where instead of filing a termination statement, creditor filed a continuation statement, continuing the earlier financing statement, the creditor's security interest, perfected earlier in debtor's equipment, was still valid and effective. Tidwell v. Slocumb (In re Ga. Steel, Inc.), 71 Bankr. 903 (Bankr. M.D. Ga. 1987) (decided under former Code Section 11-9-404).  

Award of damages held proper. - Where industrial loan was void from its inception as usurious, it created no "outstanding secured obligation," and an order by the trial court awarding damages under this section was proper where the lender refused to provide a termination statement that he no longer claimed a security interest under the financing statement. United States Life Credit Corp. v. Johnson, 161 Ga. App. 864, 290 S.E.2d 280 (1982) (decided under former Code Section 11-9-404).  


OPINIONS OF THE ATTORNEY GENERAL

Editor's notes. - In the light of the similarity of the provisions, opinions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Person obligated to pay filing fee. - Either secured party or debtor may file termination statement under the former provisions of Code Section 11-9-404; whoever files it is obligated for filing fee. 1970 Op. Att'y Gen. No. U70-178.  

Clerk must obtain written authorization executed by or on behalf of grantee in order to cancel a security instrument and in case of real property may require additional formalities such as attestations to assure against forgery. 1981 Op. Att'y Gen. No. U81-50.  

Sufficiency of release of corporate security interests under UCC. - See 1986 Op. Att'y Gen. No. U86-17.  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 419-420, 426-432.  

C.J.S. - 72 C.J.S., Pledges, § 44. 76 C.J.S., Records, § 27.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-513.  

ALR. - Consignment transactions under Uniform Commercial Code Article 9 on secured transactions, 58 A.L.R.6th 289.  

11-9-514. Assignment of powers of secured party of record.

Statute text
(a)  Assignment reflected on initial financing statement. 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.  
(b)  Assignment of filed financing statement. 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:  
(1) Identifies, by its file number, the initial financing statement to which it relates;  
(2) Provides the name of the assignor; and  
(3) Provides the name and mailing address of the assignee.  

History
(Code 1981, § 11-9-514, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For article, "Security Transfers by Secured Parties," see 4 Ga. L. Rev. 527 (1970).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 283, 284, 420, 462.  

C.J.S. - 72 C.J.S., Pledges, §§ 41-44.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-514.  

ALR. - Validity of assignment of future book accounts, 72 A.L.R. 856.  
Recording laws as applied to assignments of mortgages on real estate, 104 A.L.R. 1301.  
Assignability of contemplated debt before execution of agreement by which it is to be created, 116 A.L.R. 955.  
Federal government or agencies of federal government as subject to payment of tax or fee imposed upon, or for, recording or filing instrument, 124 A.L.R. 1267.  

11-9-515. Duration and effectiveness of financing statement; effect of lapsed financing statement; record of mortgage as financing statement.

Statute text
(a)  Five-year effectiveness. Except as otherwise provided in subsection (d) of this Code section, a filed financing statement is effective for a period of five years after the date of filing or until the twentieth day after any earlier maturity date required to be specified on the filed financing statement.  
(b)  Lapse and continuation of financing statement. 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 (c) of this Code section. 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.  
(c)  When continuation statement may be filed. A continuation statement may be filed only within six months before the expiration of the five-year period specified in subsection (a) of this Code section or the occurrence of any earlier maturity date required to be specified on a filed financing statement.  
(d)  Effect of filing continuation statement. Except as otherwise provided in Code Section 11-9-510, 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 or, where both (1) the collateral described consists only of consumer goods as defined in paragraph (24) of subsection (a) of Code Section 11-9-102 and (2) the secured obligation is originally $5,000.00 or less, any earlier maturity date of the secured obligation specified on such continuation statement. Upon the expiration of the five-year period or the earlier occurrence of a required specified maturity date, the financing statement lapses in the same manner as provided in subsection (b) of this Code section, unless, before the lapse, another continuation statement is filed pursuant to subsection (c) of this Code section. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.  
(e)  Record of mortgage as financing statement. A record of a mortgage that is effective as a financing statement filed as a fixture filing under subsection (c) of Code Section 11-9-502 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.  

History
(Code 1981, § 11-9-515, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 13/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, added subsection (e).  
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "H.B. 712: New Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 22 Ga. St. B.J. 6 (1985). For article surveying commercial law in 1984-1985, see 37 Mercer L. Rev. 139 (1985). For article, "H.B. 1364: Revised Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 23 Ga. St. B.J. 50 (1986). For annual survey of law of real property, see 38 Mercer L. Rev. 319 (1986). For survey article on commercial law, see 44 Mercer L. Rev. 99 (1992).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

The five-year period begins on day of filing. - The time computation would be made from the filing day and would expire on midnight of the day preceding the anniversary date of filing. In order to be effective, any continuation statement would have to be filed within six months prior to expiration of the five-year period. Harrelson Rubber Co. v. Super Treads, Inc., 7 Bankr. 532 (Bankr. M.D. Ga. 1980) (decided under former Code Section 11-9-403).  

Filing continuation statement. - Upon the lapse of a seriously misleading, though partially effective, financing statement, the secured party, acting in good faith, must file a continuation statement under the new debtor's name if it wishes to sustain its perfected status. Jones v. Small Bus. Admin. (In re Cohutta Mills, Inc.), 108 Bankr. 815 (N.D. Ga. 1989) (decided under former Code Section 11-9-403).  

Failure to file timely continuation statement. - Although a bank's security interests in equipment were properly perfected and remained so throughout a buyer's acquisition of the equipment from the debtor, those security interests were deemed never to have been perfected as against a purchaser for value when the bank failed to file timely continuation statements, under O.C.G.A. § 11-9-515(b), and the buyer took free of the security interests under O.C.G.A. § 11-9-317(b) because the buyer did not have actual knowledge of the security interests. Four County Bank v. Tidewater Equip. Co., 331 Ga. App. 753, 771 S.E.2d 437 (2015).  

Harvested peanut crops. - Plaintiffs' filing of their financing statement in the proper county gave defendant legal notice of plaintiffs' security interests and liens in peanut crops defendant purchased, even though the clerk incorrectly recorded the financing statement, and the perfected security interests remained effective even though the crops were harvested. Bartolan, Inc. v. Columbian Peanut Co., 727 F. Supp. 1444 (M.D. Ga. 1989) (decided under former Code Section 11-9-403).  

Former subsection (8) was intended to save financing and continuation statements that had been filed in conformity with the 1985 amendments to Article 9. Only secured parties who had failed to continue their perfected security interest, and secured creditors whose security interest had legitimately expired were not continued, or saved, by operation of law. In re Rainbow Mfg. Co., 150 Bankr. 857 (M.D. Ga. 1993) (decided under former Code Section 11-9-403).  

Effect of filings under prior law. - Bank was properly perfected as a result of the filing of its financing statement and continuation statement. Former subsection (8) continued the continuation statement for a period of five years, regardless of the stated maturity date on the form. As a result of these acts, the bank would be perfected until five years after the continuation statement was filed. In re Rainbow Mfg. Co., 150 Bankr. 857 (M.D. Ga. 1993) (decided under former Code Section 11-9-403).  

Filing of continuation statements. - Former subsection (3) worked to allow filing officers (Superior Court Clerks) to refuse to accept continuation statements until the last 6 months of the previous filing's effectiveness. Once the new filing is accepted, however, it is in force for a period of five years, not from the filing date of the financing statement, but from the date of the filing of the new statement, under former subsection (8). In re Rainbow Mfg. Co., 150 Bankr. 857 (M.D. Ga. 1993) (decided under former Code Section 11-9-403).  
Continuation statement filed by a secured creditor prior to the six-month period set forth in former subsection (3) was effective for five years from the date of filing and extended the creditor's security interest in certain assets of the debtor beyond the original period of protection. Coats Am., Inc. v. Summit Nat'l Bank, 211 Bankr. 771 (N.D. Ga 1997) (decided under former Code Section 11-9-403).  

Second financing statement considered back-up, not continuation or amendment of original. - A second financing statement filed by the same creditor covering the same collateral could not be considered a continuation statement under this former section, or an amendment to the original under former § 11-9-402, but was deemed to be a back-up financing statement with its own separately established priority, and, where the debtor's bankruptcy petition was filed while the first financing statement was still effective, creditor's first-in time priority status under the original statement was preserved. Giddens v. Pioneer Credit, 205 Bankr. 349 (Bankr. M.D. Ga. 1997).  

Cited in Hamburger v. PFM Capital Mgmt., 286 Ga. App. 382, 649 S.E.2d 779 (2007).  


OPINIONS OF THE ATTORNEY GENERAL

Editor's notes. - In the light of the similarity of the provisions, opinions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Timely filing of succeeding continuation statements pursuant to this former section continues effectiveness of original statement for additional five-year period from last date to which original filing was effective. 1977 Op. Att'y Gen. No. U77-56.  

Nonrecording insurance premiums lawful if not exceeding recording fees. - Nonrecording insurance premiums, subject otherwise to rate approvals and regulations by Insurance Department, would be lawful after January 1, 1964, provided they do not exceed amount of recording fees set out in former subsection (5) of this section. 1963-65 Op. Att'y Gen. p. 335.  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 310-314, 318, 405-419.  

C.J.S. - 76 C.J.S., Records, § 4.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-515.  

ALR. - Coverage of "nonrecording" or "nonfiling" insurance against loss from failure to record chattel mortgage, conditional sale, or other security instrument, 51 A.L.R.2d 325.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  

11-9-516. What constitutes filing; effectiveness of filing.

Statute text
(a)  What constitutes filing. Except as otherwise provided in subsection (b) of this Code section, 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.  
(b)  Refusal to accept record; filing does not occur. Filing does not occur with respect to a record that a filing office refuses to accept because:  
(1) The record is not communicated by a method or medium of communication authorized by the filing office;  
(2) An amount equal to or greater than the applicable filing fee is not tendered;  
(3) The authority is unable to index the record because:  
(A) In the case of an initial financing statement, the record does not provide a name for the debtor;  
(B) In the case of an amendment or information statement, the record:  
(i) Does not identify the initial financing statement as required by Code Section 11-9-512 or 11-9-518, as applicable;  
(ii) Identifies an initial financing statement whose effectiveness has lapsed under Code Section 11-9-515;  
(iii) Identifies more than one initial financing statement; or  
(iv) Indicates that it is presented to accomplish more than one action, such as amendment and continuation;  
(C) 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  
(D) In the case of a record filed or recorded in the filing office described in paragraph (1) of subsection (a) of Code Section 11-9-501, the record does not provide a sufficient description of the real property to which it relates;  
(4) 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;  
(5) 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:  
(A) Provide a mailing address for the debtor; or  
(B) Indicate whether the name provided as the name of the debtor is the name of an individual or an organization; or  
(6) In the case of an assignment reflected in an initial financing statement under subsection (a) of Code Section 11-9-514 or an amendment filed under subsection (b) of Code Section 11-9-514, the record does not provide a name and mailing address for the assignee.  
(c)  Rules applicable to subsection (b) of this Code section. For purposes of subsection (b) of this Code section:  
(1) A record does not provide information if the filing office is unable to read or decipher the information; and  
(2) A record that does not indicate that it is an amendment or accurately identify an initial financing statement to which it relates, as required by Code Section 11-9-512, 11-9-514, or 11-9-518, is an initial financing statement.  
(d)  Refusal to accept record; record effective as filed record. 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 (b) of this Code section, 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.  

History
(Code 1981, § 11-9-516, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 14/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, substituted "information statement" for "correction statement" in the introductory language of subparagraph (b)(3)(B); substituted "surname" for "last name" in subparagraph (b)(3)(C); and, in paragraph (b)(5), added "or" at the end of subparagraph (b)(5)(A), inserted "name provided as the name of the" and "the name of" in subparagraph (b)(5)(B), and deleted former paragraph (b)(5)(C), which read: "(C) If the financing statement indicates that the debtor is an organization, provide:  
"(i) A type of organization for the debtor; or  
"(ii) A jurisdiction of organization for the debtor; or".  
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "H.B. 712: New Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 22 Ga. St. B.J. 6 (1985). For article surveying commercial law in 1984-1985, see 37 Mercer L. Rev. 139 (1985). For article, "H.B. 1364: Revised Requirements for Financing Statements and Continuation Statements Filed in Georgia," see 23 Ga. St. B.J. 50 (1986). For annual survey of law of real property, see 38 Mercer L. Rev. 319 (1986). For survey article on commercial law, see 44 Mercer L. Rev. 99 (1992).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Presentation of instruments to office of clerk constitutes proper filing. Pease & Elliman Realty Trust v. Gaines, 160 Ga. App. 125, 286 S.E.2d 448 (1981) (decided under former Code Section 11-9-403).  

Goods which are or are to become fixtures. - Former §§ 11-9-401, 11-9-403 and this section (see now §§ 11-9-501 et seq., 11-9-623) provide for fixture filing to enable secured party with chattel interest in goods which are or are to become fixtures to preserve that interest. Williams v. Western Pac. Fin. Corp., 643 F.2d 331 (5th Cir. 1981) (decided under former Code Section 11-9-403).  

Harvested peanut crops. - Plaintiffs' filing of their financing statement in the proper county gave defendant legal notice of plaintiffs' security interests and liens in peanut crops defendant purchased, even though the clerk incorrectly recorded the financing statement, and the perfected security interests remained effective even though the crops were harvested. Bartolan, Inc. v. Columbian Peanut Co., 727 F. Supp. 1444 (M.D. Ga. 1989) (decided under former Code Section 11-9-403).  

Former subsection (8) was intended to save financing and continuation statements that had been filed in conformity with the 1985 amendments to this article. Only secured parties who had failed to continue their perfected security interest, and secured creditors whose security interest had legitimately expired were not continued, or saved, by operation of law. In re Rainbow Mfg. Co., 150 Bankr. 857 (M.D. Ga. 1993) (decided under former Code Section 11-9-403).  

Effect of filings under prior law. - Bank was properly perfected as a result of the filing of its financing statement and continuation statement. Former subsection (8) continued the continuation statement for a period of five years, regardless of the stated maturity date on the form. As a result of these acts, the bank would be perfected until five years after the continuation statement was filed. In re Rainbow Mfg. Co., 150 Bankr. 857 (M.D. Ga. 1993) (decided under former Code Section 11-9-403).  

Filing of continuation statements. - Former subsection (3) works to allow filing officers (Superior Court Clerks) to refuse to accept continuation statements until the last 6 months of the previous filing's effectiveness. Once the new filing is accepted, however, it is in force for a period of five years, not from the filing date of the financing statement, but from the date of the filing of the new statement, under former subsection (8). In re Rainbow Mfg. Co., 150 Bankr. 857 (M.D. Ga. 1993) (decided under former Code Section 11-9-403).  
Continuation statement filed by a secured creditor prior to the six-month period set forth in  former subsection (3) was effective for five years from the date of filing and extended the creditor's security interest in certain assets of the debtor beyond the original period of protection. Coats Am., Inc. v. Summit Nat'l Bank, 211 Bankr. 771 (N.D. Ga 1997) (decided under former Code Section 11-9-403).  

Second financing statement considered back-up, not continuation or amendment of original. - A second financing statement filed by the same creditor covering the same collateral could not be considered a continuation statement under this section, or an amendment to the original under former § 11-9-402 (see now § 11-9-502 et seq.), but was deemed to be a back-up financing statement with its own separately established priority, and, where the debtor's bankruptcy petition was filed while the first financing statement was still effective, creditor's first-in time priority status under the original statement was preserved. Giddens v. Pioneer Credit, 205 Bankr. 349 (Bankr. M.D. Ga. 1997).  


OPINIONS OF THE ATTORNEY GENERAL

Editor's notes. - In the light of the similarity of the provisions, opinions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Timely filing of succeeding continuation statements pursuant to this section continues effectiveness of original statement for additional five-year period from last date to which original filing was effective. 1977 Op. Att'y Gen. No. U77-56.  

Nonrecording insurance premiums lawful if not exceeding recording fees. - Nonrecording insurance premiums, subject otherwise to rate approvals and regulations by Insurance Department would be lawful after January 1, 1964, provided they do not exceed amount of recording fees set out in former subsection (5) of this section. 1963-65 Op. Att'y Gen. p. 335.  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 310-314, 318, 405-419.  

C.J.S. - 76 C.J.S., Records, § 4.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-516.  

ALR. - Coverage of "nonrecording" or "nonfiling" insurance against loss from failure to record chattel mortgage, conditional sale, or other security instrument, 51 A.L.R.2d 325.  
Effectiveness of original financing statement under UCC Article 9 after change in debtor's name, identity, or business structure, 99 A.L.R.3d 1194.  

11-9-517. Effect of indexing errors.

Statute text
The failure of the filing office or authority to index a record correctly does not affect the effectiveness of the filed record.  

History
(Code 1981, § 11-9-517, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-517.  

11-9-518. Inaccurate or wrongfully filed record.

Statute text
(a)  Statement with respect to record indexed under person's name. A person may file in the filing office an information statement with respect to a record indexed under the person's name if the person believes that the record is inaccurate or was wrongfully filed. The information statement shall be filed in the filing office of the county where the record was filed.  
(b)  Contents of statement under subsection (a) of this Code section. An information statement under subsection (a) of this Code section must:  
(1) Identify the record to which it relates by the file number assigned to the initial financing statement to which the record relates;  
(2) Indicate that it is an information statement; and  
(3) 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.  
(c)  Statement by secured party of record. A person may file in the filing office an information statement with respect to a record filed there if such 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 (d) of Code Section 11-9-509.  
(d)  Contents of statement under subsection (c) of this Code section. An information statement under subsection (c) of this Code section must:  
(1) Identify the record to which it relates by the file number assigned to the initial financing statement to which the record relates;  
(2) Indicate that it is an information statement; and  
(3) Provide the basis for the person's belief that the person that filed the record was not entitled to do so under subsection (d) of Code Section 11-9-509.  
(e)  Record not affected by information statement. The filing of an information statement does not affect the effectiveness of an initial financing statement or other filed record.  

History
(Code 1981, § 11-9-518, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 15/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, in subsection (a), substituted "Statement with respect to record indexed under person's name" for "Correction statement" in the subsection heading, substituted "in the filing office an information" for "a correction" in the first sentence, and substituted "information" for "correction" in the second sentence; in subsection (b), substituted the present provisions of the introductory paragraph for the former provisions, which read: "Sufficiency of correction statement. A correction statement must:" and substituted "an information" for "a correction" in paragraph (b)(2); added present subsections (c) and (d); redesignated former subsection (c) as present subsection (e); and in subsection (e), substituted "information" for "correction" in the subsection heading and substituted "an information" for "a correction" near the beginning.  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-518.  


PART 2

DUTIES AND OPERATION OF FILING OFFICE AND CENTRAL INDEXING SYSTEM


11-9-519. Numbering, maintaining, and indexing records; communicating information provided in records.

Statute text
(a)  Filing office duties. For each record filed in a filing office, the filing office shall:  
(1) Assign a unique number to the filed record;  
(2) Create a record that bears the number assigned to the filed record and the date and time of filing;  
(3) Maintain the filed record or a microfilm or other photostatic, microphotographic, photographic copy, or optical image of the filed record for public inspection;  
(4) Transmit each record to the authority in such form and manner as may be required by the authority within 24 hours of filing. Weekends and holidays shall not be included in the calculation of the 24 hour period; and  
(5) Promptly upon discovering any discrepancy between a filed record and the information as it appears in the central indexing system, retransmit such record to the authority with a notation as to the discrepancy and a request for correction of the central indexing system information.  
(b)  Central indexing system.   
(1) The authority shall administer, maintain, and modify a central indexing system which shall contain the records transmitted to it by filing offices pursuant to paragraph (4) of subsection (a) of this Code section. The authority shall, within 24 hours after receipt of each record, include the record in the central filing system and make such information available to the public through the central index. Weekends and holidays shall not be included in the calculation of the 24 hour period.  
(2) The authority may designate one or more agents who will be responsible for any or all of the duties and functions of the authority set out in this Code section.  
(c)  Indexing; general. The authority shall:  
(1) 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  
(2) 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.  
(d)  Indexing; real property related financing statement. If a financing statement is filed as a fixture filing or covers as-extracted collateral, crops, or timber to be cut, it must be filed for record and the filing office shall index it:  
(1) 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  
(2) 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.  
(e)  Indexing; real property related assignment. If a financing statement is filed as a fixture filing or covers as-extracted collateral, crops, or timber to be cut, the filing office shall index an assignment filed under subsection (a) of Code Section 11-9-514 or an amendment filed under subsection (b) of Code Section 11-9-514:  
(1) Under the name of the assignor as grantor; and  
(2) 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.  
(f)  Retrieval and association capability. The authority and each filing office shall maintain a capability with respect to the records they are required to index:  
(1) 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  
(2) To associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement.  
(g)  Removal of debtor's name. The authority may not remove a debtor's name from the central index until one year after the effectiveness of a financing statement naming the debtor lapses under Code Section 11-9-515 with respect to all secured parties of record.  

History
(Code 1981, § 11-9-519, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2002, p. 415, § 11.)

Annotations
The 2002 amendment, effective April 18, 2002, part of an Act to revise, modernize, and correct the Code, revised punctuation in paragraph (e)(2).  
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 412, 421-423.  

C.J.S. - 26A C.J.S., Deeds, § 19 et seq.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-519.  

11-9-520. Acceptance and refusal to accept record.

Statute text
(a)  Refusal to accept record. A filing office may refuse to accept a record for filing only for a reason set forth in subsection (b) of Code Section 11-9-516.  
(b)  Communication concerning refusal. 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.  
(c)  When filed financing statement effective. A filed financing statement satisfying subsections (a) and (b) of Code Section 11-9-502 is effective, even if the filing office refuses to accept it for filing under subsection (a) of this Code section. However, Code Section 11-9-338 applies to a filed financing statement providing information described in paragraph (5) of subsection (b) of Code Section 11-9-516 which is incorrect at the time the financing statement is filed.  
(d)  Separate application to multiple debtors. 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.  

History
(Code 1981, § 11-9-520, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-520.  

11-9-521. Uniform form of written financing statement and amendment; authority may prescribe forms.

Statute text
(a)  Initial financing statement form. Except for a reason set forth in subsection (b) of Code Section 11-9-516, a filing office that accepts written records may not refuse to accept a written initial financing statement in the form and format set forth in the final official text of the 2010 amendments to Article 9 of the Uniform Commercial Code promulgated by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, and such form and format are incorporated into this subsection by reference.  
(b)  Amendment form. Except for a reason set forth in subsection (b) of Code Section 11-9-516, a filing office that accepts written records may not refuse to accept a written record amending an initial financing statement if such record is in the form and format set forth in the final official text of the 2010 amendments to Article 9 of the Uniform Commercial Code promulgated by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, and such form and format are incorporated into this subsection by reference.  
(c)  Authority's forms. The authority may prescribe forms for initial financing statements and amendments. Subject to the provisions of subsections (a) and (b) of this Code section, all written financing statements and amendments must be presented for filing on forms prescribed by the authority.  

History
(Code 1981, § 11-9-521, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2002, p. 415, § 11; Ga. L. 2013, p. 690, § 16/SB 185.)

Annotations
The 2002 amendment, effective April 18, 2002, part of an Act to revise, modernize, and correct the Code, added the catchline for subsection (c).  

The 2013 amendment, effective July 1, 2013, substituted "set forth in the final official text of the 2010 amendments to Article 9" for "set out in Section 9-521(a) of the Official Text of Revised Article 9, 2000 Revision," in the middle of subsection (a); and substituted "set forth in the final official text of the 2010 amendments to Article 9" for "set out in Section 9-521(b) of the Official Text of Revised Article 9, 2000 Revision," in the middle of subsection (b).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-521.  

11-9-522. Maintenance and destruction of records.

Statute text
(a)  Postlapse maintenance and retrieval of information. The authority shall maintain a record of the information provided in a filed record for at least one year after the effectiveness of such record or the initial financing statement to which such record relates has lapsed under Code Section 11-9-515 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.  
(b)  Destruction of written records. Except to the extent that an applicable statute governing disposition of public records provides otherwise, the filing office or the authority immediately may destroy any written record evidencing a financing statement. However, if the filing office or the authority destroys a written record, it shall maintain another record of the financing statement which complies with subsection (a) of this Code section.  

History
(Code 1981, § 11-9-522, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-522.  

11-9-523. Information from filing office and central indexing system; sale or license of records.

