CHAPTER 12-9 SECURED TRANSACTIONS

Tribal code

Ask Donna

What actually matters in this document.

Text

PART 1

GENERAL PROVISIONS

12-9-1

Short title

This Chapter may be cited as the Uniform Commercial Code-Secured Transactions.

12-9-2

Definitions and index of definitions

(a) “Accession” means goods that are physically united with other goods in such a manner that the identity

of the original goods is not lost.

(b) “Account” except as used in “account for,”

(1) 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 or tribe, the

governmental unit of a state or tribe or person licensed or authorized to operate the game by a state

or tribe or governmental unit of a state or tribe. The term includes health-care-insurance

receivables.

(2) 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.

does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of

chattel paper.

(d) “Accounting” except as used in “accounting for,” means a record:

(1) Authenticated by a secured party;

(2) Indicating the aggregate unpaid secured obligations as of a date not more than thirty-five days

earlier or thirty-five days later than the date of the record; and

(3) Identifying the components of the obligations in reasonable detail.

(e) “Agricultural lien” means an interest, other than a security interest, in farm products:

(1) Which secures payment or performance of an obligation for:

(A) Goods or services furnished in connection with a debtor’s farming operation; or

(B) Rent on real property leased by a debtor in connection with its farming operation;

(2) Which is created by statute in favor of a person that:

(A) In the ordinary course of its business, furnished goods or services to a debtor in

connection with a debtor’s farming operation; or

June 2011 Chapter 12-9

(B) Leased real property to a debtor in connection with the debtor’s farming operation;

and

(3) Whose effectiveness does not depend on the person’s possession of the personal property.

(f) “Article” as used in this Chapter means Article as it is commonly used in the Uniform Commercial

Code. Article means those chapters adopted under this title of the Colville Code or otherwise adopted by

reference.

(g) “As-extracted collateral” means:

(1) Oil, gas, or other minerals that are subject to a security interest that:

(A) Is created by a debtor having an interest in the minerals before extraction; and

(B) Attaches to the minerals as extracted; or

(2) 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.

(h) “Authenticate” means:

(1) To sign; or

(2) 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.

(i) “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 but does not include Colville

Tribal Credit Corporation.

(j) “Cash proceeds” means proceeds that are money, checks, deposit accounts, or the like.

(k) “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.

(l) “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. 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 “chattel

paper” does not include:

(1) Charters or other contracts involving the use or hire of a vessel or

(2) 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.

(m) “Collateral” means the property subject to a security interest or agricultural lien. The term includes:

(1) Proceeds to which a security interest attaches;

(2) Accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and

(3) Goods that are the subject of a consignment.

June 2011 Chapter 12-9

(n) “Commercial tort claim” means a claim arising in tort with respect to which:

(1) The claimant is an organization; or

(2) The claimant is an individual, and the claim:

(A) Arose in the course of the claimant’s business or profession; and

(B) Does not include damages arising out of personal injury to, or the death of, an

individual.

issue of Colville Tribal culture as a material and substantial element of the claim or

damages.

(o) “Commodity account” means an account maintained by a commodity intermediary in which a

commodity contract is carried for a commodity customer.

(p) “Commodity contract” means a commodity futures contract, an option on a commodity futures contract,

a commodity option, or another contract if the contract or option is:

(1) Traded on or subject to the rules of a board of trade that has been designated as a contract

market for such a contract pursuant to federal commodities laws; or

(2) Traded on a foreign commodity board of trade, exchange, or market, and is carried on the

books of a commodity intermediary for a commodity customer.

(q) “Commodity customer” means a person for which a commodity intermediary carries a commodity

contract on its books.

(r) “Commodity intermediary” means a person that:

(1) Is registered as a futures commission merchant under federal commodities law; or

(2) In the ordinary course of 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.

(s) “Communicate” means:

(1) To send a written or other tangible record;

(2) To transmit a record by any means agreed upon by the persons sending and receiving the

record; or

(3) In the case of transmission of a record to or by a filing office, to transmit a record by any

means prescribed by filing-office rule.

(t) “Consignee” means a merchant to which goods are delivered in a consignment.