Statute text
(a)  Acknowledgment of filing written record. If a person that files a written record requests an acknowledgment of the filing, the filing office shall send to the person an image of the record showing the number assigned to the record pursuant to paragraph (1) of subsection (a) of Code Section 11-9-519 and the date and time of the filing of the record. However, if the person furnishes a copy of the record to the filing office, the filing office may instead:  
(1) Note upon the copy the number assigned to the record pursuant to paragraph (1) of subsection (a) of Code Section 11-9-519 and the date and time of the filing of the record; and  
(2) Send the copy to the person.  
(b)  Acknowledgment of filing other record. If a person files a record other than a written record, the filing office shall communicate to the person an acknowledgment that provides:  
(1) The information in the record;  
(2) The number assigned to the record pursuant to paragraph (1) of subsection (a) of Code Section 11-9-519; and  
(3) The date and time of the filing of the record.  
(c)  Communication of requested information. Upon payment of a fee therefor established from time to time by the authority, the authority shall communicate or otherwise make available in a record the following information to any person that requests it:  
(1) Whether there is on file on a date and time specified by the authority, but not a date earlier than three business days before the authority receives the request, any financing statement that:  
(A) Designates a particular debtor (or, if the request so states, designates a particular debtor at the address specified in the request);  
(B) Has not lapsed under Code Section 11-9-515 with respect to all secured parties of record; and  
(C) If the request so states, has lapsed under Code Section 11-9-515 and a record of which is maintained by the authority under subsection (a) of Code Section 11-9-522;  
(2) The date and time of filing of each financing statement; and  
(3) The information provided in each financing statement.  
(d)  Medium for communicating information. In complying with its duty under subsection (c) of this Code section, the authority may communicate information in any medium. However, if requested, the authority shall communicate information by issuing a record that can be admitted into evidence in the courts of this state without extrinsic evidence of its authenticity.  
(e)  Timeliness of performance. The filing office shall perform the acts required by subsections (a) and (b) of this Code section and the authority shall perform the acts required by subsections (c) and (d) of this Code section at the time and in the manner prescribed by filing office rule but not later than two business days after the filing office or the authority, as the case may be, receives the request.  
(f)  Public availability of records. At least weekly, the authority shall offer to sell or license to the public on a nonexclusive basis, upon payment of the fee therefor established from time to time by the authority, in bulk, copies of all records transmitted to it under this part, in every medium from time to time available to the authority.  

History
(Code 1981, § 11-9-523, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963).  


JUDICIAL DECISIONS

Mistake in name of debtor. - Where a search of the county records did not reveal a financing statement due to a mistake in the name of the debtor shown on the financing statement, the security interest in the funds relating to the financing statement was not perfected, and the money was awarded to a judgment creditor in an interpleader action. Receivables Purchasing Co. v. R & R Directional Drilling, L.L.C., 263 Ga. App. 649, 588 S.E.2d 831 (2003).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 412, 421-423.  

C.J.S. - 26A C.J.S., Deeds, § 19 et seq.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-523.  

11-9-524. Delay by filing office or authority.

Statute text
Delay by the filing office or authority 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 or authority; and  
(2) The filing office or authority exercises reasonable diligence under the circumstances.  

History
(Code 1981, § 11-9-524, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-524.  

11-9-525. Fees.

Statute text
(a)  Initial financing statement; general. Except as otherwise provided in subsection (b) of this Code section, the fees for filing a record under this part are the amounts specified in Article 2 of Chapter 6 of Title 15.  
(b)  Fees of the Georgia Superior Court Clerks' Cooperative Authority. The Georgia Superior Court Clerks' Cooperative Authority is authorized to set and collect fees for incidental services and information provided by the authority or its designated agent with respect to the central indexing system if such fees are not otherwise prescribed by law.  

History
(Code 1981, § 11-9-525, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963). For article, "Security Transfers by Secured Parties," see 4 Ga. L. Rev. 527 (1970).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 283, 284, 420, 434-436, 462, 539.  

C.J.S. - 72 C.J.S., Pledges, §§ 41-44.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-525.  

ALR. - Validity of assignment of future book accounts, 72 A.L.R. 856.  
Recording laws as applied to assignments of mortgages on real estate, 104 A.L.R. 1301.  
Assignability of contemplated debt before execution of agreement by which it is to be created, 116 A.L.R. 955.  
Federal government or agencies of federal government as subject to payment of tax or fee imposed upon, or for, recording or filing instrument, 124 A.L.R. 1267.  
Discharge of accommodation maker or surety by release of mortgage or other security given for note, 2 A.L.R.2d 260.  

11-9-526. Rules.

Statute text
(a)  Adoption of filing office rules. The authority shall adopt and publish in print or electronically rules to implement this article, including rules to administer, maintain, and modify the central indexing system. The filing office rules must be consistent with this article.  
(b)  Harmonization of rules. To keep the filing office rules, practices of the filing offices, and practices of the authority in harmony with the rules and practices in other jurisdictions that enact substantially this part, and to keep the technology used by the filing offices and the authority compatible with the technology used in other jurisdictions that enact substantially this part, the authority, so far as is consistent with the purposes, policies, and provisions of this article, in adopting, amending, and repealing filing office rules, shall:  
(1) Consult with filing offices in other jurisdictions that enact substantially this part; and  
(2) Consult the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators or any successor organization; and  
(3) Take into consideration the rules and practices of, and the technology used by, filing offices in other jurisdictions that enact substantially this part.  
(c)  Notification system for farm products. The authority shall not be authorized to adopt rules to implement a notification system for farm products in conformity with the requirements of Section 1324 of the federal Food Security Act of 1985, P.L. 99-198, as now in effect or as hereafter amended, and shall not be authorized to request certification of such notification system by the secretary of the United States Department of Agriculture.  

History
(Code 1981, § 11-9-526, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 838, § 10/SB 388.)

Annotations
The 2010 amendment, effective June 3, 2010, inserted "in print or electronically" in the first sentence of subsection (a).  

U.S. Code. - The federal Food Security Act, referred to in subsection (c), is codified at 16 U.S.C.S. § 3839aa et seq.  
Law reviews. -  For article on the 1963 amendment to the Georgia Uniform Commercial Code, see 14 Mercer L. Rev. 378 (1963).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 412, 421-423.  

C.J.S. - 26A C.J.S., Deeds, § 19 et seq.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-526.  

——————————
PART 6
DEFAULT


Annotations
Cross references. - Applicability of part to default by buyer of goods sold in "home solicitation sale," as defined in § 10-1-2, § 10-1-10.  
Respective rights of buyer, seller, etc., following repossession of motor vehicle sold under retail installment contract, § 10-1-36.  
Law reviews. -  For article discussing secured creditors' legal and equitable remedies and debtors' protections under the Uniform Commercial Code, see 3 Ga. L. Rev. 198 (1968). For annual survey of commercial law, see 38 Mercer L. Rev. 85 (1986). For article, "Nonjudicial Foreclosures in Georgia: Fresh Doubts, Issues and Strategies," see 23 Ga. St. B.J. 123 (1987).  


JUDICIAL DECISIONS

Prerequisites for deficiency claim allowable under this article. - Section 10-1-36 provides cumulative additional rights and remedies which must be fulfilled before any deficiency claim under this article and part will lie against a buyer. Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980).  


PART 1

DEFAULT AND ENFORCEMENT OF SECURITY INTEREST


11-9-601. Rights after default; judicial enforcement; consignor or buyer of accounts, chattel paper, payment intangibles, or promissory notes.

Statute text
(a)  Rights of secured party after default. After default, a secured party has the rights provided in this part and, except as otherwise provided in Code Section 11-9-602, those provided by agreement of the parties. A secured party:  
(1) May reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure; and  
(2) If the collateral is documents, may proceed either as to the documents or as to the goods they cover.  
(b)  Rights and duties of secured party in possession or control. A secured party in possession of collateral or control of collateral under Code Section 11-9-104, 11-9-105, 11-9-106, or 11-9-107 has the rights and duties provided in Code Section 11-9-207.  
(c)  Rights cumulative; simultaneous exercise. The rights under subsections (a) and (b) of this Code section are cumulative and may be exercised simultaneously.  
(d)  Rights of debtor and obligor. Except as otherwise provided in subsection (g) of this Code section and Code Section 11-9-605, after default, a debtor and an obligor have the rights provided in this part and by agreement of the parties.  
(e)  Lien of levy after judgment. 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:  
(1) The date of perfection of the security interest or agricultural lien in the collateral;  
(2) The date of filing a financing statement covering the collateral; or  
(3) Any date specified in a statute under which the agricultural lien was created.  
(f)  Execution sale. A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this Code section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this article.  
(g)  Consignor or buyer of certain rights to payment. Except as otherwise provided in subsection (c) of Code Section 11-9-607, this part imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, or promissory notes.  

History
(Code 1981, § 11-9-601, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS
 
		ANALYSIS
   	General Consideration
   	Default
 


 General Consideration


Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Nature of remedies provided in this article. - The former provisions set forth general remedies of both creditor and debtor while remaining provisions of Art. 9 simply elaborated on the various remedies summarized herein, and as such, are neither mandatory nor mutually exclusive. McCullough v. Mobiland, Inc., 139 Ga. App. 260, 228 S.E.2d 146 (1976) (decided under former Code Section 11-9-501).  

Construction of former subsection (4). - The last clause of former subsection (4) ("in which case the provisions of this part do not apply") is itself applicable only where the creditor proceeds "as to both the real and the personal property in accordance with his rights and remedies in respect of the real property . . . ", where the creditor sells the debtor's personalty pursuant to debtor's notes and security agreement and seeks to proceed against the debtor's guarantor's real estate for the balance pursuant to their deed. United States ex rel. FHA v. Kennedy, 256 Ga. 345, 348 S.E.2d 636 (1986) (decided under former Code Section 11-9-501).  

Filing suit after repossession without first disposing of collateral. - Secured creditor's election to repossess collateral and then to file suit on contract without first disposing of the collateral was not improper under the terms of the sale contracts or of the UCC. ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga. App. 710, 320 S.E.2d 784 (1984) (decided under former Code Section 11-9-501).  
Trial court did not err in granting summary judgment to a bank, a secured creditor, that brought an action for money judgment on a note while holding the collateral pledged by a corporation and an individual because O.C.G.A. §§ 11-9-601(c) and 11-9-609(a)(1) allowed a secured creditor in possession of a debtor's collateral to employ a number of different remedial steps until the debt was satisfied. Okefenokee Aircraft, Inc. v. Primesouth Bank, 296 Ga. App. 782, 676 S.E.2d 394 (2009).  


 Default


Standard for determining default to be determined contractually. - Since there is no definition per se of what constitutes default within purview of Uniform Commercial Code, this is one of those standards to be determined by parties contractually. Borochoff Properties, Inc. v. Howard Lumber Co., 115 Ga. App. 691, 155 S.E.2d 651 (1967) (decided under former Code Section 11-9-501).  

Standards for determining whether there has been default. - This title does not specifically define "default" under a security agreement. For the most part, the security agreement itself must define standards for determining whether default occurs. Whisenhunt v. Allen Parker Co., 119 Ga. App. 813, 168 S.E.2d 827 (1969) (decided under former Code Section 11-9-501).  

Pre-petition enforcement under Georgia law of an assignment of rents from a hotel's operation is not essential to the existence of a post-petition lien under 11 U.S.C. § 552(b)(2). In re Resort Inns, Inc.,    Bankr.    (Bankr. S.D. Ga. Aug. 30, 2004).  

Default found. - Summary judgment was properly entered for a credit union on an owner's claim for wrongful possession as the owner defaulted on the owner's agreement with the credit union by failing to pay the storage fees for the car, which resulted in a garageman's lien; under O.C.G.A. § 11-9-601(a), as the owner was in default, the credit union could, pursuant to O.C.G.A. § 11-9-609(a), take possession of the collateral, and under O.C.G.A. § 11-9-610, the credit union could sell it. Endsley v. Robins Fed. Credit Union, 267 Ga. App. 512, 600 S.E.2d 441 (2004).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 109, 160 et seq., 192 et seq., 556-575, 581, 590 et seq., 637, 734.  

C.J.S. - 72 C.J.S., Pledges, §§ 49, 50.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-601.  

ALR. - Rights and remedies as between parties to a conditional sale after the seller has repossessed himself of the property, 37 A.L.R. 91; 83 A.L.R. 959; 99 A.L.R. 1288; 49 A.L.R.2d 15.  
Right, upon buyer's default in payment of installment due, to recover amount not due, in absence of acceleration clause, 57 A.L.R. 825.  
Right to attorneys' fees on enforcing chattel mortgage, 63 A.L.R. 1314.  
Attachment as affected by release or modification of lien to which property was subject when attachment was levied, 128 A.L.R. 1392.  
Right of conditional seller to retake property without legal process, 146 A.L.R. 1331.  
Payment or discharge of principal obligation as affecting right of the pledgee to sue or continue pending suit against the maker of the collateral pledged, or judgment previously recovered on the collateral obligation, 157 A.L.R. 261.  
Construction of §§ 301 and 700 of Soldiers' and Sailors' Civil Relief Act of 1940, as amended, relating to instalment contracts for purchase of property, 24 A.L.R.2d 1074.  

11-9-602. Waiver and variance of rights and duties.

Statute text
Except as otherwise provided in Code Section 11-9-624, 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) Subparagraph (b)(4)(C) of Code Section 11-9-207, which deals with use and operation of the collateral by the secured party;  
(2) Code Section 11-9-210, which deals with requests for an accounting and requests concerning a list of collateral and statement of account;  
(3) Subsection (c) of Code Section 11-9-607, which deals with collection and enforcement of collateral;  
(4) Subsection (a) of Code Section 11-9-608 and subsection (c) of Code Section 11-9-615 to the extent that they deal with application or payment of noncash proceeds of collection, enforcement, or disposition;  
(5) Subsection (a) of Code Section 11-9-608 and subsection (d) of Code Section 11-9-615 to the extent that they require accounting for or payment of surplus proceeds of collateral;  
(6) Code Section 11-9-609 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;  
(7) Subsection (b) of Code Section 11-9-610 and Code Sections 11-9-611, 11-9-613, and 11-9-614, which deal with disposition of collateral;  
(8) Subsection (f) of Code Section 11-9-615, 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;  
(9) Code Section 11-9-616, which deals with explanation of the calculation of a surplus or deficiency;  
(10) Code Sections 11-9-620, 11-9-621, and 11-9-622, which deal with acceptance of collateral in satisfaction of obligation;  
(11) Code Section 11-9-623, which deals with redemption of collateral;  
(12) Code Section 11-9-624, which deals with permissible waivers; and  
(13) Code Sections 11-9-625 and 11-9-626, which deal with the secured party's liability for failure to comply with this article.  

History
(Code 1981, § 11-9-602, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Waiver in writing after, but not before, default. - Right to redeem collateral may be waived by written agreement after default, but cannot be so waived before default. Kellos v. Parker-Sharpe, Inc., 245 Ga. 130, 263 S.E.2d 138 (1980) (decided under former Code Section 11-9-501).  

Notice requirement may not be waived or varied. GEMC Fed. Credit Union v. Shoemake, 151 Ga. App. 705, 261 S.E.2d 443 (1979) (decided under former Code Section 11-9-501).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 109, 160 et seq., 192 et seq., 556-575, 581, 590 et seq., 637, 734.  

C.J.S. - 72 C.J.S., Pledges, §§ 49, 50.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-602.  

ALR. - Rights and remedies as between parties to a conditional sale after the seller has repossessed himself of the property, 37 A.L.R. 91; 83 A.L.R. 959; 99 A.L.R. 1288; 49 A.L.R.2d 15.  
Right, upon buyer's default in payment of installment due, to recover amount not due, in absence of acceleration clause, 57 A.L.R. 825.  
Right to attorneys' fees on enforcing chattel mortgage, 63 A.L.R. 1314.  
Attachment as affected by release or modification of lien to which property was subject when attachment was levied, 128 A.L.R. 1392.  
Right of conditional seller to retake property without legal process, 146 A.L.R. 1331.  
Payment or discharge of principal obligation as affecting right of the pledgee to sue or continue pending suit against the maker of the collateral pledged, or judgment previously recovered on the collateral obligation, 157 A.L.R. 261.  
Construction of §§ 301 and 700 of Soldiers' and Sailors' Civil Relief Act of 1940, as amended, relating to instalment contracts for purchase of property, 24 A.L.R.2d 1074.  

11-9-603. Agreement on standards concerning rights and duties.

Statute text
(a)  Agreed standards. 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 Code Section 11-9-602 if the standards are not manifestly unreasonable.  
(b)  Agreed standards inapplicable to breach of peace. Subsection (a) of this Code section does not apply to the duty under Code Section 11-9-609 to refrain from breaching the peace.  

History
(Code 1981, § 11-9-603, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-603.  

11-9-604. Procedure if security agreement covers real property or fixtures.

Statute text
(a)  Enforcement; personal and real property. If a security agreement covers both personal and real property, a secured party may proceed:  
(1) Under this part as to the personal property without prejudicing any rights with respect to the real property; or  
(2) 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.  
(b)  Enforcement; fixtures. Subject to subsection (c) of this Code section, if a security agreement covers goods that are or become fixtures, a secured party may proceed:  
(1) Under this part; or  
(2) In accordance with the rights with respect to real property, in which case the other provisions of this part do not apply.  
(c)  Removal of fixtures. 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.  
(d)  Injury caused by removal. 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.  

History
(Code 1981, § 11-9-604, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-604.  

11-9-605. Unknown debtor or secondary obligor.

Statute text
A secured party does not owe a duty based on its status as secured party:  

(1) To a person that is a debtor or obligor, unless the secured party knows:  
(A) That the person is a debtor or obligor;  
(B) The identity of the person; and  
(C) How to communicate with the person; or  
(2) To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:  
(A) That the person is a debtor; and  
(B) The identity of the person.  

History
(Code 1981, § 11-9-605, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-605.  

11-9-606. Time of default for agricultural lien.

Statute text
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.  

History
(Code 1981, § 11-9-606, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-606.  

11-9-607. Collection and enforcement by secured party.

Statute text
(a)  Collection and enforcement generally. If so agreed, and in any event after default, a secured party:  
(1) 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;  
(2) May take any proceeds to which the secured party is entitled under Code Section 11-9-315;  
(3) 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;  
(4) If it holds a security interest in a deposit account perfected by control under paragraph (1) of subsection (a) of Code Section 11-9-104, may apply the balance of the deposit account to the obligation secured by the deposit account; and  
(5) If it holds a security interest in a deposit account perfected by control under paragraph (2) or (3) of subsection (a) of Code Section 11-9-104, may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.  
(b)  Nonjudicial enforcement of mortgage. If necessary to enable a secured party to exercise under paragraph (3) of subsection (a) of this Code section 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:  
(1) A copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and  
(2) The secured party's sworn affidavit in recordable form stating that:  
(A) A default has occurred with respect to the obligation secured by the mortgage; and  
(B) The secured party is entitled to enforce the mortgage nonjudicially.  
(c)  Commercially reasonable collection and enforcement. A secured party shall proceed in a commercially reasonable manner if the secured party:  
(1) Undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and  
(2) Is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.  
(d)  Expenses of collection and enforcement. A secured party may deduct from the collections made pursuant to subsection (c) of this Code section reasonable expenses of collection and enforcement, including reasonable attorney's fees and legal expenses incurred by the secured party.  
(e)  Duties to secured party not affected. This Code section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.  

History
(Code 1981, § 11-9-607, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 17/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, inserted "with respect to the obligation secured by the mortgage" in subparagraph (b)(2)(A).  
Law reviews. -  For note discussing creditor's remedy of direct collection of accounts and instruments owed to the defaulting debtor, see 3 Ga. L. Rev. 198 (1968).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Meaning of "indebtedness". - Although security agreement authorizing creditor to collect debtor's receivables "for application on the indebtedness hereby secured" was authorized by the former provisions of this section, the term "indebtedness" as used  does not include unmatured balance of loan, since such a construction would effectively permit acceleration of indebtedness without default and at whim of the lender, at least to extent of receivables. First Nat'l Bank v. Appalachian Indus., Inc., 146 Ga. App. 630, 247 S.E.2d 422 (1978), cert. denied, 243 Ga. 353, 255 S.E.2d 726 (1979) (decided under former Code Section 11-9-502).  
Term "indebtedness" does not include unmatured balance of loan; such construction would effectively permit acceleration of indebtedness without default and at whim of lender, at least to extent of receivables. Washington Loan & Banking Co. v. First Fulton Bank & Trust, 155 Ga. App. 141, 270 S.E.2d 242 (1980) (decided under former Code Section 11-9-502).  

Duty of bank where acceleration was improper. - In event acceleration of note is eventually determined to have been improper, bank is not authorized to retain any income from accounts receivable in excess of amount actually required to keep installments current. Washington Loan & Banking Co. v. First Fulton Bank & Trust, 155 Ga. App. 141, 270 S.E.2d 242 (1980) (decided under former Code Section 11-9-502).  

Action in name of holder of note as collateral security. - When note is placed in hands of party as collateral security, the holder thereof has legal right to maintain suit thereon in the holder's own name, and to obtain judgment thereon. Peters v. Washington Loan & Banking Co., 133 Ga. App. 293, 211 S.E.2d 148 (1974) (decided under former Code Section 11-9-502).  

The apparent reason for the requirement of commercial reasonableness in former subsection (2) of this section (see O.C.G.A. § 11-9-607(c)) is to assure, where the secured assignee of receivables undertakes to collect on accounts, that the assignee act with the same degree of prudence which the original account creditor would exercise. CC Fin., Inc. v. Ross, 250 Ga. 832, 301 S.E.2d 262 (1983) (decided under former Code Section 11-9-502).  

Factoring agreement takes precedence over commercial reasonableness standard. - Where an accounts receivable factor in no way undertook to collect factored accounts, but rather, by the express terms of the factoring agreement, the duty of collection was placed exclusively upon the debtor and this is an agreement between merchants dealing at arms' length, with consideration flowing to both sides, there is no obstacle to leaving the duty of collection with the debtor, and the debtor may not rely on the standard of commercial reasonableness embodied in former subsection (2) of this section (see O.C.G.A. § 11-9-607 (c)), but must look to the terms of the factoring agreement. CC Fin., Inc. v. Ross, 250 Ga. 832, 301 S.E.2d 262 (1983) (decided under former Code Section 11-9-502).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 533-537, 546, 584-589, 638.  

C.J.S. - 6A C.J.S., Assignments, § 98. 72 C.J.S., Pledges, §§ 49, 50.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-607.  

ALR. - Right, upon buyer's default in payment of installment due, to recover amount not due, in absence of acceleration clause, 57 A.L.R. 825.  
Bar of statute of limitations against debt secured by pledge as affecting rights and remedies in respect of pledge, 137 A.L.R. 928.  
Right of conditional seller to retake property without legal process, 146 A.L.R. 1331.  

11-9-608. Application of proceeds of collection or enforcement; liability for deficiency and right to surplus.

Statute text
(a)  Application of proceeds, surplus, and deficiency if obligation secured. If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:  
(1) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under Code Section 11-9-607 in the following order to:  
(A) 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;  
(B) The satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and  
(C) 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 an authenticated 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 complies, the secured party need not comply with the holder's demand under subparagraph (C) of paragraph (1) of this subsection;  
(3) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under Code Section 11-9-607 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; and  
(4) A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.  
(b)  No surplus or deficiency in sales of certain rights to payment. 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.  

History
(Code 1981, § 11-9-608, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations
Code Commission notes. - Pursuant to Code Section 28-9-5, in 2001, a semicolon was substituted for a period at the end of paragraph (a)(2).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-608.  

11-9-609. Secured party's right to take possession after default.

Statute text
(a)  Possession; rendering equipment unusable; disposition on debtor's premises. After default, a secured party:  
(1) May take possession of the collateral; and  
(2) Without removal, may render equipment unusable and dispose of collateral on a debtor's premises under Code Section 11-9-610.  
(b)  Judicial and nonjudicial process. A secured party may proceed under subsection (a) of this Code section:  
(1) Pursuant to judicial process; or  
(2) Without judicial process, if it proceeds without breach of the peace.  
(c)  Assembly of collateral. 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.  

History
(Code 1981, § 11-9-609, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977). For article critically analyzing the various elements constitutionally required for pre-judgment seizure of a debtor's property, focusing on § 9-503 of the U.C.C., see 28 Mercer L. Rev. 665 (1977). For article surveying 1982 Eleventh Circuit cases involving bankruptcy law, see 34 Mercer L. Rev. 1209 (1983).  

  For note discussing repossession and foreclosure as creditor's remedies under the Uniform Commercial Code, see 3 Ga. L. Rev. 198 (1968). For note, "Wrongful Repossession in Georgia," see 8 Ga. St. U.L. Rev. 223 (1992).  

  For comment on a secured party's burden of proof in seeking a deficiency judgment after resale of collateral, see 33 Mercer L. Rev. 397 (1981).  


JUDICIAL DECISIONS
 
		ANALYSIS
   	General Consideration
   	Self-Help Repossession
   	Notice
 


 General Consideration


Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Repossession though another holds legal title by bill of sale. - This former section, which made provision as to right of holder of security instrument to possession of chattel upon default by maker, permits one who has right of possession to recover property from one who wrongfully deprives the right holder of possession, although a third person may hold legal title by bill of sale to secure debt. Chastain v. Consol. Credit Corp., 113 Ga. App. 225, 147 S.E.2d 807, later appeal, 114 Ga. App. 474, 151 S.E.2d 889 (1966) (decided under former Code Section 11-9-503).  

Possession proper. - Summary judgment was properly entered for a credit union on an owner's claim for wrongful possession as the owner defaulted on the owner's agreement with the credit union by failing to pay the storage fees for the car, which resulted in a garageman's lien; under O.C.G.A. § 11-9-601(a), as the owner was in default, the credit union could, pursuant to O.C.G.A. § 11-9-609(a), take possession of the collateral, and under O.C.G.A. § 11-9-610, the credit union could sell it. Endsley v. Robins Fed. Credit Union, 267 Ga. App. 512, 600 S.E.2d 441 (2004).  

Right to title. - This former section gave broad rights to a secured party to repossess the secured property in order to sell or otherwise dispose of it upon default. At the time that a secured party forecloses on the secured property, it obtains the right of possession, not absolute title. Jeweler's Fin. Servs., Inc. v. Chapes, Ltd., 181 Ga. App. 872, 354 S.E.2d 200 (1987) (decided under former Code Section 11-9-503).  

Constructive possession. - It was unnecessary for the creditor to exercise actual physical control of an automobile in order to repossess it. Rather, the creditor could, and did, repossess the automobile by taking constructive possession of it. Avery v. Chrysler Credit Corp., 194 Ga. App. 682, 391 S.E.2d 410 (1990) (decided under former Code Section 11-9-503).  

Remedy for breach. - A breach of peace by the creditor does not bar all recovery on a debt. Rather, the remedy available to the debtor for creditor's misbehavior is recovery in tort for damages incurred. Emmons v. Burkett, 179 Ga. App. 838, 348 S.E.2d 323 (1986), rev'd on other grounds, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-503).  

Suing on contract after repossession but prior to selling collateral. - Secured creditor's election to repossess collateral and then to file suit on contract without first disposing of the collateral was not improper under the terms of the sale contracts or of the UCC. ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga. App. 710, 320 S.E.2d 784 (1984) (decided under former Code Section 11-9-503).  
Trial court did not err in granting summary judgment to a bank, a secured creditor, that brought an action for money judgment on a note while holding the collateral pledged by a corporation and an individual because O.C.G.A. §§ 11-9-601(c) and 11-9-609(a)(1) allowed a secured creditor in possession of a debtor's collateral to employ a number of different remedial steps until the debt was satisfied. Okefenokee Aircraft, Inc. v. Primesouth Bank, 296 Ga. App. 782, 676 S.E.2d 394 (2009).  

Breach of the peace. - Where plaintiff's asserted abduction during the course of having plaintiff's car repossessed was unrefuted in the record, it could not be said as a matter of law that defendants' alleged conduct did not amount to a breach of the peace. Roach v. Barclays-American/Credit, Inc., 164 Ga. App. 616, 298 S.E.2d 304 (1982) (decided under former Code Section 11-9-503).  
The Court of Appeals could not say as a matter of law that creditor's entry into the business premises was in breach of the peace since, because debtor was not present at the time, there was no evidence of "accompanying incitement to immediate violence," nor "unequivocal oral protest of the defaulting debtor." Emmons v. Burkett, 179 Ga. App. 838, 348 S.E.2d 323 (1986), rev'd on other grounds, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-503).  
In an action by a debtor against a creditor-bank, recovery service, and independent contractor hired by the recovery service to repossess the debtor's car, circumstances of debtor's resistance to the seizure by the contractor created genuine issues of material fact as to the debtor's claim for breach of the peace, and both the bank and recovery service could be held liable for damages based on a finding that the contractor breached the peace. Fulton v. Anchor Sav. Bank, 215 Ga. App. 456, 452 S.E.2d 208 (1994).  
Trial court erred in granting summary judgment in favor of a creditor as to whether it could be held vicariously liable for an independent contractor's acts in attempting to repossess a debtor's car because the creditor had a non-delegable statutory duty under O.C.G.A. § 11-9-609 to not breach the peace in repossessing the car, and if the contractor's attempt to repossess the car was in violation of the statute, the creditor would be chargeable with that conduct since it was done in violation of a duty imposed upon it by statute; there is nothing in § 11-9-609 that allows a secured party to avoid liability for a wrongful repossession by simply delegating this duty to an independent contractor. Lewis v. Nicholas Fin., Inc., 300 Ga. App. 888, 686 S.E.2d 468 (2009).  

Pre-default rights waiver ineffective. - Guarantor's waiver of an affirmative defense of commercial unreasonability prior to a debtor's default on a loan made in participation with business organization was ineffective since pre-default waiver of rights under was invalid under the former provisions. United States v. Contestabile, 989 F.2d 463 (11th Cir. 1993) (decided under former Code Section 11-9-503).  

Cited in Moody v. Nides Fin. Co., 115 Ga. App. 859, 156 S.E.2d 310 (1967); Barnes v. Reliable Tractor Co., 117 Ga. App. 777, 161 S.E.2d 918 (1968); Atkins v. Citizens & S. Nat'l Bank, 127 Ga. App. 348, 193 S.E.2d 187 (1972); White Stores, Inc. v. Meadows, 127 Ga. App. 841, 195 S.E.2d 198 (1973); Trust Co. v. Montgomery, 234 Ga. 187, 215 S.E.2d 8 (1975); Trust Co. v. Montgomery, 136 Ga. App. 742, 222 S.E.2d 196 (1975); Ford Motor Credit Co. v. Milline, 137 Ga. App. 585, 224 S.E.2d 437 (1976); Philyaw v. Fulton Nat'l Bank, 139 Ga. App. 28, 227 S.E.2d 811 (1976); McCullough v. Mobiland, Inc., 139 Ga. App. 260, 228 S.E.2d 146 (1976); First Nat'l Bank & Trust Co. v. State, 141 Ga. App. 471, 233 S.E.2d 861 (1977); Ford Motor Credit Co. v. Hunt, 141 Ga. App. 612, 234 S.E.2d 112 (1977); Ford Motor Credit Co. v. Spicer, 144 Ga. App. 383, 241 S.E.2d 273 (1977); Marshall v. Fulton Nat'l Bank, 145 Ga. App. 190, 243 S.E.2d 266 (1978); Kyburz v. Cobb Bank & Trust Co., 241 Ga. 298, 245 S.E.2d 275 (1978); Ace Parts & Distribs., Inc. v. First Nat'l Bank, 146 Ga. App. 4, 245 S.E.2d 314 (1978); Baker v. Chrysler Credit Corp., 154 Ga. App. 325, 268 S.E.2d 722 (1980); In re Bagley, 6 Bankr. 387 (Bankr. N.D. Ga. 1980); International Harvester Credit Corp. v. Clenny, 505 F. Supp. 983 (M.D. Ga. 1981); Hambrick v. Fidelity Acceptance Corp., 159 Ga. App. 540, 284 S.E.2d 53 (1981); Robbins v. F & M Bank, 161 Ga. App. 53, 289 S.E.2d 288 (1982); Rush v. F & M Bank, 162 Ga. App. 65, 290 S.E.2d 164 (1982); Reis v. Ralls, 250 Ga. 721, 301 S.E.2d 40 (1983); Barney v. Morris, 168 Ga. App. 426, 309 S.E.2d 420 (1983); Barnett v. First Fed. Sav. & Loan Ass'n, 169 Ga. App. 396, 313 S.E.2d 115 (1984); Fidelity Nat'l Bank v. Wood, 178 Ga. App. 171, 342 S.E.2d 350 (1986); Moyer v. Citicorp Homeowners, Inc., 799 F.2d 1445 (11th Cir. 1986); Borden v. Pope Jeep-Eagle, Inc., 200 Ga. App. 176, 407 S.E.2d 128 (1991); Welch v. Ford Motor Credit Co., 227 Ga. App. 904, 490 S.E.2d 206 (1997); Atlantic Coast Fed. Credit Union v. Delk, 241 Ga. App. 589, 526 S.E.2d 425 (1999); Camelot Club Condo. Assoc. v. Afari-Opoku, 340 Ga. App. 618, 798 S.E.2d 241 (2017).  


 Self-Help Repossession


Self help has always been part of common law without use of state power. Shelton v. GECC, 359 F. Supp. 1079 (M.D. Ga. 1973) (decided under former Code Section 11-9-503).  

Secured party responsible for tortious acts committed by agents. - Although secured party, through its agents, has right to peacefully enter premises and obtain its property, secured party is responsible for any tortious acts committed during repossession. Whisenhunt v. Allen Parker Co., 119 Ga. App. 813, 168 S.E.2d 827 (1969) (decided under former Code Section 11-9-503).  

 Threats by agents to defaulting party. - Threats to have plaintiffs arrested if they did not disclose the location of a vehicle they purchased to individuals who were hired to repossess the vehicle were insufficient by themselves to show that the individuals making the statements violated former O.C.G.A. § 11-9-503. Cornelius v. Nuvell Fin. Servs. Corp., 256 Ga. App. 171, 568 S.E.2d 82 (2002) (decided under former Code Section 11-9-503).  

Meaning of "breach of the peace." - See Deavers v. Standridge, 144 Ga. App. 673, 242 S.E.2d 331 (1978) (decided under former Code Section 11-9-503).  
Absence of the debtor's knowledge or consent to repossession does not constitute a breach of the peace unless abusive and insulting language which incites violence is used or some other violation of the public peace, order, or decorum occurs. Hill v. Federal Employees Credit Union, 193 Ga. App. 44, 386 S.E.2d 874 (1989) (decided under former Code Section 11-9-503).  

"Self-help" mechanism does not create an agency relationship. Flournoy v. City Fin. of Columbus, Inc., 679 F.2d 821 (11th Cir. 1982) (decided under former Code Section 11-9-503).  

Repossessor is not "custodian" under federal Bankruptcy Act. - A secured creditor who repossesses a debtor's automobile without legal process under former subsection (3) was not a "custodian" within meaning of Bankruptcy Act of 1978, 11 U.S.C. § 101(10)(C), so as to require delivery of possession to the trustee in bankruptcy in accordance with 11 U.S.C. § 543(b). Flournoy v. City Fin. of Columbus, Inc., 679 F.2d 821 (11th Cir. 1982) (decided under former Code Section 11-9-503).  

Insurers for repossession company entitled to recover from insurers of repossession management company. - Insurers' claim that other insurers who had paid a judgment against both insureds for breach of the peace during a repossession under O.C.G.A. § 11-9-609 had no right of reimbursement because fault had not been apportioned under O.C.G.A. § 51-12-33 was rejected; the insurers had a right to recover contribution as subrogees. Renaissance Recovery Solutions, LLC v. Monroe Guar. Ins. Co.,    F. Supp. 2d    (S.D. Ga. July 13, 2016).  


 Notice


Notice prior to repossession. - Notice is not required prior to repossession absent prior agreement to the contrary. Fulton Nat'l Bank v. Horn, 239 Ga. 648, 238 S.E.2d 358 (1977); Hill v. Federal Employees Credit Union, 193 Ga. App. 44, 386 S.E.2d 874 (1989) (decided under former Code Section 11-9-503).  
Creditor's right to repossess exists independently of right to accelerate indebtedness, and notice is not required prior to repossession absent provision in agreement to contrary. Ford Motor Credit Co. v. Hunt, 241 Ga. 342, 245 S.E.2d 295 (1978) (decided under former Code Section 11-9-503).  

Repossession by agent of lending company is not a conversion, even though without notice to debtor. Thurmond v. Elliott Fin. Co., 141 Ga. App. 574, 234 S.E.2d 153 (1977) (decided under former Code Section 11-9-503).  

Notice where creditor indicates he will accept late payments. - If creditor has given debtor reasonable impression that late payments will be accepted or that an arrearage need not be paid immediately, then creditor may be estopped to engage in self-help repossession until the creditor has given notice, demanded payment or otherwise indicated to debtor that the debtor is considered to be in default. Pierce v. Leasing Int'l, Inc., 142 Ga. App. 371, 235 S.E.2d 752, adhered to, 144 Ga. App. 312, 241 S.E.2d 31 (1977) (decided under former Code Section 11-9-503).  

Notice required where contract preempted by federal law. - A mobile home financing contract which was silent with regard to foreclosure and repossession did not permit the creditor to repossess by self help without notice, or to foreclose upon seven-days notice pursuant to a writ of possession (O.C.G.A. § 44-14-232), for the simple reason that the parties intended to enter a contract preempted by federal law, which requires 30 days notice to a defaulting debtor prior to repossession or foreclosure. Grant v. GECC, 764 F.2d 1404 (11th Cir. 1985), cert. denied, 476 U.S. 1124, 106 S. Ct. 1993, 90 L. Ed. 2d 673 (1985) (decided under former Code Section 11-9-503).  

Sale of property by secured party without notice. - In action for conversion of mortgaged property, instruction that secured party had no right to sell property if no notice was given was erroneous, as the U.C.C. does not prohibit sale without notice, but rather provides that a debtor is entitled to recover any loss caused by such a sale, that is, a loss caused by a sale at a less than adequate price, and is also protected from any action by secured party to recover any deficiency between sale price and balance owing. Trust Co. v. Kite, 164 Ga. App. 119, 294 S.E.2d 606 (1982) (decided under former Code Section 11-9-503).  


OPINIONS OF THE ATTORNEY GENERAL

Editor's notes. - In the light of the similarity of the provisions, opinions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Notice not required prior to repossession. - Prior to taking possession of the collateral, the security interest holder is not required to give notice to the debtor absent prior agreement to the contrary.  1990 Op. Att'y Gen. No. 90-8.  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 121, 230, 590 et seq.  

C.J.S. - 72 C.J.S., Pledges, §§ 49, 50.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-609.  

ALR. - Right of chattel mortgagee to take possession of property without legal process, 57 A.L.R. 26.  
Demand for payment or for possession as a condition of seller's right to retake property or otherwise enforce forfeiture under conditional sale, 59 A.L.R. 134.  
Right of bank to charge depositor's indebtedness against deposit account without first exhausting collateral, 96 A.L.R. 1240.  
Rights and remedies as between parties to conditional sale after seller has repossessed himself of the property, 99 A.L.R. 1288.  
Right of conditional seller to retake property without legal process, 146 A.L.R. 1331.  
Payment or discharge of principal obligation as affecting right of the pledgee to sue or continue pending suit against the maker of the collateral pledged, or judgment previously recovered on the collateral obligation, 157 A.L.R. 261.  
Conditional sale: what amounts to waiver by buyer of seller's duty to give notice before repossessing the property, 174 A.L.R. 1363.  
Construction of §§ 301 and 700 of Soldiers' and Sailors' Civil Relief Act of 1940, as amended, relating to instalment contracts for purchase of property, 24 A.L.R.2d 1074.  
What conduct by repossessing chattel mortgagee or conditional vendor entails tort liability, 99 A.L.R.2d 358.  
Validity, under state law, of self-help repossession of goods pursuant to UCC § 9-503, 75 A.L.R.3d 1061.  
Secured transactions: Right of secured party to take possession of collateral on default under UCC § 9-503, 25 A.L.R.5th 696.  

11-9-610. Disposition of collateral after default.

Statute text
(a)  Disposition after default. 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.  
(b)  Commercially reasonable disposition. 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.  
(c)  Purchase by secured party. A secured party may purchase collateral:  
(1) At a public disposition; or  
(2) 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.  
(d)  Warranties on disposition. 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.  
(e)  Disclaimer of warranties. A secured party may disclaim or modify warranties under subsection (d) of this Code section:  
(1) 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  
(2) By communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.  
(f)  Record sufficient to disclaim warranties. A record is sufficient to disclaim warranties under subsection (e) of this Code section 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.  

History
(Code 1981, § 11-9-610, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations
Cross references. - Additional provisions regarding disposition of goods repossessed after default, § 10-1-10.  
Law reviews. -  For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For article, "Nonjudicial Foreclosures in Georgia: Fresh Doubts, Issues and Strategies," see 23 Ga. St. B.J. 123 (1987). For annual survey of commercial law, see 43 Mercer L. Rev. 119 (1991).  

  For note discussing repossession and foreclosure as creditor's remedies under the Uniform Commercial Code, see 3 Ga. L. Rev. 198 (1968).  

  For comment on a secured party's burden of proof in seeking a deficiency judgment after resale of collateral, see 33 Mercer L. Rev. 397 (1981).  


JUDICIAL DECISIONS
 
		ANALYSIS
   	General Consideration
   	Right to Deficiency Judgment
 


 General Consideration


Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Section inapplicable to sales by court appointed receivers. - Whenever sale of collateral is not by secured party, but by receiver appointed by court of equity, the former provisions were not applicable to the transaction. Sands v. Citizens & S. Nat'l Bank, 146 Ga. App. 853, 247 S.E.2d 544 (1978) (decided under former Code Section 11-9-504).  

Section inapplicable where debt extinguished as provided by instrument. - Where the terms of the deed to secure debt allowed for early payment of the debt, by accepting grantor of deed's payoff, the plaintiff simply allowed the debt evidenced by the deed to secure debt to be extinguished in a manner contemplated by that instrument, and that act does not constitute a disposition or sale of the collateral within the meaning of the former provisions. Griffith v. First Fed. Sav. Bank, 208 Ga. App. 863, 432 S.E.2d 606 (1993) (decided under former Code Section 11-9-504).  

Section inapplicable where no evidence of sale. - Where neither the affidavits nor any other matter or pleading presented by the defendants identified any specific, probative evidence of a sale by the secured party, the former provisions of this section did not apply. Congress Fin. Corp. v. Commercial Technology, Inc., 910 F. Supp. 637 (N.D. Ga. 1995) (decided under former Code Section 11-9-504).  

Sale commercially reasonable. - Trial court did not err in concluding that a credit union's sale of a car was done in a commercially reasonable manner under O.C.G.A. § 11-9-610(b) where: (1) the car had been vandalized, including the stripping of its interior; (2) the car was not drivable; (3) a Texas credit union attempted to sell the car to its membership for eight weeks without results; (4) the credit union then contacted more than three body shops seeking a bid on the car; and (5) only one shop responded, and that bid was accepted. Endsley v. Robins Fed. Credit Union, 267 Ga. App. 512, 600 S.E.2d 441 (2004).  
Because a bank utilized professionals in the industry to assist in the sale of the debtor's equipment, and it did not rush to dispose of the equipment, but ultimately sold it to the person whom the debtor and its guarantor contended would most likely tender the highest bid for the equipment, the sale was conducted in a commercially reasonable manner under O.C.G.A. §§ 11-9-627(b) and 11-9-610. AKA Mgmt. v. Branch Banking & Trust Co., 275 Ga. App. 615, 621 S.E.2d 576 (2005).  
Assuming that the sale of collateral was a public sale within the meaning of O.C.G.A. § 11-1-201(31.1), the sale occurred in a commercially reasonable manner, under O.C.G.A. § 11-9-627, because the sale was consistent with the reasonable commercial practices of dealers in similar equipment. Moreover, the sale qualified as a valid private sale under O.C.G.A. § 11-9-613 and the creditor did not have to comply with the statute's public-sale provisions regarding time and advertising. Colonial Pac. Leasing Corp. v. N & N Partners, LLC, 981 F. Supp. 2d 1345 (N.D. Ga. Nov. 4, 2013).  

Issue of fact as to commercial reasonableness of sale. - Evidence from an owner of an equipment purchaser, who had 22 years of experience in the industry and who claimed that a finance company's sale of equipment upon repossession did not bring the equipment's full value, raised a genuine issue of fact as to commercial reasonableness; accordingly, a grant of summary judgment to the finance company on the company's claim for a deficiency judgment was error. Mason Logging Co. v. GE Capital Corp., 322 Ga. App. 708, 746 S.E.2d 180 (2013).  

Value of collateral customarily sold in recognized market is readily ascertainable. - For collateral to qualify as collateral of a type customarily sold in recognized market so as to authorize purchase by secured party at private sale, it must be such that its value at any given time is readily ascertainable, as in case of stocks and bonds or other negotiable instruments. Luxurest Furn. Mfg. Co. v. Furniture Whse. Sales, Inc., 132 Ga. App. 661, 209 S.E.2d 63 (1974), rev'd on other grounds sub nom. Gurwitch v. Luxurest Furn. Mfg. Co., 233 Ga. 934, 214 S.E.2d 373 (1975) (decided under former Code Section 11-9-504).  

Evidence of fair and reasonable value insufficient. - Documents in evidence showing only the sale price of the car were insufficient to establish the car's fair and reasonable value. No witness testified as to the basis for the opinion or opined that the appraised value of the car was the car's fair and reasonable value in that market at the time of the repossession or the sale. Versey v. Citizens Trust Bank, 306 Ga. App. 479, 702 S.E.2d 479 (2010).  

Knowledge of purchaser as prerequisite for setting aside sale. - Allegations that sheriff misled the attorneys of plaintiff in fieria facias as to when foreclosure sale was to be held may be insufficient grounds to set sale aside, unless it appears that purchaser knew of or had some hand in the misleading. American Sec. Inv. Co. v. Popell, 114 Ga. App. 268, 150 S.E.2d 697 (1966) (decided under former Code Section 11-9-504).  

Charges imposable in event of default. - Security agreement may impose various charges, not found in promissory note, in event of default. General Fin. Corp. v. Sprouse, 577 F.2d 989 (5th Cir. 1978) (decided under former Code Section 11-9-504).  

Remedies are cumulative. - The remedies available to creditor under the former provisions  are cumulative and creditor is not required to be reduced to the position of unsecured creditor so long as the creditor acts in a commercially reasonable manner and does not, by the creditor's actions or omissions, further impair position of debtor. Henderson Few & Co. v. Rollins Communications, Inc., 148 Ga. App. 139, 250 S.E.2d 830 (1978) (decided under former Code Section 11-9-504).  

Creditor can elect either a public or private sale. First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259, 287 S.E.2d 701 (1982) (decided under former Code Section 11-9-504).  

Defenses assertable. - Surety or guarantor may assert all defenses, except personal defenses, available to principal. Vickers v. Chrysler Credit Corp., 158 Ga. App. 434, 280 S.E.2d 842 (1981) (decided under former Code Section 11-9-504).  
Absent waiver or estoppel there is no reason why guarantor may not assert "commercially reasonable" defense which would be available to guarantor's principal, the debtor, in an action by secured party against guarantor for deficiency judgment. Vickers v. Chrysler Credit Corp., 158 Ga. App. 434, 280 S.E.2d 842 (1981); Clay v. Presidential Fin. Corp., 175 Ga. App. 226, 332 S.E.2d 924 (1985), overruled on other grounds, Branan v. Equico Lessors, Inc., 256 Ga. 23, 342 S.E.2d 671 (1986) (decided under former Code Section 11-9-504).  

Buyer not complying with terms of sale. - The security interest of the mortgagee of a mobile home retail installment sales contract was not discharged by a sale to the mobile home dealer by the mortgagee following default by the purchasers where the mortgagee and the dealer agreed that the title to the mobile home was to be transferred to the dealer only after it had paid mortgagee for the mobile home, the dealer did not complete payment for the mobile home, and there was no transfer of the certificate of title or ownership interest to the dealer, nor was there need prior to the resale of the mobile home for the mortgagee to secure a new certificate of title. Sunnyland Employees' Fed. Credit Union v. Fort Wayne Mtg. Co., 182 Ga. App. 5, 354 S.E.2d 645 (1987) (decided under former Code Section 11-9-504).  

Recovery on other notes between same parties. - Where suit on three promissory notes was not for deficiency judgment on debt for which foreclosure was had, but was action to recover on separate, subsequent and different notes, made for different debts, which were separate transactions, plaintiff-creditor's failure to give proper notice of sale of personal property listed in security agreements and bills of sale executed to secure first five promissory notes not included in instant suit did not extinguish entire debt of defendant-debtor. Jerkins v. Savannah Valley Prod. Credit Ass'n, 157 Ga. App. 652, 278 S.E.2d 431 (1981) (decided under former Code Section 11-9-504).  

No default occurred where no request for payment was made. - No default occurred where, although the evidence presented at trial showed that defendant had defaulted under the terms of the note with plaintiff at the time grantor of deed sought to pay off defendant's debt, there was no evidence presented that plaintiff requested or required that grantor of deed pay off the debt evidenced by the deed to secure debt. Griffith v. First Fed. Sav. Bank, 208 Ga. App. 863, 432 S.E.2d 606 (1993) (decided under former Code Section 11-9-504).  

Disposition of realty. - When a creditor disposes of realty, strict compliance with the confirmation provisions of O.C.G.A. § 44-14-160 et seq. is not required in order for a deficiency to be recovered, and the cases calling for strict compliance with former subsection (3) of the former provisions as to a creditor's disposition of personalty and dealing more specifically with the notice requirements of former subsection (3) rather than with any requirement similar to confirmation of a real property foreclosure, do not effectively overrule it. Business Dev. Corp. v. Bickerstaff, 73 Bankr. 421 (Bankr. N.D. Ga. 1987) (decided under former Code Section 11-9-504).  

Leases. - The commercially reasonable sale provision and the notice provision under O.C.G.A. § 10-1-36 were not applicable to a lease which was a "true lease" rather than a disguised secured transaction. Citizens & S. Nat'l Bank v. Thomas, 188 Ga. App. 312, 372 S.E.2d 687 (1988) (decided under former Code Section 11-9-504).  

Cited in Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004).  


 Right to Deficiency Judgment


Absolute bar rule. - These code provisions do not require the imposition of an absolute-bar rule and the absolute-bar rule is contrary to the intent of O.C.G.A. § 11-1-106 which expressly prohibits penal damages. Emmons v. Burkett, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-504).  