(u) “Consignment” means a transaction, regardless of its form, in which a person delivers goods to a

merchant for the purpose of sale and:

(1) The merchant:

(A) Deals in goods of that kind under a name other than the name of the person making

delivery;

(B) Is not an auctioneer; and

June 2011 Chapter 12-9

goods of others;

(2) With respect to each delivery, the aggregate value of the goods is three thousand dollars or

more at the time of delivery;

(3) The goods are not consumer goods immediately before delivery; and

(4) The transaction does not create a security interest that secures an obligation.

(v) “Consignor” means a person that delivers goods to a consignee in a consignment.

(w) “Consumer debtor” means a debtor in a consumer transaction.

(x) “Consumer goods” means goods that are used or bought for use primarily for personal, family, or

household purposes.

(y) “Consumer-goods transaction” means a consumer transaction in which:

(1) An individual incurs an a consumer obligation primarily for personal, family, or household

purposes; and

(2) A security interest in consumer goods secures the obligation.

(z) “Consumer obligor” means an obligor who is an individual and who incurred the obligation as part of

an transaction entered into primarily for personal, family, or household purposes.

(aa) “Consumer transaction” means a transaction in which:

(1) an individual incurs an obligation primarily for personal, family, or household purposes;

(2) a security interest secures the obligation; and

(3) the collateral is held or acquired primarily for personal, family, or household purposes. The

term includes consumer-goods transactions.

(bb) “Continuation statement” means an amendment of a financing statement which:

(1) Identifies, by its file number, the initial financing statement to which it relates; and

(2) Indicates that it is a continuation statement for, or that it is filed to continue the effectiveness

of, the identified financing statement.

(cc) “Debtor” means:

(1) A person having an interest, other than a security interest or other lien, in the collateral,

whether or not the person is an obligor on the debt secured;

(2) A seller of accounts, chattel paper, payment intangibles, or promissory notes; or

(3) A consignee.

(dd) “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.

(ee) “Document” means a document of title or a receipt of the type described in Revised Code of

Washington § 62A.7-201(2).

(ff) “Electronic chattel paper” means chattel paper evidenced by a record or records consisting of

information stored in an electronic medium.

June 2011 Chapter 12-9

(gg) “Encumbrance” means a right, other than an ownership interest, in real property. The term includes

mortgages and other liens on real property.

(hh) “Equipment” means goods other than inventory, farm products, or consumer goods.

(ii) “Farm products” means goods, other than standing timber, with respect to which the debtor is engaged

in a farming operation and which are:

(1) Crops grown, growing, or to be grown, including:

(A) Crops produced on trees, vines, and bushes; and

(B) Aquatic goods produced in aquacultural operations;

(2) Livestock, born or unborn, including aquatic goods produced in aquacultural operations;

(3) Supplies used or produced in a farming operation; or

(4) Products of crops or livestock in their unmanufactured states.

(jj) “Farming operation” means raising, cultivating, propagating, fattening, grazing, or any other farming,

livestock, or aquacultural operation.

(kk) “File number” means the number assigned to an initial financing statement pursuant to the filing

system adopted by this Act at Section 12-9-120.

(ll) “Filing office” means an office designated pursuant to the filing system adopted by this Act at Section

12-9-120 as the place to file a financing statement.

(mm) “Filing-office rule” means a rule adopted pursuant to the filing system adopted by this Act at Section

12-9-120.

(nn) “Financing statement” means a record or records composed of an initial financing statement and any

filed record relating to the initial financing statement.

(oo) “Fixture filing” means the filing of a financing statement covering goods that are or are to become

fixtures and satisfying the requirements of this Act relating to contents of financial statements The term

includes the filing of a financing statement covering goods of a transmitting utility which are or are to

become fixtures.

(pp) “Fixtures” means goods that have become so related to particular real property that an interest in them

arises under real property law.

(qq) “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.

(rr) “Goods” means all things that are movable when a security interest attaches. The term includes:

(1) fixtures;

(2) standing timber that is to be cut and removed under a conveyance or contract for sale;

(3) the unborn young of animals;

(4) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or

bushes; and

June 2011 Chapter 12-9

(5) manufactured homes.

(6) a computer program embedded in goods and any supporting information provided in

connection with a transaction relating to the program if

(A) the program is associated with the goods in such a manner that it customarily is

considered part of the goods; or

(B) by becoming the owner of the goods, a person acquires a right to use the program in

connection with the goods. 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 or a manufactured

home converted to real property.