Notification of intent to sell at private sale prerequisite to recovery. - Compliance with requirement of notification of debtor of intention to sell collateral at private sale is condition precedent to recovery of any deficiency between sale price of collateral and amount of unpaid balance. Edmondson v. Air Serv. Co., 123 Ga. App. 263, 180 S.E.2d 589 (1971) (decided under former Code Section 11-9-504).  
Where a debtor filed a petition for bankruptcy and a creditor filed a complaint for relief from the automatic stay, which was granted, and then the creditor repossessed the debtor's car, in which it held a security interest, and sold the car but did not give prior notification of the sale to the debtor in compliance with former subsection (3) of these provisions, the creditor was not entitled to collect any deficiency. Fidelity Nat'l Bank v. Winslow, 39 Bankr. 869 (Bankr. N.D. Ga. 1984) (decided under former Code Section 11-9-504).  

No "deficiency" where items cannot be repossessed. - Where the evidence showed the sum sought represented the amount advanced to defendants on those inventory items which could not be repossessed because they had been sold "out of trust," and where these items were not, and could not have been, repossessed by plaintiff, no "deficiency" was deemed to be sought and the former provisions were not applicable. Dixon v. Borg-Warner Acceptance Corp., 186 Ga. App. 843, 368 S.E.2d 800 (1988) (decided under former Code Section 11-9-504).  

Sale must allow debtor to exercise redemption right. - Act of secured party, in selling collateral without strict compliance with notice of sale provisions of this former section precludes purchaser or owner from exercising right of redemption under former § 11-9-506, and for that reason secured party cannot recover for deficiency owed by purchaser. Braswell v. American Nat'l Bank, 117 Ga. App. 699, 161 S.E.2d 420 (1968) (decided under former Code Section 11-9-504).  

Deficiency admitted by failure to respond to requests to admissions. - In a finance corporation's suit to recover a deficiency balance on an installment sales contract for a log loader, the trial court properly granted the corporation summary judgment upon concluding that no genuine issues of material fact existed based on the defending trucking company and the company's president failing to answer the requests for admissions that were served simultaneously with the complaint. By failing to respond and never challenging the trial court's denial of the motion to withdraw the admissions filed by the trucking company and the company's president, the following allegations were deemed admitted: that true and correct copies of the relevant documents, including the demand for payment were received; that the president executed the installment sales contract and the guaranty; that the president failed to make payments thereunder; that the principal balance due under the contract and guaranty was $34,442.44 as of a certain date; and that the money was owed to the finance corporation. JJM Trucking, Inc. v. Caterpillar Fin. Servs. Corp., 295 Ga. App. 560, 672 S.E.2d 529 (2009).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 556-572, 606, 624 et seq., 642-680, 685-703.  

C.J.S. - 72 C.J.S., Pledges, §§ 49, 50.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-610.  

ALR. - Seller's rights in respect of the property, or its proceeds, upon dishonor of draft or check for purchase price, on a cash sale, 31 A.L.R. 578; 54 A.L.R. 526.  
Rights and remedies as between parties to conditional sale after seller has repossessed himself of the property, 99 A.L.R. 1288.  
Right of creditor or mortgagee to redeem from his own sale, 108 A.L.R. 993.  
Purchase by pledgee of subject of pledge, 37 A.L.R.2d 1381.  
Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.  
Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.  
Uniform Commercial Code: failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 A.L.R.3d 401.  
Construction of term "debtor" as used in UCC § 9-504(3), requiring secured party to give notice to debtor of sale of collateral securing obligation, 5 A.L.R.4th 1291.  
What is "commercially reasonable" disposition of collateral required by UCC § 9-504(3), 7 A.L.R.4th 308.  
Loss or modification of right to notification of sale of repossessed collateral under Uniform Commercial Code § 9-504, 9 A.L.R.4th 552.  
Failure of secured party to make "commercially reasonable" disposition of collateral under UCC § 9-504(3) as bar to deficiency judgment, 10 A.L.R.4th 413.  
Sufficiency of secured party's notification of sale or other intended disposition of collateral under UCC § 9-504(3), 11 A.L.R.4th 241.  
Nature of collateral which secured party may sell or otherwise dispose of without giving notice to defaulting debtor under UCC § 9-504(3), 11 A.L.R.4th 1060.  
Secured transactions: what is "public" or "private" sale under UCC § 9-504(3), 60 A.L.R.4th 1012.  
UCC: value of trade-in taken on sale of collateral for purposes of computing surplus or deficiency, 72 A.L.R.4th 1128.  
Causes of action governed by limitations period in UCC § 2-725, 49 A.L.R.5th 1.  

11-9-611. Notification before disposition of collateral.

Statute text
(a)  "Notification date." As used in this Code section, the term "notification date" means the earlier of the date on which:  
(1) A secured party sends to the debtor and any secondary obligor an authenticated notification of disposition; or  
(2) The debtor and any secondary obligor waive the right to notification.  
(b)  Notification of disposition required. Except as otherwise provided in subsection (d) of this Code section, a secured party that disposes of collateral under Code Section 11-9-610 shall send to the persons specified in subsection (c) of this Code section a reasonable authenticated notification of disposition.  
(c)  Persons to be notified. To comply with subsection (b) of this Code section, the secured party shall send an authenticated notification of disposition to:  
(1) The debtor;  
(2) Any secondary obligor; and  
(3) If the collateral is other than consumer goods:  
(A) Any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral;  
(B) 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:  
(i) Identified the collateral;  
(ii) Was indexed under the debtor's name as of that date; and  
(iii) Was filed in the office 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 notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in subsection (a) of Code Section 11-9-311.  
(d)  Subsection (b) of this Code section inapplicable; perishable collateral; recognized market. Subsection (b) of this Code section 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.  
(e)  Compliance with subparagraph (c)(3)(B) of this Code section. A secured party complies with the requirement for notification prescribed by subparagraph (c)(3)(B) of this Code section if:  
(1) Not later than 20 days or earlier than 30 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 subparagraph (c)(3)(B) of this Code section; and  
(2) Before the notification date, the secured party:  
(A) Did not receive a response to the request for information; or  
(B) Received a response to the request for information and sent an authenticated notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.  

History
(Code 1981, § 11-9-611, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS
 
		ANALYSIS
   	Reasonable Notification of Sale
 


 Reasonable Notification of Sale


Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

No federal presumption. - Section's requirement of notice of sale is not preempted by federal regulations not providing specific notice requirements and which are intended to accommodate state procedures. United States ex rel. Farmers Home Admin. v. Kennedy, 785 F.2d 1553 (11th Cir. 1986) (decided under former Code Section 11-9-504).  

Relation to O.C.G.A. § 10-1-36. - O.C.G.A. § 10-1-36 complements the former provisions and provides some guidance as to what constitutes reasonable notice. Lacy v. General Fin. Corp., 651 F.2d 1026 (5th Cir. 1981) (decided under former Code Section 11-9-504).  

Effort secured party must exert in locating and notifying debtor. - See Henson v. Foremost Ins. Co., 158 Ga. App. 441, 280 S.E.2d 848 (1981) (decided under former Code Section 11-9-504).  

Section requires giving, not receipt, of reasonable notice. - The former provisions required that seller give buyer reasonable notification of intended sale. However, requirement involved is one of creditor giving debtor reasonable notification as distinguished from debtor receiving such notification. Friddell v. Rawlins, 160 Ga. App. 44, 285 S.E.2d 779 (1981); Brewer v. Trust Co. Bank, 205 Ga. App. 891, 424 S.E.2d 74 (1992) (decided under former Code Section 11-9-504).  

Non-misleading notice, complying with this section, is sufficient. - Notice which was in accord with requirements of former § 11-9-504(3), and which was not such as misled or prevented debtor from exercising the right of redemption under former § 11-9-506, is sufficient to reasonably notify debtor of rights. Motor Contract Co. v. Sawyer, 123 Ga. App. 207, 180 S.E.2d 282 (1971) (decided under former Code Section 11-9-504).  

Notices sent to debtors by certified mail are sufficient. Brinson v. Commercial Bank, 138 Ga. App. 177, 225 S.E.2d 701 (1976), overruled on other grounds, Barbree v. Allis-Chalmers Corp., 250 Ga. 409, 297 S.E.2d 465 (1982) (decided under former Code Section 11-9-504).  

When notification is "sent" within meaning of section. - These provisions relied on presumption of actual notice arising by proof that letter was written, properly stamped, properly addressed and properly mailed. Notification is not "sent" where these procedures are not observed. Edmondson v. Air Serv. Co., 123 Ga. App. 263, 180 S.E.2d 589 (1971) (decided under former Code Section 11-9-504).  

Letter returned to creditor stamped "unclaimed" and "postage due". - Where it appears that only attempt made by secured party to notify debtor of time of private sale of repossessed collateral was by letter addressed to debtor and mailed by certified mail and that letter was returned to sender marked unclaimed and stamped "Postage Due 9 Cents, " there was no duty of debtor to show that the debtor did not willfully refuse the letter because postage was inadequate, and debtor did not receive notification required under these provisions. Edmondson v. Air Serv. Co., 123 Ga. App. 263, 180 S.E.2d 589 (1971) (decided under former Code Section 11-9-504).  

Notice of time not specified. - Notice only of intention to sell without any notification of time is not in compliance with Uniform Commercial Code as it precludes purchaser or owner from exercising right of redemption and therefore prevents the recovery of the deficiency. Motor Contract Co. v. Sawyer, 123 Ga. App. 207, 180 S.E.2d 282 (1971) (decided under former Code Section 11-9-504).  
Former provisions did not demand that notice specify exactly when the sales would occur. It was sufficient for the creditor to notify debtor that the sales would occur only after certain dates, and so notice requirement was satisfied. Cessna Fin. Corp. v. Wall, 876 F. Supp. 273 (M.D. Ga. 1994) (decided under former Code Section 11-9-504).  

Notice to debtor merely that creditor intends to pursue deficiency claim. - In suit based on defaults in payment of two notes, while defendant was notified by certified mail that in event of sale plaintiff would pursue deficiency claim, this notice did not advise defendant of any contemplated sale, either public or private, thus creditor failed to comply with the former provisions, as notice is a condition precedent to recovery of any deficiency. GEMC Fed. Credit Union v. Shoemake, 151 Ga. App. 705, 261 S.E.2d 443 (1979) (decided under former Code Section 11-9-504).  

Notice to secured party holding interest senior to that of selling secured party. - Secured party who holds interest senior to one held by secured party selling property at public sale and who meets other requirements of Uniform Commercial Code must be sent notification of sale, and failure to do so gave rise to cause of action under former subsection (1). Bank of Camilla v. Stephens, 234 Ga. 293, 216 S.E.2d 71 (1975) (decided under former Code Section 11-9-504).  

Effect of failure to notify debtor. - In action for conversion of mortgaged property, instruction that secured party had no right to sell property if no notice was given was erroneous, as the U.C.C. does not prohibit sale without notice, but rather provides that a debtor is entitled to recover any loss caused by such a sale, that is, a loss caused by a sale at a less than adequate price, and is also protected from any action by secured party to recover any deficiency between sale price and balance owing. Trust Co. v. Kite, 164 Ga. App. 119, 294 S.E.2d 606 (1982) (decided under former Code Section 11-9-504).  
Where bank failed to provide notice of sale to debtor hardware store, bank was precluded from obtaining deficiency against the store. First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259, 287 S.E.2d 701 (1982) (decided under former Code Section 11-9-504).  
A creditor who fails to comply with the provisions of the UCC as to repossessed collateral is met with two results for noncompliance: (1) It will be presumed that the value of the repossessed collateral equals the amount of the debt, and (2) even if the secured party overcomes such presumption, any recovery is subject to an offset of damages proved by the debtor resulting from the violation. Barney v. Morris, 168 Ga. App. 426, 309 S.E.2d 420 (1983); Emmons v. Burkett, 179 Ga. App. 838, 348 S.E.2d 323 (1986), rev'd on other grounds, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-504).  
Creditor's failure to give notice in accordance with former subsection (3) did not as a matter of law preclude the creditor's  right of recovery. Emmons v. Burkett, 179 Ga. App. 838, 348 S.E.2d 323 (1986), rev'd on other grounds, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-504).  
The Farmers Home Administration's failure to give notice of the sale of debtors' collateral, in violation of  former subsection (3), barred the administration from recovering any deficiency against the debtors based upon their second security deed. United States ex rel. Farmers Home Admin. v. Kennedy, 806 F.2d 1014 (11th Cir. 1986). But see Emmons v. Burkett, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-504).  

Misstatement of balance due. - Debtor did not receive reasonable notification of the sale of repossessed property where the notice of sale understated the balance due at the time of the notice, thereby preventing the debtor from taking steps to protect its interest. Cessna Fin. Corp. v. Design Eng'g & Constr. Int'l, Inc., 176 Ga. App. 206, 335 S.E.2d 625 (1985) (decided under former Code Section 11-9-504).  

Endorser entitled to notice. - An endorser's obligation under a promissory note, including the potential liability of any deficiency, makes obvious the endorser's interest in a fair and optimal disposition of repossessed collateral, and renders the purpose of requiring notice to the actual debtor equally applicable to the endorser. Davis v. Adel Banking Co., 175 Ga. App. 828, 334 S.E.2d 874 (1985) (decided under former Code Section 11-9-504).  

Accommodation endorsers were entitled to notice of sale of promissory note maker's collateral, even if the maker had waived own rights to notice. United States ex rel. Farmers Home Admin. v. Kennedy, 785 F.2d 1553 (11th Cir. 1986) (decided under former Code Section 11-9-504).  

Former subsection (3) held inapplicable. - In a suit against the defendant as endorser of a note brought by a bank after it had exercised its power of sale on the residence of the insurer of the note, former subsection (3), relating to reasonable notification of sale, was inapplicable under the facts of the case. Breitzman v. Heritage Bank, 180 Ga. App. 171, 348 S.E.2d 713 (1986) (decided under former Code Section 11-9-504).  

Bank's compliance with O.C.G.A. § 10-1-36 notice requirements. Evidence of a bank's compliance with the notice requirements of  O.C.G.A. § 10-1-36 was a sufficient showing of the bank's compliance with the cumulative and additional "reasonable notification" provision of former subsection (3). Calcote v. Citizens & S. Nat'l Bank, 179 Ga. App. 132, 345 S.E.2d 616 (1986) (decided under former Code Section 11-9-504).  
Two attempts to deliver certified mail to the buyer's correct address met the requirements of O.C.G.A. § 10-1-36. Hill v. Federal Employees Credit Union, 193 Ga. App. 44, 386 S.E.2d 874 (1989) (decided under former Code Section 11-9-504).  

Notice to guarantor not required. - Nothing in the Uniform Commercial Code required that notice under former subsection (3) be given to guarantor. Brinson v. Commercial Bank, 138 Ga. App. 177, 225 S.E.2d 701 (1976), overruled on other grounds, Barbree v. Allis-Chalmers Corp., 250 Ga. 409, 297 S.E.2d 465 (1982) (decided under former Code Section 11-9-504).  
A guarantor is not entitled to notice under the former provisions of this section. McNulty v. Codd, 157 Ga. App. 8, 276 S.E.2d 73 (1981), overruled on other grounds, Barbree v. Allis-Chalmers Corp., 250 Ga. 409, 297 S.E.2d 465 (1982); First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259, 287 S.E.2d 701 (1982) (decided under former Code Section 11-9-504).  
A guarantor is not a "debtor" and therefore, not required under the Uniform Commercial Code to be notified by secured party of impending sale. Vickers v. Chrysler Credit Corp., 158 Ga. App. 434, 280 S.E.2d 842 (1981) (but see Reeves v. Habersham Bank, 254 Ga. 615, 331 S.E.2d 589 (1985), holding that a guarantor is a debtor within the meaning of former subsection (3)).  

Dealer grantor of manufacturer financing. - One who is a seller of chattel paper, whether or not that person is the owner of the underlying collateral, with full recourse against him in the event of a deficiency is a debtor entitled to notice of the post-default proceedings disposing of the collateral. Barbree v. Allis-Chalmers Corp., 250 Ga. 409, 297 S.E.2d 465 (1982) (decided under former Code Section 11-9-504).  

Seller of farm equipment who had assigned retail installment contracts was a "debtor" entitled to notice of sale under former subsection (3). Barbree v. Allis-Chalmers Corp., 250 Ga. 409, 297 S.E.2d 465 (1982) (decided under former Code Section 11-9-504).  

Claiming loss of profits due to failure to give notice. - In an action by a debtor for damages caused by repossession of collateral after an alleged breach of an agreement between the debtor and the secured party, where the debtor is in default the debtor cannot allege that the failure of the secured party to give notice as to the retention and sale of collateral caused the debtor to be damaged by loss of profits. Such violations only raise the presumption that the value of the collateral equals the amount due on the debt. Barney v. Morris, 168 Ga. App. 426, 309 S.E.2d 420 (1983) (decided under former Code Section 11-9-504).  

Notice not required for transfer pursuant to standing full recourse assignment agreement. - The last sentence in former subsection (5) made clear that a reassignment of collateral by a secured party pursuant to a standing full recourse assignment agreement was not a "sale or disposition of the collateral" that would activate the notice provisions of  former subsection (3). Turner v. Trust Co. Bank, 210 Ga. App. 535, 436 S.E.2d 577 (1993) (decided under former Code Section 11-9-504).  

Notice requirement  may not be waived or varied. See GEMC Fed. Credit Union v. Shoemake, 151 Ga. App. 705, 261 S.E.2d 443 (1979).  

Guaranty subject to waiver of notice of sale. - Where the note hypothecating the property empowered the note's holder to "sell, assign, and deliver the whole or any part of the collateral at public or private sale, without demand, advertisement or notice of the time or place of sale or of any adjournment thereof, which are expressly waived," and the guaranty signed by defendant made itself subject to all terms and conditions in the notes evidencing the obligations which it guaranteed, defendant waived notice of the sale. United States v. Jones, 707 F.2d 1334 (11th Cir. 1983).  

Showing required by debtor. - Where debtor moves for summary judgment in deficiency proceeding where propriety of notice is in issue, debtor must show that debtor has not renounced or modified  right to notification of sale under these provisions. GEMC Fed. Credit Union v. Shoemake, 151 Ga. App. 705, 261 S.E.2d 443 (1979).  

Receipt of notice admitted by failure to respond to requests for admissions. - In a finance corporation's suit to recover a deficiency balance on an installment sales contract for a log loader, the trial court properly granted the corporation summary judgment upon concluding that no genuine issues of material fact existed based on the defending trucking company and the company's president failing to answer the requests for admissions that were served simultaneously with the complaint. By failing to respond and never challenging the trial court's denial of the motion to withdraw the admissions filed by the trucking company and the company's president, the following allegations were deemed admitted: that true and correct copies of the relevant documents, including the demand for payment were received; that the president executed the installment sales contract and the guaranty; that the president failed to make payments thereunder; that the principal balance due under the contract and guaranty was $34,442.44 as of a certain date; and that the money was owed to the finance corporation. JJM Trucking, Inc. v. Caterpillar Fin. Servs. Corp., 295 Ga. App. 560, 672 S.E.2d 529 (2009).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-611.  

11-9-612. Timeliness of notification before disposition of collateral.

Statute text
(a)  Reasonable time is question of fact. Except as otherwise provided in subsection (b) of this Code section, whether a notification is sent within a reasonable time is a question of fact.  
(b)  Ten-day period sufficient in nonconsumer transaction. In a transaction other than a consumer transaction, a notification of disposition sent after default and ten days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.  

History
(Code 1981, § 11-9-612, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS
 
		ANALYSIS
   	Reasonable Notification of Sale
 


 Reasonable Notification of Sale


Definition of O.C.G.A. § 11-1-201 not of itself sufficient for making determination. - Question of whether reasonable notification of time after which private sale or other intended disposition is to be made has been sent by secured party to debtor cannot be determined solely on definitional basis of  O.C.G.A. § 11-1-201. Geohagan v. Commercial Credit Corp., 130 Ga. App. 828, 204 S.E.2d 784 (1974) (decided under former Code Section 11-9-504).  

Notice stating intent to sell ten days from postmark. - Notice sent to debtor, at address given when debtor executed security agreement, by certified mail, return receipt requested, and received by debtor two days after mailing notifying debtor of creditor's intention to sell collateral at private sale ten days after postmark was effective, was a satisfactory and reasonable method of notification. Motor Contract Co. v. Sawyer, 123 Ga. App. 207, 180 S.E.2d 282 (1971) (decided under former Code Section 11-9-504).  

Conflicting evidence presents jury question. - Where there is conflicting evidence as to nature and extent of debtor's knowledge, debtor should not be estopped from raising lack of notice as a defense. Rather, question of "reasonable notification " should be submitted to jury. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-612.  

11-9-613. Contents and form of notification before disposition of collateral; general.

Statute text
Except in a consumer goods transaction, the following rules apply:  

(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 paragraph (1) of this Code section are nevertheless sufficient is a question of fact;  
(3) The contents of a notification providing substantially the information specified in paragraph (1) of this Code section are sufficient, even if the notification includes:  
(A) Information not specified by that paragraph; or  
(B) Minor errors that are not seriously misleading;  
(4) A particular phrasing of the notification is not required; and  
(5) The following form of notification and the form appearing in paragraph (3) of Code Section 11-9-614, when completed, each provides sufficient information:  



NOTIFICATION OF DISPOSITION OF COLLATERAL 




   To: (Name of debtor, obligor, or other person to which the notification is sent)  


   From: (Name, address, and telephone number of secured party)  


   Name of Debtor(s): (Include only if debtor(s) is (are) not an addressee)  


   (For a public disposition:) 


   We will sell (or lease or license, as applicable) the (describe collateral)  to the highest qualified bidder in public as follows: 


   Day and date: _____________ 


   Time: _____________ 


   Place: _____________ 


   (For a private disposition:) 


   We will sell (or lease or license, as applicable) the (describe collateral)  privately sometime after (day and date). 


   You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell (or lease or license, as applicable) (for a charge of $_____________). You may request an accounting by calling us at (telephone number). 

History
(Code 1981, § 11-9-613, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Valid private sale. - Assuming that the sale of collateral was a public sale within the meaning of O.C.G.A. § 11-1-201(31.1), the sale occurred in a commercially reasonable manner, under O.C.G.A. § 11-9-627, because the sale was consistent with the reasonable commercial practices of dealers in similar equipment. Moreover, the sale qualified as a valid private sale under O.C.G.A. § 11-9-613 and the creditor did not have to comply with the statute's public-sale provisions regarding time and advertising. Colonial Pac. Leasing Corp. v. N & N Partners, LLC, 981 F. Supp. 2d 1345 (N.D. Ga. Nov. 4, 2013).  

Misstatement in a notification of sale. - Misstatement in the notifications of sale - that the secured creditor's subsidiary was the secured creditor - was a minor error that was not seriously misleading. Colonial Pac. Leasing Corp. v. N & N Partners, LLC, 981 F. Supp. 2d 1345 (N.D. Ga. Nov. 4, 2013).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-613.  

11-9-614. Contents and form of notification before disposition of collateral; consumer goods transaction.

Statute text
In a consumer goods transaction, the following rules apply:  

(1) A notification of disposition must provide the following information:  
(A) The information specified in paragraph (1) of Code Section 11-9-613;  
(B) A description of any liability for a deficiency of the person to which the notification is sent;  
(C) A telephone number from which the amount that must be paid to the secured party to redeem the collateral under Code Section 11-9-623 is available; and  
(D) A telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available;  
(2) A particular phrasing of the notification is not required;  
      (3) The following form of notification, when completed, provides sufficient information: 




   (Name and address of secured party)  


   (Date)          



 NOTICE OF OUR PLAN TO SELL PROPERTY 


   (Name and address of any obligor who is also a debtor)  


   Subject: (Identification of transaction)  


   We have your (describe collateral), because you broke promises in our agreement. 


   (For a public disposition:) 


   We will sell (describe collateral)  at public sale. A sale could include a lease or license. The sale will be held as follows: 


   Date: _____________ 


   Time: _____________ 


   Place: _____________ 


   You may attend the sale and bring bidders if you want. 


   (For a private disposition:) 


   We will sell (describe collateral)  at private sale sometime after (date). A sale could include a lease or license. 


   The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you (will or will not, as applicable)  still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else. 


   You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at (telephone number). 


   If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at (telephone number)  or write us at (secured party's address)  and request a written explanation. (We will charge you $____________ for the explanation if we sent you another written explanation of the amount you owe us within the last six months.) 


   If you need more information about the sale call us at (telephone number)  or write us at (secured party's address). 


   We are sending this notice to the following other people who have an interest in (describe collateral)  or who owe money under your agreement: 


   (Names of all other debtors and obligors, if any) ; 
(4) A notification in the form of paragraph (3) of this Code section is sufficient, even if additional information appears at the end of the form;  
(5) A notification in the form of paragraph (3) of this Code section is sufficient, even if it includes errors in information not required by paragraph (1) of this Code section, unless the error is misleading with respect to rights arising under this article; and  
(6) If a notification under this Code section is not in the form of paragraph (3) of this Code section, law other than this article determines the effect of including information not required by paragraph (1) of this Code section.  

History
(Code 1981, § 11-9-614, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-614.  

11-9-615. Application of proceeds of disposition; liability for deficiency and right to surplus.

Statute text
(a)  Application of proceeds. A secured party shall apply or pay over for application the cash proceeds of a disposition under Code Section 11-9-610 in the following order to:  
(1) 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;  
(2) The satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made;  
(3) The satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if:  
(A) The secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and  
(B) 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  
(4) A secured party that is a consignor of the collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.  
(b)  Proof of subordinate interest. 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 paragraph (3) of subsection (a) of this Code section.  
(c)  Application of noncash proceeds. A secured party need not apply or pay over for application noncash proceeds of a disposition under Code Section 11-9-610 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)  Surplus or deficiency if obligation secured. 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 (a) of this Code section and permitted by subsection (c) of this Code section:  
(1) Unless paragraph (4) of subsection (a) of this Code section 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  
(2) The obligor is liable for any deficiency.  
(e)  No surplus or deficiency in sales of certain rights to payment. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes:  
(1) The debtor is not entitled to any surplus; and  
(2) The obligor is not liable for any deficiency.  
(f)  Calculation of surplus or deficiency in disposition to person related to secured party. 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:  
(1) The transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor; and  
(2) 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.  
(g)  Cash proceeds received by junior secured party. 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:  
(1) Takes the cash proceeds free of the security interest or other lien;  
(2) Is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and  
(3) Is not obligated to account to or pay the holder of the security interest or other lien for any surplus.  

History
(Code 1981, § 11-9-615, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Cited in Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-615.  

11-9-616. Explanation of calculation of surplus or deficiency.

Statute text
(a)  Definitions. As used in this Code section, the term:  
(1) "Explanation" means a writing that:  
(A) States the amount of the surplus or deficiency;  
(B) Provides an explanation in accordance with subsection (c) of this Code section of how the secured party calculated the surplus or deficiency;  
(C) States, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates, and expenses may affect the amount of the surplus or deficiency; and  
(D) Provides a telephone number or mailing address from which additional information concerning the transaction is available.  
(2) "Request" means a record:  
(A) Authenticated by a debtor or consumer obligor;  
(B) Requesting that the recipient provide an explanation; and  
(C) Sent after disposition of the collateral under Code Section 11-9-610.  
(b)  Explanation of calculation. In a consumer goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under Code Section 11-9-615, the secured party shall:  
(1) Send an explanation to the debtor or consumer obligor, as applicable, after the disposition and:  
(A) Before or when the secured party accounts to the debtor and pays any surplus or first makes written demand on the consumer obligor after the disposition for payment of the deficiency; and  
(B) Within 14 days after receipt of a request; or  
(2) In the case of a consumer obligor who is liable for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency.  
(c)  Required information. To comply with subparagraph (a)(1)(B) of this Code section, a writing must provide the following information in the following order:  
(1) The aggregate amount of obligations secured by the security interest under which the disposition was made, and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date:  
(A) If the secured party takes or receives possession of the collateral after default, not more than 35 days before the secured party takes or receives possession; or  
(B) If the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition;  
(2) The amount of proceeds of the disposition;  
(3) The aggregate amount of the obligations after deducting the amount of proceeds;  
(4) The amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing, and disposing of the collateral, and attorney's fees secured by the collateral which are known to the secured party and relate to the current disposition;  
(5) The amount, in the aggregate or by type, and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in paragraph (1) of this subsection; and  
(6) The amount of the surplus or deficiency.  
(d)  Substantial compliance. A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of subsection (a) of this Code section is sufficient, even if it includes minor errors that are not seriously misleading.  
(e)  Charges for responses. A debtor or consumer obligor is entitled without charge to one response to a request under this Code section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to paragraph (1) of subsection (b) of this Code section. The secured party may require payment of a charge not exceeding $10.00 for each additional response.  

History
(Code 1981, § 11-9-616, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Deficiency admitted by failure to respond to requests for admissions. - In a finance corporation's suit to recover a deficiency balance on an installment sales contract for a log loader, the trial court properly granted the corporation summary judgment upon concluding that no genuine issues of material fact existed based on the defending trucking company and the company's president failing to answer the requests for admissions that were served simultaneously with the complaint. By failing to respond and never challenging the trial court's denial of the motion to withdraw the admissions filed by the trucking company and the company's president, the following allegations were deemed admitted: that true and correct copies of the relevant documents, including the demand for payment were received; that the president executed the installment sales contract and the guaranty; that the president failed to make payments thereunder; that the principal balance due under the contract and guaranty was $34,442.44 as of a certain date; and that the money was owed to the finance corporation. JJM Trucking, Inc. v. Caterpillar Fin. Servs. Corp., 295 Ga. App. 560, 672 S.E.2d 529 (2009).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-616.  

11-9-617. Rights of transferee of collateral.

Statute text
(a)  Effects of disposition. A secured party's disposition of collateral after default:  
(1) Transfers to a transferee for value all of the debtor's rights in the collateral;  
(2) Discharges the security interest under which the disposition is made; and  
(3) Discharges any subordinate security interest or other subordinate lien.  
(b)  Rights of good faith transferee. A transferee that acts in good faith takes free of the rights and interests described in subsection (a) of this Code section, even if the secured party fails to comply with this article or the requirements of any judicial proceeding.  
(c)  Rights of other transferee. If a transferee does not take free of the rights and interests described in subsection (a) of this Code section, the transferee takes the collateral subject to:  
(1) The debtor's rights in the collateral;  
(2) The security interest or agricultural lien under which the disposition is made; and  
(3) Any other security interest or other lien.  

History
(Code 1981, § 11-9-617, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Termination of debtor's ownership interest. - Where a debtor's vehicle was part of the debtor's bankruptcy estate under Georgia law, return of the same was proper despite the creditor's objections, as ownership remained with the debtor until the creditor disposed of or elected to retain the collateral in accordance with the procedures of the Georgia Uniform Commercial Code. Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-617.  

11-9-618. Rights and duties of certain secondary obligors.

Statute text
(a)  Rights and duties of secondary obligor. A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after the secondary obligor:  
(1) Receives an assignment of a secured obligation from the secured party;  
(2) Receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party; or  
(3) Is subrogated to the rights of a secured party with respect to collateral.  
(b)  Effect of assignment, transfer, or subrogation. An assignment, transfer, or subrogation described in subsection (a) of this Code section:  
(1) Is not a disposition of collateral under Code Section 11-9-610; and  
(2) Relieves the secured party of further duties under this article.  

History
(Code 1981, § 11-9-618, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-618.  

11-9-619. Transfer of record or legal title.

Statute text
(a)  "Transfer statement." As used in this Code section, the term "transfer statement" means a record authenticated by a secured party stating:  
(1) That the debtor has defaulted in connection with an obligation secured by specified collateral;  
(2) That the secured party has exercised its postdefault remedies with respect to the collateral;  
(3) That, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral; and  
(4) The name and mailing address of the secured party, debtor, and transferee.  
(b)  Effect of transfer statement. 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:  
(1) Accept the transfer statement;  
(2) Promptly amend its records to reflect the transfer; and  
(3) If applicable, issue a new appropriate certificate of title in the name of the transferee.  
(c)  Transfer not a disposition; no relief of secured party's duties. A transfer of the record or legal title to collateral to a secured party under subsection (b) of this Code section or otherwise is not of itself a disposition of collateral under this article and does not of itself relieve the secured party of its duties under this article.  

History
(Code 1981, § 11-9-619, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Cited in Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004).  


RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-619.  

11-9-620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.

Statute text
(a)  Conditions to acceptance in satisfaction. Except as otherwise provided in subsection (g) of this Code section, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:  
(1) The debtor consents to the acceptance under subsection (c) of this Code section;  
(2) The secured party does not receive, within the time set forth in subsection (d) of this Code section, a notification of objection to the proposal authenticated by:  
(A) A person to which the secured party was required to send a proposal under Code Section 11-9-621; or  
(B) 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;  
(3) If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and  
(4) Subsection (e) of this Code section does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to Code Section 11-9-624.  
(b)  Purported acceptance ineffective. A purported or apparent acceptance of collateral under this Code section is ineffective unless:  
(1) The secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and  
(2) The conditions of subsection (a) of this Code section are met.  
(c)  Debtor's consent. For purposes of this Code section:  
(1) 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 authenticated after default; and  
(2) 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 authenticated after default or the secured party:  
(A) 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;  
(B) In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and  
(C) Does not receive a notification of objection authenticated by the debtor within 20 days after the proposal is sent.  
(d)  Effectiveness of notification. To be effective under paragraph (2) of subsection (a) of this Code section, a notification of objection must be received by the secured party:  
(1) In the case of a person to which the proposal was sent pursuant to Code Section 11-9-621, within 20 days after notification was sent to that person; and  
(2) In other cases:  
(A) Within 20 days after the last notification was sent pursuant to Code Section 11-9-621; or  
(B) If a notification was not sent, before the debtor consents to the acceptance under subsection (c) of this Code section.  
(e)  Mandatory disposition of consumer goods. A secured party that has taken possession of collateral shall dispose of the collateral pursuant to Code Section 11-9-610 within the time specified in subsection (f) of this Code section if:  
(1) Sixty percent of the cash price has been paid in the case of a purchase money security interest in consumer goods; or  
(2) Sixty percent of the principal amount of the obligation secured has been paid in the case of a nonpurchase money security interest in consumer goods.  
(f)  Compliance with mandatory disposition requirement. To comply with subsection (e) of this Code section, the secured party shall dispose of the collateral:  
(1) Within 90 days after taking possession; or  
(2) Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.  
(g)  No partial satisfaction in consumer transaction. In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.  

History
(Code 1981, § 11-9-620, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Retention of collateral is permissive remedy. - In stating that creditor may propose to keep goods in satisfaction of debt so long as the creditor gives required notice and no one objects, the former provisions merely set forth a permissive, not a mandatory, remedy. McCullough v. Mobiland, Inc., 139 Ga. App. 260, 228 S.E.2d 146 (1976); Ricker v. First Fed., 215 Ga. App. 793, 452 S.E.2d 583 (1994) (decided under former Code Section 11-9-505).  

Applicability of former paragraph (1). - Former paragraph (1) applied only where there is a security interest in consumer goods. Marshall v. Fulton Nat'l Bank, 152 Ga. App. 121, 262 S.E.2d 448 (1979), rev'd on other grounds, 245 Ga. 745, 267 S.E.2d 225 (1980) (decided under former Code Section 11-9-505).  

Notice requirement of former paragraph (2). - The written notice required by former paragraph (2) must clearly state the creditor's proposal to retain the collateral in satisfaction of the debt and must notify the debtor that the debtor has 21 days in which to raise an objection to such a proposal. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section 11-9-505).  
The purpose of requiring written notice of a creditor's proposal to retain collateral in lieu of the debt and of prohibiting waiver of such notice before default is to provide the debtor with options for reducing loss when collateral has a value greater than the debt via redemption pursuant to former § 11-9-506 or liquidation in a commercially reasonable manner as required by former § 11-9-504. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section 11-9-505).  
Even though a debtor gave possession of a note and security deed and executed a transfer and assignment of the instruments to the creditor as collateral for a loan, the instruments never vested in the creditor and the transaction was not the creation or transfer of an interest in real estate under former § 11-9-104(h); thus, where the creditor did not comply with the notice requirement of former paragraph (2), the debtor was entitled to recover either damages for conversion of the collateral after default or damages prescribed by former § 11-9-507. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section 11-9-505).  

Retention of collateral. - Allowing a debtor to reject a secured creditor's proposal to retain collateral in lieu of debt (after default) not only protects the debtor's right to mitigate loss, it protects the creditor from claims of the debtor that the creditor should have disposed of the collateral. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section 11-9-505).  

Election barring deficiency claim. - Creditor's written notice of repossession, of intent not to sell at a commercially reasonable sale, and of intent to keep the property for creditor's own use came within the ambit of former paragraph (2) and constituted an election barring the creditor's deficiency claim. Oraka v. Jaraysi, 226 Ga. App. 310, 486 S.E.2d 69 (1997) (decided under former Code Section 11-9-505).  

Retention of collateral after default does not preclude suit for money judgment. McCullough v. Mobiland, Inc., 139 Ga. App. 260, 228 S.E.2d 146 (1976); Ricker v. First Fed., 215 Ga. App. 793, 452 S.E.2d 583 (1994) (decided under former Code Section 11-9-505).  

Rejection in writing by debtor. - A debtor's defensive pleadings alleging that the creditor's petition failed to state a claim, the enumeration of various defenses to repossession, and a denial of all averments in the petition except jurisdiction, did not meet the requirement of this former section for a written objection to the creditor's notice of intention to retain the collateral in satisfaction of the obligation. Edward McGill, Inc. v. Wise, 181 Ga. App. 486, 352 S.E.2d 809 (1987).  

Defaulting debtor cannot claim loss of profits due to failure to give notice. - In an action by a debtor for damages caused by repossession of collateral after an alleged breach of an agreement between the debtor and the secured party, where the debtor is in default the debtor cannot allege that the failure of the secured party to give notice as to the retention and sale of collateral caused the debtor to be damaged by loss of profits. Such violations only raise the presumption that the value of the collateral equals the amount due on the debt. Barney v. Morris, 168 Ga. App. 426, 309 S.E.2d 420 (1983).  

Duty of creditor with respect to seized collateral. - Once a creditor has possession of the collateral, the creditor must act in a commercially reasonable manner and is liable for any damage sustained by the debtor as a result of breach of that duty. Thus, personalty seized by the creditor must be applied toward liquidation of the debt, and the debtor is entitled to any damage sustained as a result of any failure by the creditor to act in a commercially reasonable manner with respect to the seized personalty. Ricker v. First Fed., 215 Ga. App. 793, 452 S.E.2d 583 (1994) (decided under former Code Section 11-9-505).  

Question remained whether secured creditor acted in manner amounting to retention of collateral in satisfaction of the contract, such action constituting a rescission of the contract, there being evidence that the creditor offered to surrender the collateral to the debtor upon payment of the indebtedness, continually maintained that the transaction was valid, and otherwise acted in a manner consistent with the contract. ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga. App. 710, 320 S.E.2d 784 (1984) (decided under former Code Section 11-9-505).  

Exercise of rights under O.C.G.A. § 11-9-620 as affecting successor liability doctrine. - Corporate debtor that declared Chapter 11 bankruptcy was not liable to an LLC for unpaid rent that was owed by a lock and key company, even though the same individual owned both companies and the debtor had accepted collateral the lock and key company owned in full satisfaction of debt the company owed. The debtor's decision to accept collateral the lock and key company owned in full satisfaction of the company's debt was permitted under O.C.G.A. § 11-9-620 and was not a fraudulent attempt to avoid liabilities the lock and key company owed, the debtor was not a "mere continuation" of the lock and key company, and a contrary conclusion would have elevated form over substance and abridged the equitable principles that were codified in O.C.G.A. § 23-1-3. Acme Sec., Inc. v. CLN Props., LLC (In re Acme Sec., Inc.), 484 Bankr. 475 (Bankr. N.D. Ga. 2012).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 704-729, 758.  

C.J.S. - 72 C.J.S., Pledges, §§ 49, 50.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-620.  

ALR. - Construction and operation of UCC § 9-505(2) authorizing secured party in possession of collateral to retain it in satisfaction of obligation, 55 A.L.R.3d 651.  
Uniform Commercial Code: failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 A.L.R.3d 401.  

11-9-621. Notification of proposal to accept collateral.

Statute text
(a)  Persons to which proposal to be sent. A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to:  
(1) Any person from which the secured party has received, before the debtor consented to the acceptance, an authenticated notification of a claim of an interest in the collateral;  
(2) 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:  
(A) Identified the collateral;  
(B) Was indexed under the debtor's name as of that date; and  
(C) 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  
(3) 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 (a) of Code Section 11-9-311.  
(b)  Proposal to be sent to secondary obligor in partial satisfaction. 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 (a) of this Code section.  

History
(Code 1981, § 11-9-621, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-621.  

11-9-622. Effect of acceptance of collateral.

Statute text
(a)  Effect of acceptance. A secured party's acceptance of collateral in full or partial satisfaction of the obligation it secures:  
(1) Discharges the obligation to the extent consented to by the debtor;  
(2) Transfers to the secured party all of a debtor's rights in the collateral;  
(3) 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  
(4) Terminates any other subordinate interest.  
(b)  Discharge of subordinate interest notwithstanding noncompliance. A subordinate interest is discharged or terminated under subsection (a) of this Code section, even if the secured party fails to comply with this article.  

History
(Code 1981, § 11-9-622, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Retention of collateral is permissive remedy. - In stating that creditor may propose to keep goods in satisfaction of debt so long as the creditor gives required notice and no one objects, these provisions merely set forth a permissive, not a mandatory, remedy. McCullough v. Mobiland, Inc., 139 Ga. App. 260, 228 S.E.2d 146 (1976); Ricker v. First Fed., 215 Ga. App. 793, 452 S.E.2d 583 (1994) (decided under former Code Section 11-9-505).  

Applicability of former paragraph (1). - Former paragraph (1) of this section applied only where there is a security interest in consumer goods. Marshall v. Fulton Nat'l Bank, 152 Ga. App. 121, 262 S.E.2d 448 (1979), rev'd on other grounds, 245 Ga. 745, 267 S.E.2d 225 (1980) (decided under former Code Section 11-9-505).  

Notice requirement of former paragraph (2). - The written notice required by former paragraph (2) must clearly state the creditor's proposal to retain the collateral in satisfaction of the debt and must notify the debtor that the debtor has 21 days in which to raise an objection to such a proposal. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section 11-9-505).  
The purpose of requiring written notice of a creditor's proposal to retain collateral in lieu of the debt and of prohibiting waiver of such notice before default is to provide the debtor with options for reducing the debtor's loss when collateral has a value greater than the debt via redemption pursuant to former § 11-9-506 or liquidation in a commercially reasonable manner as required by former § 11-9-504. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section 11-9-505).  
Even though a debtor gave possession of a note and security deed and executed a transfer and assignment of the instruments to the creditor as collateral for a loan, the instruments never vested in the creditor and the transaction was not the creation or transfer of an interest in real estate under former § 11-9-104(h); thus, where the creditor did not comply with the notice requirement of former paragraph (2), the debtor was entitled to recover either damages for conversion of the collateral after default or damages prescribed by former § 11-9-507. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section 11-9-505).  

Retention of collateral. - Allowing a debtor to reject a secured creditor's proposal to retain collateral in lieu of debt (after default) not only protects the debtor's right to mitigate loss, it protects the creditor from claims of the debtor that the creditor should have disposed of the collateral. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section 11-9-505).  

Election barring deficiency claim. - Creditor's written notice of repossession, of intent not to sell at a commercially reasonable sale, and of intent to keep the property for creditor's own use came within the ambit of former paragraph (2) and constituted an election barring the creditor's deficiency claim. Oraka v. Jaraysi, 226 Ga. App. 310, 486 S.E.2d 69 (1997) (decided under former Code Section 11-9-505).  

Retention of collateral after default does not preclude suit for money judgment. McCullough v. Mobiland, Inc., 139 Ga. App. 260, 228 S.E.2d 146 (1976); Ricker v. First Fed., 215 Ga. App. 793, 452 S.E.2d 583 (1994) (decided under former Code Section 11-9-505).  

Rejection in writing by debtor. - A debtor's defensive pleadings alleging that the creditor's petition failed to state a claim, the enumeration of various defenses to repossession, and a denial of all averments in the petition except jurisdiction, did not meet the requirement of these provisions for a written objection to the creditor's notice of intention to retain the collateral in satisfaction of the obligation. Edward McGill, Inc. v. Wise, 181 Ga. App. 486, 352 S.E.2d 809 (1987) (decided under former Code Section 11-9-505).  

Defaulting debtor cannot claim loss of profits due to failure to give notice. - In an action by a debtor for damages caused by repossession of collateral after an alleged breach of an agreement between the debtor and the secured party, where the debtor is in default the debtor cannot allege that the failure of the secured party to give notice as to the retention and sale of collateral caused the debtor to be damaged by loss of profits. Such violations only raise the presumption that the value of the collateral equals the amount due on the debt. Barney v. Morris, 168 Ga. App. 426, 309 S.E.2d 420 (1983) (decided under former Code Section 11-9-505).  

Duty of creditor with respect to seized collateral. - Once a creditor has possession of the collateral, the creditor must act in a commercially reasonable manner and is liable for any damage sustained by the debtor as a result of breach of that duty. Thus, personalty seized by the creditor must be applied toward liquidation of the debt, and the debtor is entitled to any damage sustained as a result of any failure by the creditor to act in a commercially reasonable manner with respect to the seized personalty. Ricker v. First Fed., 215 Ga. App. 793, 452 S.E.2d 583 (1994) (decided under former Code Section 11-9-505).  

Question remained whether secured creditor acted in manner amounting to retention of collateral in satisfaction of the contract, such action constituting a rescission of the contract, there being evidence that the creditor offered to surrender the collateral to the debtor upon payment of the indebtedness, continually maintained that the transaction was valid, and otherwise acted in a manner consistent with the contract. ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga. App. 710, 320 S.E.2d 784 (1984) (decided under former Code Section 11-9-505).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 704-729, 758.  

C.J.S. - 72 C.J.S., Pledges, §§ 49, 50.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-622.  

ALR. - Construction and operation of UCC § 9-505(2) authorizing secured party in possession of collateral to retain it in satisfaction of obligation, 55 A.L.R.3d 651.  
Uniform Commercial Code: failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 A.L.R.3d 401.  

11-9-623. Right to redeem collateral.

Statute text
(a)  Persons that may redeem. A debtor, any secondary obligor, or any other secured party or lienholder may redeem collateral.  
(b)  Requirements for redemption. To redeem collateral, a person shall tender:  
(1) Fulfillment of all obligations secured by the collateral; and  
(2) The reasonable expenses and attorney's fees described in paragraph (1) of subsection (a) of Code Section 11-9-615.  
(c)  When redemption may occur. A redemption may occur at any time before a secured party:  
(1) Has collected collateral under Code Section 11-9-607;  
(2) Has disposed of collateral or entered into a contract for its disposition under Code Section 11-9-610; or  
(3) Has accepted collateral in full or partial satisfaction of the obligation it secures under Code Section 11-9-622.  

History
(Code 1981, § 11-9-623, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

JUDICIAL DECISIONS

Editor's notes. - In light of the similarity of the provisions, decisions under former Article 9 are included in the annotations of this section.  

Debtor to be notified he can redeem collateral at any time before sale. - Where the debtor is told by notification letter that he has ten days to redeem his repossessed collateral, but the collateral is sold after the tenth day, the debtor has not, as a matter of law, been notified that he can redeem his collateral at any time before the sale, as required by §§ 10-1-10 and 11-9-506, and a verdict should be directed for the debtor when the creditor sues for a deficiency judgment. Credithrift of Am., Inc. v. Smith, 168 Ga. App. 45, 308 S.E.2d 53 (1983) (decided under former Code Section 11-9-506).  
Where debtors were informed that payment to redeem the collateral had to be made on or before 10 days from the date of the letter and were not informed that they had a right to redeem the collateral at any time before its sale, this section was violated. Bradford v. GECC, 183 Ga. App. 782, 359 S.E.2d 757, cert. denied, 183 Ga. App. 905, 359 S.E.2d 757 (1987) (decided under former Code Section 11-9-506).  

Waiver of right to redeem. - Right to redeem collateral may be waived by written agreement after default, but not before default. Kellos v. Parker-Sharpe, Inc., 245 Ga. 130, 263 S.E.2d 138 (1980) (decided under former Code Section 11-9-506).  

Notice in accord with § 11-9-504(3). - Notice in accord with requirements of § 11-9-504(3), and which is not such as misled or prevented debtor from exercising his right of redemption under § 11-9-506, is sufficient to reasonably notify debtor of his rights. Motor Contract Co. v. Sawyer, 123 Ga. App. 207, 180 S.E.2d 282 (1971) (decided under former Code Section 11-9-506).  

Acts precluding deficiency judgment. - Act of secured party, in selling collateral without strict compliance with notice of sale provisions of § 11-9-504 precludes purchaser or owner from exercising his right of redemption under this section, and for that reason secured party cannot recover for deficiency owed him by purchaser. Braswell v. American Nat'l Bank, 117 Ga. App. 699, 161 S.E.2d 420 (1968) (decided under former Code Section 11-9-506).  
Notice only of intention to sell without any notification of time is not in compliance with Uniform Commercial Code, as it precludes purchaser or owner from exercising his right of redemption, and therefore prevents recovery of deficiency. Motor Contract Co. v. Sawyer, 123 Ga. App. 207, 180 S.E.2d 282 (1971) (decided under former Code Section 11-9-506).  
Selling collateral without strict compliance with notice of sale provisions, thereby precluding purchaser or owner from exercising his right of redemption under this section, precludes second party from recovery for deficiency. GEMC Fed. Credit Union v. Shoemake, 151 Ga. App. 705, 261 S.E.2d 443 (1979) (decided under former Code Section 11-9-506).  

Charges imposed in event of default. - Security agreement may impose various charges, not found in promissory note, in event of default. General Fin. Corp. v. Sprouse, 577 F.2d 989 (5th Cir. 1978) (decided under former Code Section 11-9-506).  