(ss) “Governmental unit” means to the extent not further defined by this Act and Colville law, a

subdivision, agency, department, county, parish, municipality, or other unit of the government of the

United States, a state, tribe, 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.

(tt) “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.

(uu) “Instrument” means a negotiable instrument, , or any other writing that evidences a right to the

payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in

ordinary course of business is transferred by delivery with any necessary indorsement or assignment. The

term does not include:

(1) investment property.

(2) letters of credit.

(3) 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.

(4) writings that do not contain a promise or order to pay.

(5) writings that are expressly nontransferable or nonassignable.

(vv) “Inventory” means goods, other than farm products, which:

(1) Are leased by a person as lessor;

(2) Are held by a person for sale or lease or to be furnished under a contract of service;

(3) Are furnished by a person under a contract of service; or

(4) Consist of raw materials, work in process, or materials used or consumed in a business.

(ww) “Investment property” means a security, whether certificated or uncertificated, security entitlement,

securities account, commodity contract, or commodity account.

(xx) “Jurisdiction of organization,” with respect to a registered organization, means the jurisdiction under

whose law the organization is organized, provided that for any tribal corporation chartered under 25 U.S.C.

§ 477, the relevant jurisdiction shall be the jurisdiction of the tribe, or tribes, that received the relevant

federal charter.

June 2011 Chapter 12-9

(yy) “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.

(zz) “Lien creditor” means:

(1) A creditor that has acquired a lien on the property involved by attachment, levy, or the like;

(2) An assignee for benefit of creditors from the time of assignment;

(3) A trustee in bankruptcy from the date of the filing of the petition; or

(4) A receiver in equity from the time of appointment.

(aaa) “Manufactured home” means a manufactured home as defined in Revised Code of Washington §

46.04.302.

(bbb) “Mortgage” means a consensual interest in real property, including fixtures, which secures payment

or performance of an obligation.

(ccc) “New debtor” means a person that becomes bound as debtor under section 12-9-22 (d) by a security

agreement previously entered into by another person.

(ddd) “New value” means:

(1) money;

(2) money’s worth in property, services, or new credit; or

(3) release by a transferee of an interest in property previously transferred to the transferee. The

term does not include an obligation substituted for another obligation.

(eee) “Noncash proceeds” means proceeds other than cash proceeds.

(fff) “Obligor” means a person that, with respect to an obligation secured by a security interest in or an

agricultural lien on the collateral;

(1) owes payment or other performance of the obligation;

(2) has provided property other than the collateral to secure payment or other performance of the

obligation; or

(3) is otherwise accountable in whole or in part for payment or other performance of the

obligation.

The term does not include issuers or nominated persons under a letter of credit.

(ggg) “Original debtor”, except as used in section 12-9-50(c), means a person that, as debtor, entered into a

security agreement to which a new debtor has become bound under section 12-9-22(d).

(hhh) “Payment intangible” means a general intangible under which the account debtor’s principal

obligation is a monetary obligation.

(iii) “Person related to,” with respect to an individual, means:

(1) The spouse of the individual;

(2) A brother, brother-in-law, sister, or sister-in-law of the individual;

June 2011 Chapter 12-9

(3) A grandparent, grandchild, parent, daughter or son of the individual or the individual’s spouse;

(4) Any other relative, by blood or marriage, of the individual or the individual’s spouse who

shares the same home with the individual.

(jjj) “Person related to,” with respect to an organization, means:

(1) A person directly or indirectly controlling, controlled by, or under common control with the

organization;

(2) An officer or director of, or a person performing similar functions with respect to, the

organization;

(3) An officer or director of, or a person performing similar functions with respect to, a person

described in subparagraph (1) of this paragraph;

(4) The spouse of an individual described in subparagraph (iii) (1), (2), or (3) of this paragraph; or

(5) An individual who is related by blood or marriage to an individual described in subparagraph

(iii) (1), (2), (3), or (4) of this paragraph and shares the same home with the individual.

(kkk) “Proceeds”, means the following property:

(1) Whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral;

(2) Whatever is collected on, or distributed on account of, collateral;

(3) Rights arising out of collateral;

(4) To the extent of the value of collateral, claims arising out of the loss, nonconformity, or

interference with the use of, defects or infringement of rights in, or damage to, the collateral; or

(5) To the extent of the value of collateral and to the extent payable to the debtor or the secured

party, insurance payable by reason of the loss or nonconformity of, defects or infringement of

rights in, or damage to, the collateral.