Levy and sale upon foreclosure of materialman's lien, subject to satisfaction of prior security interest. - Where plaintiff materialman obtains lien against property and judgment against contractor who used materials, and judgment has not been satisfied, plaintiff is entitled to obtain judgment foreclosing his lien, but cannot enforce it by levy and sale until any prior security deed is satisfied. Bowen v. Kicklighter, 124 Ga. App. 82, 183 S.E.2d 10 (1971) (decided under former Code Section 11-9-506).  

Mortgagor's option to purchase collateral not enforceable. - An option agreement executed at the same time as the mortgage, giving the mortgagor the option to purchase the collateral, constituted an impermissible attempt to defeat the mortgagee's right to redeem the collateral and could not enforced by specific performance. Lewis Broadcasting Corp. v. Phoenix Broadcasting Partners, 232 Ga. App. 94, 502 S.E.2d 254 (1998).  

Bankruptcy. - Chapter 13 debtor's equipment and furnishings repossessed pre-petition by a creditor remained property of the estate and rightfully subject to turnover pursuant to 11 U.S.C. § 542; the debtor could regain possession of the collateral that had been repossessed by redeeming the collateral pursuant to O.C.G.A. § 11-9-623. Dierkes v. Crawford Orthodontic Care, P.C. (In re Dierkes),    Bankr.    (Bankr. N.D. Ga. Feb. 15, 2005).  

Cited in Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 564-571.  

C.J.S. - 72 C.J.S., Pledges, §§ 47, 48.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-623.  

ALR. - Validity of agreement clogging equity of redemption from mortgage or pledge of personal property, 24 A.L.R. 822.  
Jurisdiction of court of state other than that in which property is located to redeem from or enforce a chattel mortgage or debt secured thereby, 69 A.L.R. 622.  
Doctrine of equitable conversion as affecting right of redemption from execution or judicial sale, 138 A.L.R. 1296.  
Payment or discharge of principal obligation as affecting right of the pledgee to sue or continue pending suit against the maker of the collateral pledged, or judgment previously recovered on the collateral obligations, 157 A.L.R. 261.  
Redemption rights of mortgager making timely tender but of inadequate amount because of officer's mistake, 52 A.L.R.2d 1327.  

11-9-624. Waiver.

Statute text
(a)  Waiver of disposition notification. A debtor or secondary obligor may waive the right to notification of disposition of collateral under Code Section 11-9-611 only by an agreement to that effect entered into and authenticated after default.  
(b)  Waiver of mandatory disposition. A debtor may waive the right to require disposition of collateral under subsection (e) of Code Section 11-9-620 only by an agreement to that effect entered into and authenticated after default.  
(c)  Waiver of redemption right. Except in a consumer goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under Code Section 11-9-623 only by an agreement to that effect entered into and authenticated after default.  

History
(Code 1981, § 11-9-624, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-624.  


PART 2

NONCOMPLIANCE WITH ARTICLE


11-9-625. Remedies for secured party's failure to comply with article.

Statute text
(a)  Judicial orders concerning noncompliance. If it is established that a secured party is not proceeding in accordance with this article, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.  
(b)  Damages for noncompliance. Subject to subsections (c), (d), and (f) of this Code section, a person is liable for damages in the amount of any loss caused by a failure to comply with this article. Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.  
(c)  Persons entitled to recover damages; statutory damages if collateral is consumer goods. Except as otherwise provided in Code Section 11-9-628:  
(1) 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 damages under subsection (b) of this Code section for its loss; and  
(2) 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 for that failure in any event an amount not less than the credit service charge plus 10 percent of the principal amount of the obligation or the time price differential plus 10 percent of the cash price.  
(d)  Recovery when deficiency eliminated or reduced. A debtor whose deficiency is eliminated under Code Section 11-9-626 may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under Code Section 11-9-626 may not otherwise recover under subsection (b) of this Code section for noncompliance with the provisions of this part relating to collection, enforcement, disposition, or acceptance.  
(e)  Statutory damages; noncompliance with specified provisions. In addition to any damages recoverable under subsection (b) of this Code section, the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover $250.00 in each case from a person that:  
(1) Fails to comply with Code Section 11-9-208;  
(2) Fails to comply with Code Section 11-9-209;  
(3) Files a record that the person is not entitled to file under subsection (a) of Code Section 11-9-509;  
(4) Fails to cause the secured party of record to file or send a termination statement as required by subsection (a) or (c) of Code Section 11-9-513;  
(5) Fails to comply with paragraph (1) of subsection (b) of Code Section 11-9-616 and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or  
(6) Fails to comply with paragraph (2) of subsection (b) of Code Section 11-9-616.  
(f)  Statutory damages; noncompliance with Code Section 11-9-210. A debtor or consumer obligor may recover damages under subsection (b) of this Code section and, in addition, $250.00 in each case from a person that, without reasonable cause, fails to comply with a request under Code Section 11-9-210. A recipient of a request under Code Section 11-9-210 which never claimed an interest in the collateral or obligations that are the subject of a request under that Code section has a reasonable excuse for failure to comply with the request within the meaning of this subsection.  
(g)  Limitation of security interest; noncompliance with Code Section 11-9-210. If a secured party fails to comply with a request regarding a list of collateral or a statement of account under Code Section 11-9-210, 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.  

History
(Code 1981, § 11-9-625, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2013, p. 690, § 18/SB 185.)

Annotations
The 2013 amendment, effective July 1, 2013, substituted "if collateral is consumer goods" for "in consumer goods transaction" in the heading of subsection (c).  
Law reviews. -  For article, "Nonjudicial Foreclosures in Georgia Revisited," see 24 Ga. St. B.J. 43 (1987). For annual survey of commercial law, see 43 Mercer L. Rev. 119 (1991). For survey article on commercial law, see 44 Mercer L. Rev. 99 (1992).  

  For comment on a secured party's burden of proof in seeking a deficiency judgment after resale of collateral, see 33 Mercer L. Rev. 397 (1981).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Liability for loss caused by failure to comply with law. - The debtor or any person entitled to notification has a right to recover from secured party any loss caused by failure to comply with provisions of law. Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980) (decided under former Code Section 11-9-507).  

Recovery of "any loss" by the debtor under former paragraph (1) for the creditor's noncompliance with the Codal provisions must necessarily be limited to actual damages caused by a sale at less than an adequate price. Willis v. Healthdyne, Inc., 191 Ga. App. 671, 382 S.E.2d 651 (1989) (decided under former Code Section 11-9-507).  

Disposition approved in judicial proceeding. - A judicial order which merely authorized plaintiff to conduct a commercially reasonable sale but did not declare the manner in which plaintiff ultimately conducted the sale to be commercially reasonable did not constitute judicial approval of the sale which would conclusively deem the sale to be commercially reasonable. Carlton Mfg., Inc. v. Bauer, 207 Ga. App. 850, 429 S.E.2d 329 (1993) (decided under former Code Section 11-9-507).  

Effect of failure to prove commercial reasonableness of disposition. - A creditor who fails to prove that notice of sale was given debtor (where required) or fails to prove that disposition, including its method, manner, time, place and terms, was commercially reasonable, is barred from obtaining a deficiency judgment. Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622 (1981) (decided under former Code Section 11-9-507).  
When the reasonableness of the sale is challenged, the seller of the collateral has the burden of proving that the sale was reasonable.  A secured creditor who fails to meet this burden is barred from recovering any deficiency between the sale price and the debt. Walker v. Modnar Corp., 194 Ga. App. 68, 389 S.E.2d 558 (1989) (decided under former Code Section 11-9-507).  

Creditor's failure to notify of dispository intent immaterial. - Where collateral securing debt was never repossessed by subsequent creditor but was instead sold at auction by guarantor's bankruptcy trustee and the proceeds thereof were retained by the trustee as an asset of the bankruptcy estate and not distributed to creditor, pursuant to former paragraph (2), this disposition by creditor's representative was conclusively deemed to be commercially reasonable, rendering immaterial creditor's failure to notify guarantor of its intent not to repossess and dispose of that collateral. Davis v. Concord Com. Corp., 209 Ga. App. 595, 434 S.E.2d 571 (1993) (decided under former Code Section 11-9-507).  

Creditor's failure to comply with notice requirement of former § 11-9-505. - Even though a debtor gave possession of a note and security deed and executed a transfer and assignment of the instruments to the creditor as collateral for a loan, the instruments never vested in the creditor and the transaction was not the creation or transfer of an interest in real estate under former § 11-9-104(h); thus, where the creditor did not comply with the notice requirement of former § 11-9-503(2), the debtor was entitled to recover either damages for conversion of the collateral after default or damages prescribed by this former section. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995).  

Reasonable terms of sale. - For secured party to meet burden of proving every aspect of sale to be commercially reasonable, it must establish affirmatively that the "terms" of sale were commercially reasonable; this includes burden to show that resale price was fair and reasonable value of collateral. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-507).  
Where commercial reasonableness of sale is challenged by debtor, party holding security interest has burden of proving that terms of sale were commercially reasonable and that resale price was fair and reasonable value of collateral. Richard v. Fulton Nat'l Bank, 158 Ga. App. 595, 281 S.E.2d 338 (1981) (decided under former Code Section 11-9-507).  
Denial of the creditor's motion for a directed verdict was proper since, based on the evidence presented, the jury could have determined that a sale was commercially unreasonable and that the debtor was entitled to money damages as a result. Atlantic Coast Fed. Credit Union v. Delk, 241 Ga. App. 589, 526 S.E.2d 425 (1999).  

Overcoming presumption that value of collateral equals debt. - Presumption that value of collateral equals debt on it is overcome by proving fair and reasonable value of collateral, whereupon creditor is entitled to deficiency judgment in amount of debt (plus or minus any payments or charges properly applicable to disposition) less fair and reasonable value of collateral proved by creditor (if resale price is less than fair and reasonable value proved). Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622 (1981) (decided under former Code Section 11-9-507).  
Burden is on secured party to prove value of collateral at time of repossession and that such value does not equal debt; failure to so prove results in a presumption that value was at least amount of debt. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-507).  

Where adequacy of price is challenged, creditor must overcome presumption as to value to recover deficiency. Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622 (1981) (decided under former Code Section 11-9-507).  

Debtor's contention that the debtor could have obtained higher price for aircraft sold at private sale had the debtor sold them personally was insufficient to infer that creditor, who sold planes, acted in commercially unreasonable manner. Cessna Fin. Corp. v. Wall, 876 F. Supp. 273 (M.D. Ga. 1994).  

Wide discrepancy between sale price and value of collateral signals need for close scrutiny, even though a seemingly low return is usually not dispositive on question of commercial reasonableness. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-507).  
Sale of repossessed collateral is not commercially reasonable when there is wide discrepancy between sale price and value of such collateral (presumed to equal amount of debt in absence of proof otherwise) coupled with secured party's failure to prove value at time of repossession, and that such value does not equal debt. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-507).  

Ultimate question of commercial reasonableness is one of law. - When reasonableness of sale of repossessed collateral is challenged, secured party has burden of proving that it was reasonable; and ultimate question of commercial reasonableness is one of law. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-507).  

Notice to secured party holding interest senior to that of selling secured party. - Secured party who holds interest senior to one held by secured party selling property at public sale and who meets other requirements of Code, must be sent notification of sale, and failure to do so gives rise to cause of action under the former provisions of this section. Bank of Camilla v. Stephens, 234 Ga. 293, 216 S.E.2d 71 (1975) (decided under former Code Section 11-9-507).  

Acts of secured party which deny debtor opportunity to redeem collateral. - Act of secured party, in selling collateral without strict compliance with notice of sale provisions of former § 11-9-504 precluded purchaser or owner from exercising right of redemption under former § 11-506, and for that reason secured party cannot recover for deficiency owed by purchaser. Braswell v. American Nat'l Bank, 117 Ga. App. 699, 161 S.E.2d 420 (1968) (decided under former Code Section 11-9-507).  

Sale of property by secured party without notice. - In action for conversion of mortgaged property, instruction that secured party had no right to sell property if no notice was given was erroneous, as the U.C.C. does not prohibit sale without notice, but rather provides that a debtor is entitled to recover any loss caused by such a sale, that is, a loss caused by a sale at a less than adequate price, and is also protected from any action by secured party to recover any deficiency between sale price and balance owing. Trust Co. v. Kite, 164 Ga. App. 119, 294 S.E.2d 606 (1982) (decided under former Code Section 11-9-507).  
The UCC does not prohibit a post-re-possession sale without notice. A debtor's remedies for a sale without notice are recovery of loss caused by an inadequate sale price. Clark v. GMAC, 185 Ga. App. 130, 363 S.E.2d 813 (1987) (decided under former Code Section 11-9-507).  

Repossessed collateral need not be disposed of where only fraction of value recoverable. - A secured creditor did not act in a commercially unreasonable manner when it repossessed the collateral and, without ever disposing of it, filed suit against the debtor, there being evidence that the collateral was the type of equipment which in the past the creditor had been able to dispose of at only a fraction of its original sale value. However, if it was later established that the creditor did not act in a commercially reasonable manner, the balance of the indebtedness owed on the contracts would be reduced by the value of the equipment at the time it was repossessed, plus the amount of any damage sustained as a result of the creditor's inaction in returning or disposing of the goods. ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga. App. 710, 320 S.E.2d 784 (1984) (decided under former Code Section 11-9-507).  

When the resale price is less than the fair and reasonable value, the creditor is entitled to a deficiency judgment in the amount of the debt (plus or minus any payments or changes properly applicable to the disposition) less the fair and reasonable value of the collateral proved by the creditor, not the debt less the resale price. McMillian v. Bank S., 188 Ga. App. 355, 373 S.E.2d 61 (1988) (decided under former Code Section 11-9-507).  

Private auction sale of automobile. - The method and manner of sale of a repossessed automobile were commercially reasonable, where the collateral was disposed of at a private auction by a recognized automobile auction company according to standard practice and procedure for sales of this kind. McMillian v. Bank S., 188 Ga. App. 355, 373 S.E.2d 61 (1988) (decided under former Code Section 11-9-507).  

Failure to prove fair and reasonable value of minibuses. - Secured creditor failed to prove the fair and reasonable value of minibuses at the time of sale, where the only evidence of value of the vehicles was the offers received after the default by the creditor's corporate president, upon the solicitation of some 15 individuals nationwide, and the actual price paid at the sale of the vehicles. Walker v. Modnar Corp., 194 Ga. App. 68, 389 S.E.2d 558 (1989) (decided under former Code Section 11-9-507).  

State remedy precludes federal due process claim. - Because Georgia provided a remedy for improper repossession pursuant to O.C.G.A. § 11-9-625, a former arrestee, who claimed that police officers interfered with the arrestee's possessory interests in a vehicle at the time of the arrest, had no federal due process claim with respect to the repossession of the vehicle. Carroll v. Henry County, 336 Bankr. 578 (N.D. Ga. 2006).  

Judicial estoppel barred debtor's claim for damages. - Debtor was judicially estopped from pursuing the debtor's claim for damages under O.C.G.A. § 11-9-625 arising from a company's sale of the debtor's car following the car's repossession because any recovery would not inure to the benefit of the debtor's creditors, who were not fully compensated when a bankruptcy court discharged the debtor's debts; the debtor's claim that the company sold the debtor's car for an unreasonably low price arose at least two years before the debtor filed for bankruptcy protection, and because the cause of action accrued prior to the debtor's commencement of the debtor's bankruptcy action, the debtor was required to disclose the car in the debtor's schedule of assets to be included as property of the bankruptcy estate under 11 U.S.C. § 541. Sevostiyanova v. Tempest Recovery Servs., 307 Ga. App. 868, 705 S.E.2d 878 (2011).  

Cited in Motors Acceptance Corp. v. Rozier, 278 Ga. 52, 597 S.E.2d 367 (2004).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, § 709, 737-779.  

C.J.S. - 72 C.J.S., Pledges, § 30.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-625.  

ALR. - Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.  
Uniform Commercial Code: failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 A.L.R.3d 401.  
UCC: value of trade-in taken on sale of collateral for purposes of computing surplus or deficiency, 72 A.L.R.4th 1128.  

11-9-626. Action in which deficiency or surplus is in issue.

Statute text
(a)  Applicable rules if amount of deficiency or surplus in issue. In an action arising from a transaction, other than a consumer 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 Code Section 11-9-628, 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 subparagraph (B) of paragraph (3) of this subsection, 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 (f) of Code Section 11-9-615, 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.  
(b)  Nonconsumer transactions; no inference. The limitation of the rules in subsection (a) of this Code section to transactions other than consumer transactions is intended to leave to the court the determination of the proper rules in consumer transactions. The court may not infer from that limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches.  

History
(Code 1981, § 11-9-626, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations
Cross references. - Additional provisions regarding disposition of goods repossessed after default, § 10-1-10.  
Law reviews. -  For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For article, "Nonjudicial Foreclosures in Georgia: Fresh Doubts, Issues and Strategies," see 23 Ga. St. B.J. 123 (1987). For annual survey of commercial law, see 43 Mercer L. Rev. 119 (1991). For article, "Georgia Foreclosure Confirmation Proceedings in Today's Recessionary Real Estate World:  Back to the Future," see 16 (No. 4) Ga. St. B.J. 11 (2010).  

  For note discussing repossession and foreclosure as creditor's remedies under the Uniform Commercial Code, see 3 Ga. L. Rev. 198 (1968).  

  For comment on a secured party's burden of proof in seeking a deficiency judgment after resale of collateral, see 33 Mercer L. Rev. 397 (1981).  


JUDICIAL DECISIONS

Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Where only fraction of value of repossessed collateral recoverable. - A secured creditor did not act in a commercially unreasonable manner when it repossessed the collateral and, without ever disposing of it, filed suit against the debtor, there being evidence that the collateral was the type of equipment which in the past the creditor had been able to dispose of at only a fraction of its original sale value. However, if it was later established that the creditor did not act in a commercially reasonable manner, the balance of the indebtedness owed on the contracts would be reduced by the value of the equipment at the time it was repossessed, plus the amount of any damage sustained as a result of the creditor's inaction in returning or disposing of the goods. ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga. App. 710, 320 S.E.2d 784 (1984).  

Strict compliance required. - Strict compliance with all requirements of these former provisions was condition precedent to recovery of deficiency between sale price of collateral and debt owed. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (decided under former Code Section 11-9-504).  
Compliance with this former section was condition precedent to recovery of any deficiency between sale price of collateral and amount of unpaid balance. Citizens State Bank v. Hewitt, 158 Ga. App. 238, 279 S.E.2d 531 (1981); Vickers v. Chrysler Credit Corp., 158 Ga. App. 434, 280 S.E.2d 842 (1981); Citizens & S. Nat'l Bank v. Dorsey, 159 Ga. App. 784, 285 S.E.2d 242 (1981); Litton Indus. Credit Corp. v. Lunceford, 175 Ga. App. 445, 333 S.E.2d 373 (1985) (decided under former Code Section 11-9-504).  
Compliance with former subsection (3) is condition precedent to recovery of any deficiency between sale price of collateral and amount of unpaid balance. Gurwitch v. Luxurest Furn. Mfg. Co., 233 Ga. 934, 214 S.E.2d 373 (1975) (decided under former Code Section 11-9-504).  

Rights and remedies under O.C.G.A. § 10-1-36 as prerequisite. - O.C.G.A. § 10-1-36 is cumulative of former Code Sections 11-9-501 through 11-9-507 and provides cumulative additional rights and remedies which must be fulfilled before any deficiency claim will lie against a buyer. Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980) (decided under former Code Section 11-9-504).  

Commercially reasonable disposition as prerequisite for deficiency judgment. - If the secured party does not dispose of the collateral in a commercially reasonable manner, there can be no recovery of any deficiency between the sale price and the unpaid balance. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-504).  
Fact that every aspect of foreclosure sale (method, manner, time, place and terms) must be commercially reasonable is a condition precedent to recovery of any deficiency between sale price and balance remaining due on contract price, and if sale is not commercially reasonable plaintiff can recover nothing, because it is then presumed that price on foreclosure sale in fact does represent full value of article at time of repossession. Brown v. C.I.T. Corp., 150 Ga. App. 361, 258 S.E.2d 44 (1979) (decided under former Code Section 11-9-504).  
In Georgia, a secured party is absolutely prohibited from recovering deficiency judgment where notice is not given or sale is commercially unreasonable. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (decided under former Code Section 11-9-504).  
Even though defendant debtor failed to introduce any testimony while denying claim in its entirety, burden of proof was upon secured party to prove sale was done in a commercially reasonable manner in order to recover on deficiency. Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980) (decided under former Code Section 11-9-504).  
In the case of a loan secured by both real and personal property, the provision of this former section for liquidation of the guarantor's personal property "in a commercially reasonable manner" did not apply where the lender chose to exercise its "rights and remedies in respect of the real property" as permitted under former § 11-9-501(4). Senske v. Harris Trust & Sav. Bank, 233 Ga. App. 407, 504 S.E.2d 272 (1998).  
Assuming that the sale of collateral was a public sale within the meaning of O.C.G.A. § 11-1-201(31.1), the sale occurred in a commercially reasonable manner, under O.C.G.A. § 11-9-627, because the sale was consistent with the reasonable commercial practices of dealers in similar equipment. Moreover, the sale qualified as a valid private sale under O.C.G.A. § 11-9-613 and the creditor did not have to comply with the statute's public-sale provisions regarding time and advertising. Colonial Pac. Leasing Corp. v. N & N Partners, LLC, 981 F. Supp. 2d 1345 (N.D. Ga. Nov. 4, 2013).  

Absolute bar rule. - These code provisions do not require the imposition of an absolute-bar rule and the absolute-bar rule is contrary to the intent of O.C.G.A. § 11-1-106 which expressly prohibits penal damages. Emmons v. Burkett, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-504).  

Presumption that value of collateral equals debt. - Failure on part of secured party to establish that fair and reasonable value of collateral does not equal debt results in presumption that value of collateral disposed of is at least equal to debt, from which it follows that no deficiency judgment can be obtained. Hubbard v. Farmers Bank, 155 Ga. App. 720, 272 S.E.2d 510 (1980) (decided under former Code Section 11-9-504).  
Secured party must prove value of collateral at time of repossession and that value of goods does not equal value of debt. Richard v. Fulton Nat'l Bank, 158 Ga. App. 595, 281 S.E.2d 338 (1981) (decided under former Code Section 11-9-504).  
Failure to introduce any evidence of the fair and reasonable value of the collateral, in order to overcome the presumption that the value of the collateral equaled the amount of the debt, will operate as a failure to establish that the disposition of the collateral was commercially reasonable; and therefore no deficiency judgment can be obtained. Giddens v. Bo Lovein Ford, Inc., 167 Ga. App. 699, 307 S.E.2d 271 (1983) (decided under former Code Section 11-9-504).  

Overcoming presumption concerning collateral. - The presumption that the value of collateral equals the debt on it is overcome by proving the fair and reasonable value of the collateral. First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259, 287 S.E.2d 701 (1982) (decided under former Code Section 11-9-504).  

Value presumed equal to debt owed. - Absent evidence of the value of collateral at the time of repossession, the value of the goods is presumed to be equal to the debt owed. Borden v. Pope Jeep-Eagle, Inc., 200 Ga. App. 176, 407 S.E.2d 128 (1991) (decided under former Code Section 11-9-504).  

Sole defect in sale was adequacy of price. - Creditor who fails to prove that notice of sale was given debtor (where required) or fails to prove that disposition, including its method, manner, time, place and terms, was commercially reasonable, is barred from obtaining a deficiency judgment, except where sole defect is adequacy of sale price, in which event creditor is not barred from recovery but must overcome presumption that value of collateral equals debt. Richard v. Fulton Nat'l Bank, 158 Ga. App. 595, 281 S.E.2d 338 (1981); First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259, 287 S.E.2d 701 (1982) (decided under former Code Section 11-9-504).  
Where sole defect in sale of collateral is adequacy of sale price, creditor is not barred from obtaining deficiency judgment; however, creditor must overcome presumption that value of collateral equals debt on it, proving its fair and reasonable value. Zohbe v. First Nat'l Bank, 162 Ga. App. 604, 292 S.E.2d 444 (1982) (decided under former Code Section 11-9-504).  

Collection of deficiency balance dependent on reasonable notice. - Former section permitted secured creditor to dispose of collateral if debtor defaults, but before creditor can pursue deficiency balance it must reasonably notify debtor of time and place of any public sale or of time after which any private sale or other intended disposition is to be made. Lacy v. General Fin. Corp., 651 F.2d 1026 (5th Cir. 1981) (decided under former Code Section 11-9-504).  

Proceeding against real property prevented. - Where a sale of collateral occurs without notice, in violation of former subsection (3), the bar against collection of a deficiency prevents a creditor holding a claim against a guarantor secured by real property from proceeding against the real estate to collect the balance remaining after a commercially unreasonable sale of the personalty. United States ex rel. FHA v. Kennedy, 256 Ga. 345, 348 S.E.2d 636 (1986) (decided under former Code Section 11-9-504).  

Satisfaction sought through personal judgment, out of collateral or pursuant to guaranty. - The rule precluding recovery of a deficiency where the secured party has failed to dispose of the collateral in a commercially reasonable manner or provide the debtor with reasonable notification of the disposition is applicable where a secured creditor seeks to satisfy the deficiency either through a personal judgment or out of collateral or pursuant to a guaranty. Reeves v. Habersham Bank, 254 Ga. 615, 331 S.E.2d 589 (1985) (decided under former Code Section 11-9-504).  

Rebuttable presumption rule. - The rebuttable presumption rule, by placing the burden on the creditor to show the propriety of the sale and making the creditor liable for any injury to the debtor, provides an adequate deterrent to an improper sale on the part of a creditor and adequately protects the debtor's interest, without arbitrarily penalizing the creditor. Emmons v. Burkett, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-504).  
Under the rebuttable presumption rule, if a creditor fails to give notice or conducts an unreasonable sale, the presumption is raised that the value of the collateral is equal to the indebtedness. To overcome this presumption, the creditor must present evidence of the fair and reasonable value of the collateral, and the evidence must show that such value was less than the debt. If the creditor rebuts the presumption, the creditor may maintain an action against the debtor or guarantor for any deficiency. Any loss suffered by the debtor as a consequence of the failure to give notice or to conduct a commercially reasonable sale is recoverable and may be set off against the deficiency. Emmons v. Burkett, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-504).  
A more complete statement of the rule set forth in Emmons v. Burkette, 256 Ga. 855, 353 S.E.2d 908 (1987), is: If the creditor conducts a commercially unreasonable sale and does not rebut the presumption that the value of the collateral is equal to the indebtedness, the creditor loses the right to recover the deficiency against the debtor and the guarantor. If the presumption is rebutted, the first to recover the deficiency remains as held in Emmons. Business Dev. Corp. v. Contestabile, 261 Ga. 886, 413 S.E.2d 447 (1992).  

Creditor showing of reasonableness as prerequisite to deficiency judgment. - If condition precedent of commercial reasonableness is not met in foreclosure sale, no recovery is possible, and burden is on creditor to prove such. Brown v. C.I.T. Corp., 150 Ga. App. 361, 258 S.E.2d 44 (1979).  

Showing required to recover deficiency. - Burden is on secured party to prove value of collateral at time of repossession and that such value does not equal debt; failure to do so results in presumption that value was at least amount of debt. BVA Credit Corp. v. May, 152 Ga. App. 733, 264 S.E.2d 32 (1979); Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979); Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980).  
Appellee secured creditor had burden of overcoming presumption that value of trucks equaled the debts on them by evidence of their fair and reasonable values, and evidence of resale prices was not sufficient to do this, nor were appellee's affiant's conclusory statements that they were sold in a commercially reasonable manner, thus, grant of summary judgment for appellee on claim for deficiency was error. Davis v. Ford Motor Credit Co., 164 Ga. App. 137, 296 S.E.2d 431 (1982).  

Debtor's burden after creditor proves commercial reasonableness. - Where creditor shows prima facie that sale of collateral was reasonable, to prevent summary judgment for deficiency, debtor must support debtor's challenge to the sale by asserting specific facts showing there is a genuine issue for trial. Slaughter v. Ford Motor Credit Co., 164 Ga. App. 428, 296 S.E.2d 428 (1982).  

Debtor's burden after creditor files a deficiency claim. - A proof of claim constitutes prima facie evidence of the validity and amount of the claim, shifting the burden of proof to the debtor to show that the deficiency claim should not be allowed; the mere recitation of National Automobile Dealers Association mobile home values is insufficient for this purpose without some evidentiary connection to the actual home at issue. In re Brown, 221 Bankr. 46 (Bankr. M.D. Ga. 1998).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 556-572, 606, 624 et seq., 642-680, 685-703.  

C.J.S. - 72 C.J.S., Pledges, §§ 49, 50.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-626.  

ALR. - Seller's rights in respect of the property, or its proceeds, upon dishonor of draft or check for purchase price, on a cash sale, 31 A.L.R. 578, 54 A.L.R. 526.  
Rights and remedies as between parties to conditional sale after seller has repossessed himself of the property, 99 A.L.R. 1288.  
Right of creditor or mortgagee to redeem from his own sale, 108 A.L.R. 993.  
Purchase by pledgee of subject of pledge, 37 A.L.R.2d 1381.  
Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.  
Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.  
Uniform Commercial Code: failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 A.L.R.3d 401.  
Construction of term "debtor" as used in UCC § 9-504(3), requiring secured party to give notice to debtor of sale of collateral securing obligation, 5 A.L.R.4th 1291.  
What is "commercially reasonable" disposition of collateral required by UCC § 9-504(3), 7 A.L.R.4th 308.  
Loss or modification of right to notification of sale of repossessed collateral under Uniform Commercial Code § 9-504, 9 A.L.R.4th 552.  
Failure of secured party to make "commercially reasonable" disposition of collateral under UCC § 9-504(3) as bar to deficiency judgment, 10 A.L.R.4th 413.  
Sufficiency of secured party's notification of sale or other intended disposition of collateral under UCC § 9-504(3), 11 A.L.R.4th 241.  
Nature of collateral which secured party may sell or otherwise dispose of without giving notice to defaulting debtor under UCC § 9-504(3), 11 A.L.R.4th 1060.  
Secured transactions: what is "public" or "private" sale under UCC § 9-504(3), 60 A.L.R.4th 1012.  
UCC: value of trade-in taken on sale of collateral for purposes of computing surplus or deficiency, 72 A.L.R.4th 1128.  
Causes of action governed by limitations period in UCC § 2-725, 49 A.L.R.5th 1.  

11-9-627. Determination of whether conduct was commercially reasonable.

Statute text
(a)  Greater amount obtainable under other circumstances; no preclusion of commercial reasonableness. 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.  
(b)  Dispositions that are commercially reasonable. A disposition of collateral is made in a commercially reasonable manner if the disposition is made:  
(1) In the usual manner on any recognized market;  
(2) At the price current in any recognized market at the time of the disposition; or  
(3) Otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.  
(c)  Approval by court or on behalf of creditors. A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved:  
(1) In a judicial proceeding;  
(2) By a bona fide creditors' committee;  
(3) By a representative of creditors; or  
(4) By an assignee for the benefit of creditors.  
(d)  Approval under subsection (c) of this Code section not necessary; absence of approval has no effect. Approval under subsection (c) of this Code section need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.  

History
(Code 1981, § 11-9-627, enacted by Ga. L. 2001, p. 362, § 1.)
Annotations
Law reviews. -  For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article surveying developments in Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For article, "Nonjudicial Foreclosures in Georgia: Fresh Doubts, Issues and Strategies," see 23 Ga. St. B.J. 123 (1987). For annual survey of commercial law, see 43 Mercer L. Rev. 119 (1991).  

  For note discussing repossession and foreclosure as creditor's remedies under the Uniform Commercial Code, see 3 Ga. L. Rev. 198 (1968).  

  For comment on a secured party's burden of proof in seeking a deficiency judgment after resale of collateral, see 33 Mercer L. Rev. 397 (1981).  


JUDICIAL DECISIONS
 
		ANALYSIS
   	Right to Deficiency Judgment
   	Commercial Reasonableness of Disposition
   	Waiver
   	Summary Judgment
   	Burden of Proof
   	Jury/Court Determinations
 


 Right to Deficiency Judgment


Editor's notes. - In the light of the similarity of the provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article.  

Commercially reasonable disposition as prerequisite for deficiency judgment. - If the secured party does not dispose of the collateral in a commercially reasonable manner, there can be no recovery of any deficiency between the sale price and the unpaid balance. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-504).  
Fact that every aspect of foreclosure sale (method, manner, time, place and terms) must be commercially reasonable is a condition precedent to recovery of any deficiency between sale price and balance remaining due on contract price, and if sale is not commercially reasonable plaintiff can recover nothing, because it is then presumed that price on foreclosure sale in fact does represent full value of article at time of repossession. Brown v. C.I.T. Corp., 150 Ga. App. 361, 258 S.E.2d 44 (1979) (decided under former Code Section 11-9-504).  
In Georgia, a secured party is absolutely prohibited from recovering deficiency judgment where notice is not given or sale is commercially unreasonable. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (decided under former Code Section 11-9-504).  
Even though defendant debtor failed to introduce any testimony while denying claim in its entirety, burden of proof was upon secured party to prove sale was done in a commercially reasonable manner in order to recover on deficiency. Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980) (decided under former Code Section 11-9-504).  
In the case of a loan secured by both real and personal property, the provision for liquidation of the guarantor's personal property "in a commercially reasonable manner" did not apply where the lender chose to exercise its "rights and remedies in respect of the real property" as permitted under former § 11-9-501(4). Senske v. Harris Trust & Sav. Bank, 233 Ga. App. 407, 504 S.E.2d 272 (1998).  

Sale must allow debtor to exercise redemption right. - Act of secured party, in selling collateral without strict compliance with notice of sale provisions precludes purchaser or owner from exercising right of redemption under former § 11-9-506, and for that reason secured party cannot recover for deficiency owed by purchaser. Braswell v. American Nat'l Bank, 117 Ga. App. 699, 161 S.E.2d 420 (1968) (decided under former Code Section 11-9-504).  

Sole defect in sale was adequacy of price. - Creditor who fails to prove that notice of sale was given debtor (where required) or fails to prove that disposition, including its method, manner, time, place and terms, was commercially reasonable, is barred from obtaining a deficiency judgment, except where sole defect is adequacy of sale price, in which event creditor is not barred from recovery but must overcome presumption that value of collateral equals debt. Richard v. Fulton Nat'l Bank, 158 Ga. App. 595, 281 S.E.2d 338 (1981); First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259, 287 S.E.2d 701 (1982) (decided under former Code Section 11-9-504).  
Where sole defect in sale of collateral is adequacy of sale price, creditor is not barred from obtaining deficiency judgment; however, creditor must overcome presumption that value of collateral equals debt on it, proving its fair and reasonable value. Zohbe v. First Nat'l Bank, 162 Ga. App. 604, 292 S.E.2d 444 (1982) (decided under former Code Section 11-9-504).  

Overcoming presumption concerning collateral. - The presumption that the value of collateral equals the debt on it is overcome by proving the fair and reasonable value of the collateral. First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259, 287 S.E.2d 701 (1982) (decided under former Code Section 11-9-504).  

When collateral valued. - Proof of the value of the collateral is required to be the value at the time of repossession. First Nat'l Bank v. Rivercliff Hdwe., Inc., 161 Ga. App. 259, 287 S.E.2d 701 (1982) (decided under former Code Section 11-9-504).  

Cost alone is never proof of market value. Zohbe v. First Nat'l Bank, 162 Ga. App. 604, 292 S.E.2d 444 (1982) (decided under former Code Section 11-9-504).  
Proof of price brought at public sale is not sufficient to overcome presumption against creditor that value of collateral equals debt on it. Zohbe v. First Nat'l Bank, 162 Ga. App. 604, 292 S.E.2d 444 (1982) (decided under former Code Section 11-9-504).  


 Commercial Reasonableness of Disposition


Good faith required. - A creditor must perform in good faith its obligations in disposing of collateral. Lacy v. General Fin. Corp., 651 F.2d 1026 (5th Cir. 1981) (decided under former Code Section 11-9-504).  

Commercially reasonable disposition required. - Although Uniform Commercial Code has no requirement that secured party sell collateral after repossession, secured party who does not elect to retain collateral in satisfaction of indebtedness must act in commercially reasonable manner in disposing of it, and disposition must be made in commercially reasonable time. Henderson Few & Co. v. Rollins Communications, Inc., 148 Ga. App. 139, 250 S.E.2d 830 (1978) (decided under former Code Section 11-9-504).  
Once creditor has possession the creditor must act in a commercially reasonable manner toward sale, lease, proposed retention where permissible, or other disposition. If such disposition is not feasible, the asset must be returned, still subject, of course, to creditor's security interest. To the extent that creditor's inaction results in injury to debtor, debtor has right of recovery. Henderson Few & Co. v. Rollins Communications, Inc., 148 Ga. App. 139, 250 S.E.2d 830 (1978) (decided under former Code Section 11-9-504).  
Secured party has right to dispose of collateral repossessed from debtor so long as every aspect of disposition - method, manner, time, place, and terms - are commercially reasonable. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (decided under former Code Section 11-9-504).  
Because a bank utilized professionals in the industry to assist in the sale of the debtor's equipment, and it did not rush to dispose of the equipment, but ultimately sold it to the person whom the debtor and its guarantor contended would most likely tender the highest bid for the equipment, said sale was conducted in a commercially reasonable manner under O.C.G.A. §§ 11-9-627(b) and 11-9-610. AKA Mgmt. v. Branch Banking & Trust Co., 275 Ga. App. 615, 621 S.E.2d 576 (2005).  

Effect of conducting unreasonable sale. - A secured creditor who conducts a commercially unreasonable sale is barred from proceeding against other collateral pledged for the debt and/or from seeking a deficiency judgment against the debtor or the guarantor. Contestabile v. Business Dev. Corp., 259 Ga. 783, 387 S.E.2d 137 (1990) (decided under former Code Section 11-9-504).  

Burden of proving reasonableness. - Where reasonableness of sale of repossessed collateral is challenged, burden of showing that disposition of collateral was commercially reasonable rests with secured party. Wagner v. Ford Motor Credit Co., 155 Ga. App. 729, 272 S.E.2d 500 (1980) (decided under former Code Section 11-9-504).  
Burden of proof of commercial reasonableness of sale of collateral rests with secured party, and includes burden to show that terms of sale are commercially reasonable, and one term which must be so proved is that resale price was fair and reasonable value of collateral. Hubbard v. Farmers Bank, 155 Ga. App. 720, 272 S.E.2d 510 (1980), aff'd, 247 Ga. 431, 276 S.E.2d 622 (1981) (decided under former Code Section 11-9-504).  
When the reasonableness of the sale is challenged, the seller of the collateral has the burden of proving that the sale was reasonable.  A secured creditor who fails to meet this burden is barred from recovering any deficiency between the sale price and the debt. Walker v. Modnar Corp., 194 Ga. App. 68, 389 S.E.2d 558 (1989) (decided under former Code Section 11-9-504).  

Proof required to show reasonableness. - Where reasonableness of sale of repossessed collateral is challenged, secured party must establish affirmatively that "terms" of sale were commercially reasonable, and that resale price was fair and reasonable value of collateral. Wagner v. Ford Motor Credit Co., 155 Ga. App. 729, 272 S.E.2d 500 (1980); Massey-Ferguson Credit Corp. v. Bond, 176 Ga. App. 217, 335 S.E.2d 454 (1985) (decided under former Code Section 11-9-504).  
For secured party to meet burden of proving every aspect of sale is commercially reasonable, it must establish affirmatively that terms of sale were commercially reasonable, which includes burden of showing that resale price was fair and reasonable value of collateral. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976); BVA Credit Corp. v. May, 152 Ga. App. 733, 264 S.E.2d 32 (1979); Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (decided under former Code Section 11-9-504).  

Presumption as to value of collateral serves as gauge of commercial reasonableness. - Effect of presumption that value of collateral at time of repossession equals debt owed is to provide value against which price obtained upon secured party's disposition of repossessed collateral can be measured for purpose of deciding whether price term was commercially reasonable. The presumption does not operate, however, to deny a secured party a deficiency judgment. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (decided under former Code Section 11-9-504).  

Overcoming presumption as to collateral value. - Presumption that value of collateral equals debt on it is overcome by proving fair and reasonable value of collateral, whereupon creditor is entitled to deficiency judgment in amount of debt (plus or minus any payments or charges properly applicable to disposition) less fair and reasonable value of collateral proved by creditor (if resale price is less than fair and reasonable value proved). Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622 (1981) (decided under former Code Section 11-9-504).  

Effect of price obtained on resale in establishing value. - Where, in case challenging reasonableness of sale of repossessed collateral, secured party presents no evidence other than price obtained on resale; this was not sufficient to establish fair and reasonable value of collateral. Wagner v. Ford Motor Credit Co., 155 Ga. App. 729, 272 S.E.2d 500 (1980) (decided under former Code Section 11-9-504).  
Proof of price brought at public sale of collateral is insufficient to establish market value for purposes of proving commercial reasonableness of sale, since foreclosure sales are forced sales and notoriously fail to bring true market price of article. Hubbard v. Farmers Bank, 155 Ga. App. 720, 272 S.E.2d 510 (1980) (decided under former Code Section 11-9-504).  
Debtor's contention that debtor could have obtained a higher price for aircraft sold at private sale had debtor sold them personally was insufficient to infer that creditor who sold planes acted in commercially unreasonable manner. Cessna Fin. Corp. v. Wall, 876 F. Supp. 273 (M.D. Ga. 1994).  

Failure to obtain price equal to presumed value. - Failure of secured party to obtain price equal to presumed value does not make sale commercially unreasonable per se, but this circumstance would be one fact taken into account by trier of fact in determining whether sale was commercially reasonable. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (decided under former Code Section 11-9-504).  

Wide discrepancy between sale price and value of collateral signals need for close scrutiny, even though a seemingly low return is usually not dispositive on question of commercial reasonableness. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-504).  
Sale of repossessed collateral is not commercially reasonable when there is wide discrepancy between sale price and value of such collateral (presumed to equal amount of debt in absence of proof otherwise) coupled with secured party's failure to prove value at time of repossession, and that such value does not equal debt. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-504).  
Where the secured party sold collateral at a private sale and within hours the buyer sold the collateral to a third party for more than 13 times what the buyer paid, and there was no evidence that the seller solicited more than one buyer, the debtor carried the burden in opposing summary judgment of identifying evidence that the sale of the collateral was not commercially reasonable. Hansford v. Burns, 241 Ga. App. 407, 526 S.E.2d 884 (1999).  

Commercial reasonableness of time of sale. - Commercial reasonableness of time of sale must be judged from time of repossession rather than time creditor finally chooses to dispose of goods. Henderson Few & Co. v. Rollins Communications, Inc., 148 Ga. App. 139, 250 S.E.2d 830 (1978) (decided under former Code Section 11-9-504).  

Sale not commercially reasonable where only one dealer contacted. - Where time is not of the essence and secured party only contacts one dealer in attempting to sell, sale is not commercially reasonable. Luxurest Furn. Mfg. Co. v. Furniture Whse. Sales, Inc., 132 Ga. App. 661, 209 S.E.2d 63 (1974), aff'd sub nom., 233 Ga. 934, 214 S.E.2d 373 (1975).  

Commercially unreasonableness sale of goods is not conversion. - Private sale of vehicle repossessed by agents of secured party is not conversion even though terms are not commercially reasonable. Thurmond v. Elliott Fin. Co., 141 Ga. App. 574, 234 S.E.2d 153 (1977) (decided under former Code Section 11-9-504).  

Detailed accounting required. - The provision as to the disposition of collateral being "commercially reasonable" does not abrogate the doctrine that a creditor asserting control over a debtor's assets, then seeking to recover a deficiency judgment, must make a detailed accounting of its disposition of the assets. Walton Motor Sales, Inc. v. Ross, 736 F.2d 1449 (11th Cir. 1984) (decided under former Code Section 11-9-504).  

Effect of unreasonable sale of one security item on recovery of other items. - Distributor, who was the secured creditor of the dealer (via the execution of one security interest agreement) conducted a commercially unreasonable sale of one of the forklifts which secured the debt and thereby adversely affected the distributor's action to recover the amount due on the remaining inventory which secured the debt. C. Itoh Indus. Mach., Inc. v. Forklift Serv. Co., 180 Ga. App. 125, 348 S.E.2d 551 (1986), aff'd, 256 Ga. 757, 354 S.E.2d 159 (1987) (decided under former Code Section 11-9-504).  

Sale of collateral done in commercially reasonable manner. - See White v. First Ga. Bank, 167 Ga. App. 825, 307 S.E.2d 720 (1983) (decided under former Code Section 11-9-504).  

Private auction sale of automobile. - The method and manner of sale of a repossessed automobile were commercially reasonable, where the collateral was disposed of at a private auction by a recognized automobile auction company according to standard practice and procedure for sales of this kind. McMillian v. Bank S., 188 Ga. App. 355, 373 S.E.2d 61 (1988) (decided under former Code Section 11-9-504).  

Evidence of car's fair and reasonable value insufficient. - Documents in evidence showing only the sale price of the car were insufficient to establish the car's fair and reasonable value. No witness testified as to the basis for the opinion or opined that the appraised value of the car was the car's fair and reasonable value in that market at the time of the repossession or the sale. Versey v. Citizens Trust Bank, 306 Ga. App. 479, 702 S.E.2d 479 (2010).  

Failure to prove fair and reasonable value of minibuses. - Secured creditor failed to prove the fair and reasonable value of minibuses at the time of sale, where the only evidence of value of the vehicles was the offers received after the default by the creditor's corporate president, upon solicitation of some 15 individuals nationwide, and the actual price paid at the sale of the vehicles. Walker v. Modnar Corp., 194 Ga. App. 68, 389 S.E.2d 558 (1989) (decided under former Code Section 11-9-504).  

Sale of convenience store equipment and food inventory. - Small Business Administration failed to act in a commercially reasonable manner in the sale of collateral consisting of inventory and equipment from a convenience store, where the value of food inventory substantially diminished by the time of auction and the equipment brought less than it would have if it had been sold at the store site in a timely manner. Johnson v. United States Small Bus. Admin., 116 Bankr. 863 (Bankr. M.D. Ga. 1990) (decided under former Code Section 11-9-504).  

Sale occurred in a commercially reasonable manner. - Assuming that the sale of collateral was a public sale within the meaning of O.C.G.A. § 11-1-201(31.1), the sale occurred in a commercially reasonable manner, under O.C.G.A. § 11-9-627, because the sale was consistent with the reasonable commercial practices of dealers in similar equipment. Moreover, the sale qualified as a valid private sale under O.C.G.A. § 11-9-613 and the creditor did not have to comply with the statute's public-sale provisions regarding time and advertising. Colonial Pac. Leasing Corp. v. N & N Partners, LLC, 981 F. Supp. 2d 1345 (N.D. Ga. Nov. 4, 2013).  


 Waiver


Commercial reasonableness cannot be waived. - Commercial reasonability of method and notice of sale cannot be contractually waived under former § 11-9-501(3). The commercial reasonability of method and notice of sale required  cannot be contractually waived or varied. Ennis v. Atlas Fin. Co., 120 Ga. App. 849, 172 S.E.2d 482 (1969) (decided under former Code Section 11-9-504).  

Status of "guarantor" is determinative as to legally non-binding effect of pre-default waiver of the requirements of former § 11-9-501(3). Branan v. Equico Lessors, Inc., 255 Ga. 718, 342 S.E.2d 671 (1986) (decided under former Code Section 11-9-504).  

Guarantor may waive notice. - A guarantor or surety, under the terms of a separate contract, may waive such protection as notice or the right to contest the commercial reasonableness of the disposition of collateral. Pollard v. Trust Co. Bank, 175 Ga. App. 510, 333 S.E.2d 642 (1985), overruled on other grounds, 255 Ga. 721, 342 S.E.2d 674 (1986) (decided under former Code Section 11-9-504).  

Surety's advance consent to otherwise dischargeable conduct. - Surety or guarantor may consent in advance to conduct which would otherwise result in discharge. Vickers v. Chrysler Credit Corp., 158 Ga. App. 434, 280 S.E.2d 842 (1981) (decided under former Code Section 11-9-504).  


 Summary Judgment


Summary judgment denied. - Trial court erred by granting summary judgment to creditor regarding the commercial reasonableness of the sale, where a material issue of fact existed regarding whether creditor carried its burden of proving that the sale price obtained for a piece of logging equipment was equal to its fair market value. Gilbert v. F & M Bank, 192 Ga. App. 700, 385 S.E.2d 782 (1989) (decided under former Code Section 11-9-504).  
Where it is unclear whether certified letter sent as "notice," which was returned marked "unclaimed" was returned prior to or after private sale, and where length of time between mailing and sale is almost four months, it is error to grant a summary judgment for deficiency balance in favor of plaintiff creditor. Geohagan v. Commercial Credit Corp., 130 Ga. App. 828, 204 S.E.2d 784 (1974) (decided under former Code Section 11-9-504).  


 Burden of Proof


Burden on secured party. - Burden of proving reasonableness of disposition of collateral is upon the secured party. Henderson Few & Co. v. Rollins Communications, Inc., 148 Ga. App. 139, 250 S.E.2d 830 (1978) (decided under former Code Section 11-9-504).  
The burden is on the secured party to prove that the sale of the collateral was commercially reasonable. Johnson v. United States Small Bus. Admin., 116 Bankr. 863 (Bankr. M.D. Ga. 1990) (decided under former Code Section 11-9-504).  
After commercial reasonableness of secured party's disposition has been challenged, burden is placed upon the secured party to prove disposition was commercially reasonable. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (decided under former Code Section 11-9-504).  
In challenge to reasonableness of a sale of repossessed collateral, secured party bears burden of proof that sale was commercially reasonable. BVA Credit Corp. v. May, 152 Ga. App. 733, 264 S.E.2d 32 (1979) (decided under former Code Section 11-9-504).  