(lll) “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.

(mmm) “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 sections 12-9-169, 12-9-170, and 12-9-171.

(nnn) “Public-finance transaction” means a secured transaction in connection with which:

(1) Debt securities are issued;

(2) All or a portion of the securities issued have an initial stated maturity of at least twenty years;

and

(3) 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 federally-recognized tribe or a governmental unit of a state or a federally-recognized tribe.

(ooo) “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.

June 2011 Chapter 12-9

(ppp) “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.

(qqq) “Registered organization” means an organization organized solely under the law of a single state,

tribe, or the United States and as to which the state, tribe, or the United States must maintain a publicly

accessible record showing the organization to have been organized.

(rrr) “Secondary obligor” means an obligor to the extent that:

(1) The obligor’s obligation is secondary; or

(2) The obligor has a right of recourse with respect to an obligation secured by collateral against

the debtor, another obligor, or property of either.

(sss) “Secured party” means:

(1) 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;

(2) A person that holds an agricultural lien;

(3) A consignor;

(4) A person to which accounts, chattel paper, payment intangibles, or promissory notes have been

sold;

(5) A trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a

security interest or agricultural lien is created or provided for; or

(6) A person that holds a security interest arising under other applicable law including a

comparable statute of another jurisdiction.

(ttt) “Security agreement” means an agreement that creates or provides for a security interest.

(uuu) “Send,” in connection with a record or notification, means:

(1) 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

(2) To cause the record or notification to be received within the time that it would have been

received if properly sent under subparagraph (1) of this paragraph.

(vvv) “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.

(www) “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.

(xxx) “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.

(yyy) “Tangible chattel paper” means chattel paper evidenced by a record or records consisting of

information that is inscribed on a tangible medium.

(zzz) “Termination statement” means an amendment of a financing statement which:

June 2011 Chapter 12-9

(1) Identifies, by its file number, the initial financing statement to which it relates; and

(2) Indicates either that it is a termination statement or that the identified financing statement is no

longer effective.

(aaaa) “Transmitting utility” means a person primarily engaged in the business of:

(1) Operating a railroad, subway, street railway, or trolley bus;

(2) Transmitting communications electrically, electromagnetically, or by light;

(3) Transmitting goods by pipeline or sewer; or

(4) Transmitting or producing and transmitting electricity, steam, gas, or water.

(bbbb) “Tribal land” means all land within the exterior boundaries of the Colville Reservation and all land

held in trust for a Colville Tribal member or the Colville Tribe outside the exterior boundaries of the

Colville Reservation.

12-9-3

Additional necessary definitions

To the extent any additional terms are necessarily implicated by this Act, the definition of their terms under

the relevant UCC statutes of the state of Washington will apply, but only to the extent not in conflict with

Colville law. Provided further, and subject to the provisions of this Act dealing with course of

performance, course of dealing, and usage of trade, the meaning of a term not defined by this Act is to be

derived from the context involved, with due consideration for consistency in meaning with uniform

principles of commercial and contract law operative in the United States.

12-9-4

Part 1 definitions and principles

Part 1 contains general definitions and principles of construction and interpretation applicable throughout

this Chapter.

12-9-5

Purchase-money security interest; application of payments; burden of establishing

(a) Definitions in this section:

(1) “Purchase-money collateral” means goods or software that secures a purchase-money

obligation incurred with respect to that collateral; and

(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.

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:

June 2011 Chapter 12-9

(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 consumergoods 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 section to transactions other than consumer-goods transactions is intended to leave to the court

the determination of the proper rules in consumer-goods transactions. The court may not infer from that

limitation the nature of the proper rule in consumer-goods transactions and may continue to apply

established approaches.

12-9-6

Control of deposit account

(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 section has

control, even if the debtor retains the right to direct the disposition of funds from the deposit account.

June 2011 Chapter 12-9

12-9-7

Control of electronic chattel paper

(a) A secured party has control of electronic chattel paper 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 subsections (4), (5), and (6) of this section, 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 revisions that add or change an identified assignee of the authoritative copy can be

made only with the participation 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 revision of the authoritative copy is readily identifiable as an authorized or unauthorized

revision.

12-9-8

Control of investment property

(a) Control under Revised Code of Washington § 62A.8-106. A person has control of a certificated

security, uncertificated security, or security entitlement as provided in Revised Code of Washington §

62A.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.

security entitlements or commodity contracts carried in a securities account or commodity account has

control over the securities account or commodity account.

12-9-9

Control of letter-of-credit right

A secured party has control of a letter-of-credit right to the extent of any right to payment or performance

by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of

proceeds of the letter of credit under Revised Code of Washington § 62A.5-114(3) or otherwise applicable

law or practice.

12-9-10

Sufficiency of description in security agreement

(a) Sufficiency of description. Except as otherwise provided in subsections (c), (d), and (e) of this 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 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 section, a type of collateral defined in

the Uniform Commercial Code

June 2011 Chapter 12-9

(4) Quantity;

(5) Computational or allocational formula or procedure; or

(6) Except as otherwise provided in subsection (c) of this section, any other method, if the identity

of the collateral is objectively determinable.

debtor’s personal property” or using words of similar import does not reasonably identify the collateral.

However, as provided in section 12-9-123, such a description is sufficient in a financing statement.

(d) Investment property. Except as otherwise provided in subsection (e) of this 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 the Uniform

Commercial Code 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.

12-9-11

Scope

(a) General scope of Article. Except as otherwise provided in subsections (c) and (d) of this 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)Any other commercial activities, including sales of goods, leases of goods, other transactions in

goods, negotiable instruments, bank deposits and collections, funds transfers, letters of credit,

documents of sale, and investment securities, to the extent those commercial activities are

implicated in clauses (1), (2), (3), and (4) of this subsection (a).

(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.

(1) A statute, regulation, or treaty of the United States preempts this Article;

(2) Another statute of the Colville Tribe expressly governs the creation, perfection, priority, or

enforcement of a security interest created by the Colville Tribe or a governmental unit of the

Colville Tribe;

(3) A statute of a state, a foreign country, or a governmental unit of a r state or a foreign country,

other than a statute generally applicable to security interests, expressly governs creation,

June 2011 Chapter 12-9

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 applicable law.

(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 section 12-9-73 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 sections 12-9-55 and 12-9-62 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 set-off, but:

(A) Section 12-9-80 applies with respect to the effectiveness of rights of recoupment or

set-off against deposit accounts; and

(B) Section 12-9-103 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 rents

thereunder, except to the extent that provision is made for:

(A) A fixture filing; and

(B) Security agreements covering personal and real property in section 12-9-153;

(12) An assignment of a claim arising in tort, other than a commercial tort claim, but sections 129-55 and 12-9-62 apply with respect to proceeds and priorities in proceeds; or

(13) An assignment of a deposit account in a consumer transaction of a deposit account on which

checks can be drawn, but sections 12-9-55 and 12-9-62 apply with respect to proceeds and

priorities in proceeds; or

(14) A transfer by the Colville Tribe or a governmental unit of this Tribe.

(15) A transaction that is governed by Colville Chapter 9-1.

(16) A Colville Tribal lien, including lien of Colville Tribal Credit Corporation.

June 2011 Chapter 12-9

12-9-12

Security interests arising under Article 2 or 2A

A security interest arising underapplicable law and directly derived from Article 2 of the Uniform

Commercial Code is subject to this Article. However, until the debtor obtains possession of the goods:

(1) The security interest is enforceable, even if section 12-9-22(b)(3) 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

the Uniform Commercial Code, as enacted by the Colville Tribes, or to the extent the Colville

Tribes has not enacted these Articles, then as these Articles have been enacted by the State of

Washington; and

(4) The security interest has priority over a conflicting security interest created by the debtor.

PART 2

EFFECTIVENESS OF A SECURITY AGREEMENT; ATTACHMENT

12-9-20

General effectiveness of security agreement

(a) General effectiveness. Except as otherwise provided in the Uniform Commercial Code, 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 (1) any other Colville Tribal,

Washington state, or federal statute or regulation that regulates the rates, charges, agreements, and practices

for loans, credit sales, or other extensions of credit and (2) any consumer-protection statute or regulation.

regulation described in subsection (b) of this section, the rule of law, statute, or regulation controls. Failure

to comply with a statute or regulation described in subsection (b) of this 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 section; or

(2) Extend the application of the rule of law, statute, or regulation to a transaction not otherwise

subject to it.