Where reasonableness of disposition challenged, secured party must show resale price was fair, reasonable value. - Whenever reasonableness to sale of repossessed collateral is challenged, burden of showing that disposition of collateral was commercially reasonable rests with the secured party. This includes burden of showing that resale price is fair and reasonable value of collateral. Vines v. Citizens Trust Bank, 146 Ga. App. 845, 247 S.E.2d 528 (1979); Central & S. Bank v. Craft, 190 Ga. App. 576, 379 S.E.2d 432 (1989) (decided under former Code Section 11-9-504).  
Where commercial reasonableness of sale is challenged by debtor, party holding security interest has burden of proving that terms of sale were commercially reasonable and that resale price was fair and reasonable value of collateral. Richard v. Fulton Nat'l Bank, 158 Ga. App. 595, 281 S.E.2d 338 (1981); Harrison v. Massey-Ferguson Credit Corp., 175 Ga. App. 752, 334 S.E.2d 352 (1985); Carlton Mfg., Inc. v. Bauer, 207 Ga. App. 850, 429 S.E.2d 329 (1993) (decided under former Code Section 11-9-504).  

Value presumed equal to debt owed. - Absent evidence of the value of collateral at the time of repossession, the value of the goods is presumed to be equal to the debt owed. Borden v. Pope Jeep-Eagle, Inc., 200 Ga. App. 176, 407 S.E.2d 128 (1991) (decided under former Code Section 11-9-504).  

Rebuttable presumption rule. - The rebuttable presumption rule, by placing the burden on the creditor to show the propriety of the sale and making the creditor liable for any injury to the debtor, provides an adequate deterrent to an improper sale on the part of a creditor and adequately protects the debtor's interest, without arbitrarily penalizing the creditor. Emmons v. Burkett, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-504).  
Under the rebuttable presumption rule, if a creditor fails to give notice or conducts an unreasonable sale, the presumption is raised that the value of the collateral is equal to the indebtedness. To overcome this presumption, the creditor must present evidence of the fair and reasonable value of the collateral, and the evidence must show that such value was less than the debt. If the creditor rebuts the presumption, the creditor may maintain an action against the debtor or guarantor for any deficiency. Any loss suffered by the debtor as a consequence of the failure to give notice or to conduct a commercially reasonable sale is recoverable and may be set off against the deficiency. Emmons v. Burkett, 256 Ga. 855, 353 S.E.2d 908 (1987) (decided under former Code Section 11-9-504).  
A more complete statement of the rule set forth in Emmons v. Burkette, 256 Ga. 855, 353 S.E.2d 908 (1987), is: If the creditor conducts a commercially unreasonable sale and does not rebut the presumption that the value of the collateral is equal to the indebtedness, the creditor loses the right to recover the deficiency against the debtor and the guarantor. If the presumption is rebutted, the first to recover the deficiency remains as held in Emmons. Business Dev. Corp. v. Contestabile, 261 Ga. 886, 413 S.E.2d 447 (1992) (decided under former Code Section 11-9-504).  

Creditor showing of reasonableness as prerequisite to deficiency judgment. - If condition precedent of commercial reasonableness is not met in foreclosure sale, no recovery is possible, and burden is on creditor to prove such. Brown v. C.I.T. Corp., 150 Ga. App. 361, 258 S.E.2d 44 (1979) (decided under former Code Section 11-9-504).  

Showing required to recover deficiency. - Burden is on secured party to prove value of collateral at time of repossession and that such value does not equal debt; failure to do so results in presumption that value was at least amount of debt. BVA Credit Corp. v. May, 152 Ga. App. 733, 264 S.E.2d 32 (1979); Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979); Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681 (1980) (decided under former Code Section 11-9-504).  
Appellee secured creditor had burden of overcoming presumption that value of trucks equalled the debts on them by evidence of their fair and reasonable values, and evidence of resale prices was not sufficient to do this, nor were appellee's affiant's conclusory statements that they were sold in a commercially reasonable manner, thus, grant of summary judgment for appellee on claim for deficiency was error. Davis v. Ford Motor Credit Co., 164 Ga. App. 137, 296 S.E.2d 431 (1982) (decided under former Code Section 11-9-504).  

Debtor's burden after creditor proves commercial reasonableness. - Where creditor shows prima facie that sale of collateral was reasonable, to prevent summary judgment for deficiency, debtor must support debtor's challenge to the sale by asserting specific facts showing there is a genuine issue for trial. Slaughter v. Ford Motor Credit Co., 164 Ga. App. 428, 296 S.E.2d 428 (1982) (decided under former Code Section 11-9-504).  

Debtor's burden after creditor files a deficiency claim. - A proof of claim constitutes prima facie evidence of the validity and amount of the claim, shifting the burden of proof to the debtor to show that the deficiency claim should not be allowed; the mere recitation of National Automobile Dealers Association mobile home values is insufficient for this purpose without some evidentiary connection to the actual home at issue. In re Brown, 221 Bankr. 46 (Bankr. M.D. Ga. 1998).  
Evidence from an owner of an equipment purchaser, who had 22 years of experience in the industry and who claimed that a finance company's sale of equipment upon repossession did not bring the equipment's full value, raised a genuine issue of fact as to commercial reasonableness; accordingly, a grant of summary judgment to the finance company on the company's claim for a deficiency judgment was error. Mason Logging Co. v. GE Capital Corp., 322 Ga. App. 708, 746 S.E.2d 180 (2013).  


 Jury/Court Determinations


Commercial reasonableness of disposition is jury question. - Question of commercial reasonableness is generally for jury, but trial judge may withdraw question of commercial reasonableness from jury and direct a verdict. Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (decided under former Code Section 11-9-504).  
Commercial reasonableness of disposition of collateral, considering method, time, place and terms, is question of fact for jury. Neither trial court nor appellate court should take upon itself such a determination. Ennis v. Atlas Fin. Co., 120 Ga. App. 849, 172 S.E.2d 482 (1969) (decided under former Code Section 11-9-504).  
It is for jury to determine the commercial reasonableness of a private sale of collateral. Gordon v. Weldon, 154 Ga. App. 531, 268 S.E.2d 796 (1980) (decided under former Code Section 11-9-504).  

Ultimate question of commercial reasonableness is one of law. - When reasonableness of a sale of repossessed collateral is challenged, secured party has burden of proving that it was reasonable; and ultimate question of commercial reasonableness is one of law. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43 (1976) (decided under former Code Section 11-9-504).  


RESEARCH REFERENCES

Am. Jur. 2d. - 68A Am. Jur. 2d, Secured Transactions, §§ 556-572, 606, 624 et seq., 642-680, 685-703.  

C.J.S. - 72 C.J.S., Pledges, §§ 49, 50.  

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-627.  

ALR. - Seller's rights in respect of the property, or its proceeds, upon dishonor of draft or check for purchase price, on a cash sale, 31 A.L.R. 578; 54 A.L.R. 526.  
Rights and remedies as between parties to conditional sale after seller has repossessed himself of the property, 99 A.L.R. 1288.  
Right of creditor or mortgagee to redeem from his own sale, 108 A.L.R. 993.  
Purchase by pledgee of subject of pledge, 37 A.L.R.2d 1381.  
Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.  
Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.  
Uniform Commercial Code: failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 A.L.R.3d 401.  
Construction of term "debtor" as used in UCC § 9-504(3), requiring secured party to give notice to debtor of sale of collateral securing obligation, 5 A.L.R.4th 1291.  
What is "commercially reasonable" disposition of collateral required by UCC § 9-504(3), 7 A.L.R.4th 308.  
Loss or modification of right to notification of sale of repossessed collateral under Uniform Commercial Code § 9-504, 9 A.L.R.4th 552.  
Failure of secured party to make "commercially reasonable" disposition of collateral under UCC § 9-504(3) as bar to deficiency judgment, 10 A.L.R.4th 413.  
Sufficiency of secured party's notification of sale or other intended disposition of collateral under UCC § 9-504(3), 11 A.L.R.4th 241.  
Nature of collateral which secured party may sell or otherwise dispose of without giving notice to defaulting debtor under UCC § 9-504(3), 11 A.L.R.4th 1060.  
Secured transactions: what is "public" or "private" sale under UCC § 9-504(3), 60 A.L.R.4th 1012.  
UCC: value of trade-in taken on sale of collateral for purposes of computing surplus or deficiency, 72 A.L.R.4th 1128.  
Causes of action governed by limitations period in UCC § 2-725, 49 A.L.R.5th 1.  

11-9-628. Nonliability and limitation on liability of secured party; liability of secondary obligor.

Statute text
(a)  Limitation of liability of secured party for noncompliance with article. 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:  
(1) 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 article; and  
(2) The secured party's failure to comply with this article does not affect the liability of the person for a deficiency.  
(b)  Limitation of liability based on status as secured party. A secured party is not liable because of its status as secured party:  
(1) To a person that is a debtor or obligor, unless the secured party knows:  
(A) That the person is a debtor or obligor;  
(B) The identity of the person; and  
(C) How to communicate with the person; or  
(2) To a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:  
(A) That the person is a debtor; and  
(B) The identity of the person.  
(c)  Limitation of liability if reasonable belief that transaction not a consumer goods transaction or consumer transaction. 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:  
(1) A debtor's representation concerning the purpose for which collateral was to be used, acquired, or held; or  
(2) An obligor's representation concerning the purpose for which a secured obligation was incurred.  
(d)  Limitation of liability for statutory damages. A secured party is not liable to any person under paragraph (2) of subsection (c) of Code Section 11-9-625 for its failure to comply with Code Section 11-9-616.  
(e)  Limitation of multiple liability for statutory damages. A secured party is not liable under paragraph (2) of subsection (c) of Code Section 11-9-625 more than once with respect to any one secured obligation.  

History
(Code 1981, § 11-9-628, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-628.  

——————————
PART 7
2001 TRANSITION


Annotations
  Editor's notes. - Ga. L. 2013, p. 690, § 19/SB 185, effective July 1, 2013, renamed Part 7 as "2001 Transition".  

11-9-701. Effective date.

Statute text
This article takes effect on July 1, 2001.  

History
(Code 1981, § 11-9-701, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-701.  

11-9-702. Savings clause.

Statute text
(a)  Pre-effective date transactions or liens. Except as otherwise provided in this part, this article applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before July 1, 2001.  
(b)  Continuing validity. Except as otherwise provided in subsection (c) of this Code section and Code Sections 11-9-703 through 11-9-709:  
(1) Transactions and liens that were not governed by former Article 9 of this title, were validly entered into or created before July 1, 2001, and would be subject to this article 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 on or after July 1, 2001; and  
(2) The transactions and liens may be terminated, completed, consummated, and enforced as required or permitted by this article or by the law, as amended and in effect from time to time, that otherwise would apply before July 1, 2001.  
(c)  Pre-effective date proceedings. This article and amendments to other Code sections which amendments were enacted in conjunction with this article do not affect an action, case, or proceeding commenced before July 1, 2001.  

History
(Code 1981, § 11-9-702, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-702.  

11-9-703. Security interest perfected before effective date.

Statute text
(a)  Continuing priority over lien creditor; perfection requirements satisfied. 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 article if, on July 1, 2001, the applicable requirements for enforceability and perfection under this article are satisfied without further action.  
(b)  Continuing priority over lien creditor; perfection requirements not satisfied. Except as otherwise provided in Code Section 11-9-705, 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 article are not satisfied on July 1, 2001, the security interest:  
(1) Is a perfected security interest on and for one year after July 1, 2001;  
(2) Remains enforceable thereafter only if the security interest becomes enforceable under Code Section 11-9-203 before the year expires; and  
(3) Remains perfected thereafter only if the applicable requirements for perfection under this article are satisfied before the year expires.  

History
(Code 1981, § 11-9-703, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-703.  

11-9-704. Security interest unperfected before effective date.

Statute text
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 on and for one year after July 1, 2001;  
(2) Remains enforceable thereafter if the security interest becomes enforceable under Code Section 11-9-203 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 article 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.  

History
(Code 1981, § 11-9-704, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-704.  

11-9-705. Effectiveness of action taken before effective date.

Statute text
(a)  Pre-effective date action; one-year perfection period unless reperfected. 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 article within one year after July 1, 2001. An attached security interest becomes unperfected one year after July 1, 2001, unless the security interest becomes a perfected security interest under this article before the expiration of that period.  
(b)  Pre-effective date filing. 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 article.  
(c)  Pre-effective date filing in jurisdiction formerly governing perfection. This article and amendments to other Code sections which amendments were enacted in conjunction with this article do 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 former Code Section 11-9-103. However, except as otherwise provided in subsections (d) and (e) of this Code section and Code Section 11-9-706, the financing statement ceases to be effective at the earlier of:  
(1) The time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed; or  
(2) June 30, 2006.  
(d)  Continuation statement. The filing of a continuation statement on or after July 1, 2001, does not continue the effectiveness of the financing statement filed before July 1, 2001. However, upon the timely filing of a continuation statement on or after July 1, 2001, and in accordance with the law of the jurisdiction governing perfection as provided in Part 3 of this article, 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.  
(e)  Application of paragraph (2) of subsection (c) of this Code section to transmitting utility financing statement. Paragraph (2) of subsection (c) of this Code section 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 former Code Section 11-9-103 only to the extent that Part 3 of this article provides that the law of a jurisdiction other than jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.  
(f)  Application of Part 5 of this article. A financing statement that includes a financing statement filed before July 1, 2001, and a continuation statement filed on or after July 1, 2001, is effective only to the extent that it satisfies the requirements of Part 5 of this article for an initial financing statement.  

History
(Code 1981, § 11-9-705, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-705.  

11-9-706. When initial financing statement suffices to continue effectiveness of financing statement.

Statute text
(a)  Initial financing statement in lieu of continuation statement. The filing of an initial financing statement in the office specified in Code Section 11-9-501 continues the effectiveness of a financing statement filed before July 1, 2001, if:  
(1) The filing of an initial financing statement in that office would be effective to perfect a security interest under this article;  
(2) The pre-effective date financing statement was filed in an office in another state or another office in this state; and  
(3) The initial financing statement satisfies subsection (c) of this Code section.  
(b)  Period of continued effectiveness. The filing of an initial financing statement under subsection (a) of this Code section continues the effectiveness of the pre-effective date financing statement:  
(1) If the initial financing statement is filed before July 1, 2001, for the period provided in former Code Section 11-9-403 with respect to a financing statement; and  
(2) If the initial financing statement is filed on or after July 1, 2001, for the period provided in Code Section 11-9-515 with respect to an initial financing statement.  
(c)  Requirements for initial financing statement under subsection (a) of this Code section. To be effective for purposes of subsection (a), an initial financing statement must:  
(1) Satisfy the requirements of Part 5 of this article for an initial financing statement;  
(2) 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  
(3) Indicate that the pre-effective date financing statement remains effective.  

History
(Code 1981, § 11-9-706, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-706.  

11-9-707. Amendment of pre-effective date financing statement.

Statute text
(a)  "Pre-effective date financing statement." In this Code section, "pre-effective date financing statement" means a financing statement filed before July 1, 2001.  
(b)  Applicable law. On or 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 of this article. 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.  
(c)  Method of amending: general rule. Except as otherwise provided in subsection (d) of this Code section, if the law of this state governs perfection of a security interest, the information in a pre-effective date financing statement may be amended on or after July 1, 2001, only if:  
(1) The pre-effective date financing statement and an amendment are filed in the office specified in Code Section 11-9-501;  
(2) An amendment is filed in the office specified in Code Section 11-9-501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies subsection (c) of Code Section 11-9-706; or  
(3) An initial financing statement that provides the information as amended and satisfies subsection (c) of Code Section 11-9-706 is filed in the office specified in Code Section 11-9-501.  
(d)  Method of amending: continuation. 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 (d) and (f) of Code Section 11-9-705 or Code Section 11-9-706.  
(e)  Method of amending: additional termination rule. 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 on and after 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 (c) of Code Section 11-9-706 has been filed in the office specified by the law of the jurisdiction governing perfection as provided in Part 3 of this article as the office in which to file a financing statement.  

History
(Code 1981, § 11-9-707, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-707.  

11-9-708. Persons entitled to file initial financing statement or continuation statement.

Statute text
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.  

History
(Code 1981, § 11-9-708, enacted by Ga. L. 2001, p. 362, § 1.)

Annotations

RESEARCH REFERENCES

U.L.A. - Uniform Commercial Code (U.L.A.) § 9-708.  

11-9-709. Priority.

Statute text
(a)  Law governing priority. This article determines the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before July 1, 2001, former Article 9 of this title determines priority.  
(b)  Priority if security interest becomes enforceable under Code Section 11-9-203. For purposes of subsection (a) of Code Section 11-9-322, the priority of a security interest that becomes enforceable under Code Section 11-9-203 dates from July 1, 2001, if the security interest is perfected under this article by the filing of a financing statement before July 1, 2001, which would not have been effective to perfect the security interest under former Article 9 of this title. This subsection does not apply to conflicting security interests each of which is perfected by the filing of such a financing statement.  

History
(Code 1981, § 11-9-709, enacted by Ga. L. 2001, p. 362, § 1.)

11-9-710. Exculpation.

Statute text
From July 1, 2001, until July 1, 2006, any search company shall not be liable to its customer as a result of failing to disclose the existence of a filed financing statement in any filing office or index maintained by the authority searched in good faith by such search company to the extent such failure is attributable either to the failure of such filing office or the authority, as the case may be, to have properly indexed such filed financing statement or to the failure of the search logic used by such filing office or the authority, as the case may be, to disclose such filed financing statement in response to a search in the appropriate records of such filing office or of such index in the name provided to such search company by its customer. As used in this Code section, "search company" shall mean any person engaged in the business of conducting or arranging searches of public records of filed financing statements. On and after July 1, 2006, the liability of a search company shall be determined by law other than this article.  

History
(Code 1981, § 11-9-710, enacted by Ga. L. 2001, p. 362, § 1.)

——————————
PART 8
2013 TRANSITION


Annotations
Effective date. - This part became effective July 1, 2013.  

11-9-801. Reserved.

Statute text
Reserved. (Code 1981, § 11-9-801, enacted by Ga. L. 2013, p. 690, § 20/SB 185.)  

11-9-802. Savings clause.

Statute text
(a)  Pre-effective date transactions or liens. Except as otherwise provided in this part, this article, as in effect on July 1, 2013, applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before July 1, 2013.  
(b)  Pre-effective date proceedings. This article, as in effect on July 1, 2013, does not affect an action, case, or proceeding commenced before July 1, 2013.  

History
(Code 1981, § 11-9-802, enacted by Ga. L. 2013, p. 690, § 20/SB 185.)

11-9-803. Security interest perfected before effective date.

Statute text
(a)  Continuing perfection; perfection requirements satisfied. A security interest that is a perfected security interest immediately before July 1, 2013, is a perfected security interest under this article, as in effect on July 1, 2013, if, on July 1, 2013, the applicable requirements for attachment and perfection under this article, as in effect on July 1, 2013, are satisfied without further action.  
(b)  Continuing perfection; perfection requirements not satisfied. Except as otherwise provided in Code Section 11-9-805, if, immediately before July 1, 2013, a security interest is a perfected security interest, but the applicable requirements for perfection under this article, as in effect on July 1, 2013, are not satisfied on July 1, 2013, the security interest remains perfected thereafter only if the applicable requirements for perfection under this article, as in effect on July 1, 2013, are satisfied before July 1, 2014.  

History
(Code 1981, § 11-9-803, enacted by Ga. L. 2013, p. 690, § 20/SB 185.)

11-9-804. Security interest unperfected before effective date.

Statute text
A security interest that is an unperfected security interest immediately before July 1, 2013, becomes a perfected security interest:  

(1) Without further action, on July 1, 2013, if the applicable requirements for perfection under this article, as in effect on July 1, 2013, 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.  

History
(Code 1981, § 11-9-804, enacted by Ga. L. 2013, p. 690, § 20/SB 185.)

11-9-805. Effectiveness of action taken before effective date.

Statute text
(a)  Pre-effective date filing effective. The filing of a financing statement before July 1, 2013, is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this article, as in effect on July 1, 2013.  
(b)  When pre-effective date filing becomes ineffective. Changes made to this article effective July 1, 2013, do not render ineffective an effective financing statement that, before July 1, 2013, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided under the former provisions of this article in effect prior to July 1, 2013. However, except as otherwise provided in subsections (c) and (d) of this Code section and Code Section 11-9-806, the financing statement ceases to be effective:  
(1) If the financing statement is filed in this state, at the time the financing statement would have ceased to be effective under the former provisions of this article in effect prior to July 1, 2013; or  
(2) If the financing statement is filed in another jurisdiction, at the earlier of:  
(A) The time the financing statement would have ceased to be effective under the law of that jurisdiction; or  
(B) June 30, 2018.  
(c)  Continuation statement. The filing of a continuation statement on or after July 1, 2013, does not continue the effectiveness of a financing statement filed before July 1, 2013. However, upon the timely filing of a continuation statement on or after July 1, 2013, and in accordance with the law of the jurisdiction governing perfection as provided in this article, as in effect on July 1, 2013, the effectiveness of a financing statement filed in the same office in that jurisdiction before July 1, 2013, continues for the period provided by the law of that jurisdiction.  
(d)  Application of subparagraph (b)(2)(B) of this Code section to transmitting utility financing statement. Subparagraph (b)(2)(B) of this Code section shall apply to a financing statement that, before July 1, 2013, 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 provisions of this article, as in effect prior to July 1, 2013, only to the extent that the provisions of this article, as in effect on July 1, 2013, provide 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.  
(e)  Application of Part 5 of this article. A financing statement that includes a financing statement filed before July 1, 2013, and a continuation statement filed on or after July 1, 2013, is effective only to the extent that it satisfies the requirements of Part 5 of this article, as in effect on July 1, 2013, 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 paragraph (2) of subsection (a) of Code Section 11-9-503, as in effect on July 1, 2013. 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 paragraph (3) of subsection (a) of Code Section 11-9-503, as in effect on July 1, 2013.  

History
(Code 1981, § 11-9-805, enacted by Ga. L. 2013, p. 690, § 20/SB 185.)

11-9-806. When initial financing statement suffices to continue effectiveness of financing statement.

Statute text
(a)  Initial financing statement in lieu of continuation statement. The filing of an initial financing statement in the office specified in Code Section 11-9-501 continues the effectiveness of a financing statement filed before July 1, 2013, if:  
(1) The filing of an initial financing statement in that office would be effective to perfect a security interest under this article, as in effect on July 1, 2013;  
(2) The pre-effective date financing statement was filed in an office in another state; and  
(3) The initial financing statement satisfies subsection (c) of this Code section.  
(b)  Period of continued effectiveness. The filing of an initial financing statement under subsection (a) of this Code section continues the effectiveness of the pre-effective date financing statement:  
(1) If the initial financing statement is filed before July 1, 2013, for the period provided in former Code Section 11-9-515, as in effect prior to July 1, 2013, with respect to an initial financing statement; and  
(2) If the initial financing statement is filed on or after July 1, 2013, for the period provided in Code Section 11-9-515, as in effect on July 1, 2013, with respect to an initial financing statement.  
(c)  Requirements for initial financing statement under subsection (a) of this Code section. To be effective for purposes of subsection (a) of this Code section, an initial financing statement must:  
(1) Satisfy the requirements of Part 5 of this article, as in effect on July 1, 2013, for an initial financing statement;  
(2) 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  
(3) Indicate that the pre-effective date financing statement remains effective.  

History
(Code 1981, § 11-9-806, enacted by Ga. L. 2013, p. 690, § 20/SB 185.)

11-9-807. Amendment of pre-effective date financing statement.

Statute text
(a)  "Pre-effective date financing statement." As used in this Code section, the term "pre-effective date financing statement" means a financing statement filed before July 1, 2013.  
(b)  Applicable law. On or after July 1, 2013, 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 of this article, as in effect on July 1, 2013. 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.  
(c)  Method of amending: general rule. Except as otherwise provided in subsection (d) of this Code section, if the law of this state governs perfection of a security interest, the information in a pre-effective date financing statement may be amended on or after July 1, 2013, only if:  
(1) The pre-effective date financing statement and an amendment are filed in the office specified in Code Section 11-9-501;  
(2) An amendment is filed in the office specified in Code Section 11-9-501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies subsection (c) of Code Section 11-9-806; or  
(3) An initial financing statement that provides the information as amended and satisfies subsection (c) of Code Section 11-9-806 is filed in the office specified in Code Section 11-9-501.  
(d)  Method of amending: continuation. 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 (c) and (e) of Code Section 11-9-805 or Code Section 11-9-806.  
(e)  Method of amending: additional termination rule. 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 on or after July 1, 2013, 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 (c) of Code Section 11-9-806 has been filed in the office specified by the law of the jurisdiction governing perfection as provided in Part 3 of this article, as in effect on July 1, 2013, as the office in which to file a financing statement.  

History
(Code 1981, § 11-9-807, enacted by Ga. L. 2013, p. 690, § 20/SB 185.)

11-9-808. Person entitled to file initial financing statement or continuation statement.

Statute text
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, 2013; or  
(B) To perfect or continue the perfection of a security interest.  

History
(Code 1981, § 11-9-808, enacted by Ga. L. 2013, p. 690, § 20/SB 185.)

11-9-809. Priority.

Statute text
This article, as in effect on July 1, 2013, determines the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before July 1, 2013, the former provisions of this article, as in effect prior to July 1, 2013, determine priority.  

History
(Code 1981, § 11-9-809, enacted by Ga. L. 2013, p. 690, § 20/SB 185.)

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