12-9-21

Title to collateral immaterial

Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment

intangibles, or promissory notes, the provisions of this Article with regard to rights and obligations apply

whether title to collateral is in the secured party or the debtor.

12-9-22

Attachment and enforceability of security interest; proceeds; supporting obligations; formal

requisites

(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 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:

June 2011 Chapter 12-9

(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 section 12-9-53 pursuant to the debtor’s security agreement;

has been delivered to the secured party under Revised Code of Washington § 62A.8-301,

or the comparable statute of another jurisdiction, pursuant to the debtor’s security

agreement; or

(D) The collateral is deposit accounts, electronic chattel paper, investment property, or

letter-of-credit rights, and the secured party has control under section 12-9-6, 12-9-7, 129-8, or 12-9-9 pursuant to the debtor’s security agreement.

interest of a collecting bank, on the security interest of a letter-of-credit issuer or nominated person, section

12-9-12 on a security interest arising under Article 2 or 2A of the Uniform Commercial Code, and section

12-9-25 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;

(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 subsection (b)(3) of this section with respect to existing or afteracquired 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 section 12-9-55 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 n the commodity contracts carried in the

commodity account.

12-9-23

After-acquired property; future advances

(a) After-acquired collateral. Except as otherwise provided in subsection (b) of this section, a security

agreement may create or provide for a security interest in after-acquired collateral.

June 2011 Chapter 12-9

(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.

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.

12-9-24

Use or disposition of collateral permissible

(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;

(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 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.

12-9-25

Security interest arising in purchase or delivery of financial asset

(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 section secures the person’s obligation to pay for the financial asset.

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

endorsement 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.

June 2011 Chapter 12-9

(d) Security interest secures obligation to pay for delivery. The security interest described in subsection (c)

of this section secures the obligation to make payment for the delivery.

12-9-26

Rights and duties of secured party having possession or control of collateral

(a) Duty of care when secured party in possession. Except as otherwise provided in subsection (d) of this

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 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

debtor.

subsection (d) of this section, a secured party having possession of collateral or control of collateral under

sections 12-9-6, 12-9-7, 12-9-8, or 12-9-9:

(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 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 section do not apply.

12-9-27

Additional duties of secured party having control of collateral

June 2011 Chapter 12-9

(a) Applicability of section. This section applies to cases in which there is no outstanding secured

obligation and the secured party is not committed to make advances, incur obligations, or otherwise give

value.

(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 section 12-9-6(a)(2) 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 section 12-9-6(a)(3) 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 section

12-9-7 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

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 Revised Code of Washington §

62A.8-8(d)(24)(b) or Uniform Commercial Code § 12-9-8(b) 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; and

(5) A secured party having control of a letter-of-credit right under section 12-9-9 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.

12-9-28

Duties of secured party if account debtor has been notified of assignment

(a) Applicability of section. Except as otherwise provided in subsection (c) of this section, this 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 section 12-9-105(a) an authenticated

record that releases the account debtor from any further obligation to the secured party.

June 2011 Chapter 12-9

chattel paper, or payment intangible.

12-9-29

Request for accounting; request regarding list of collateral or statement of account

(a)Definitions in this section:

(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, and also containing

what the debtor believes to be the aggregate amount of unpaid indebtedness as of a specified date.

(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 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 fourteen 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.

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 fourteen 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 fourteen 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 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 fourteen 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.

June 2011 Chapter 12-9

(f) Charges for responses. A debtor is entitled without charge to one response to a request under this section

during any six-month period. The secured party may require payment of a charge not exceeding twentyfive dollars for each additional response.

PART 3

PERFECTION AND PRIORITY

12-9-40

Law governing perfection and priority of security interests

Except as otherwise provided in sections 12-9-42 through 12-9-45, the following rules determine the law

governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in

collateral:

(1) Except as otherwise provided in this section, while a debtor is located in a jurisdiction, the

local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the

priority of a security interest in collateral.

(2) While collateral is located in a jurisdiction, the local law of that jurisdiction governs

perfection, the effect of perfection or nonperfection, and the priority of a possessory security

interest in that collateral.

(3) Except as otherwise provided in subsection (4) of this section, while 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; and

interest in the collateral.

(4) The local law of the jurisdiction in which the wellhead or minehead is located governs

perfection, the effect of perfection or nonperfection, and the priority of a security interest in asextracted collateral.

12-9-41

Law governing perfection and priority of agricultural liens

While farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the

effect of perfection or nonperfection, and the priority of an agricultural lien on the farm products.

12-9-42

Law governing perfection and priority of security interests in goods covered by a certificate of title

(a) Applicability of section. This section applies to goods covered by a certificate of title, even if there is no

other relationship between the jurisdictions 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.

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.

12-9-43

Law governing perfection and priority of security interests in deposit accounts

(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.

June 2011 Chapter 12-9

(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 the debtor governing the deposit account expressly

provides that a particular jurisdiction is the bank’s jurisdiction for purposes of this part, this

Article, or the Uniform Commercial Code, 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 paragraph (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 paragraphs (1) through (3) of this subsection do not apply, 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.

(5) If paragraphs (1)through (4) of this subsection do not apply, the bank’s jurisdiction is the

jurisdiction in which the chief executive office of the bank is located.

12-9-44

Law governing perfection and priority of security interests in investment property

(a) Governing law: General rules. Except as otherwise provided in subsection (c) of this 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 Revised Code of Washington § 62A.8110(4) 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 Revised Code of

Washington § 62A.8-110(5) governs perfection, the effect of perfection or nonperfection, and the

priority of a security interest in a security entitlement or securities account.

(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 the Uniform Commercial

Code, 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 paragraph (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.

June 2011 Chapter 12-9

(4) If paragraphs (1) through (3) of this subsection do not apply, 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.

(5) If paragraphs (1) through (4) of this subsection do not apply, the commodity intermediary’s

jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is

located.

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.

12-9-45

Law governing perfection and priority of security interests in letter-of-credit rights

(a) Governing law: Issuer’s or nominated person’s jurisdiction. Subject to subsection (c) of this 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 Revised Code of Washington §

62A.5-116.

under section 12-9-48(d).

12-9-46

Location of debtor

(a) “Place of business.” In this section, “place of business” means a place where a debtor conducts its

affairs.

(b) Debtor’s location: General rules. Except as otherwise provided in this 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.

(3) A debtor that is an organization and has more than one place of business is located at its chief

executive office.

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 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 section.

(e) Location of registered organization organized under state or tribal law.

June 2011 Chapter 12-9

(1) A registered organization that is organized under the law of a state is located in that state.

(2) A registered organization that is organized under the law of a Native American tribe is located

in the state in which the tribe is located.

(f) Location of registered organization organized under federal law; bank branches and agencies. Except as

otherwise provided in subsection (i) of this 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; or

(3) In the District of Columbia, if neither (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 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) Section applies only to this part. This section applies only for purposes of this part.

(l) Special rules for Tribe and entities located on Tribal lands.

(1) The Colville Tribe of Indians is located in the State of Washington.

(2) An individual who resides on Tribal land is located in the state in which such land is situated.

(3) A place of business or chief executive office located on Tribal land is located in the state in

which such land is situated.

12-9-47

Location of Collateral

For the purposes of this part, collateral on Tribal land is located in the state and county in which such

collateral would be located if the Tribal land were not sovereign territory.

12-9-48

When security interest or agricultural lien is perfected; continuity of perfection

(a) Perfection of security interest. Except as otherwise provided in this section and section 12-9-49, a

security interest is perfected if it has attached and all of the applicable requirements for perfection in

sections 12-9-50 through 12-9-56 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 section 12-9-50 have been satisfied. An agricultural lien is

June 2011 Chapter 12-9

perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien

becomes effective.

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.

12-9-49

Security interest perfected upon attachment

(a) The following security interests are perfected when they attach:

(1) A purchase-money security interest in consumer goods, except as otherwise provided in

section 12-9-51(b) with respect to consumer goods that are subject to a statute or treaty described

in section 12-9-51(a);

(2) An assignment of accounts or payment intangibles which does not by itself or in conjunction

with other assignments to the same assignee transfer more than fifty thousand dollars, or ten

percent of the total amount of the assignor’s outstanding accounts and 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 Revised Code of Washington § 62A.2-401, 62A.2-505,

62A.2-711(3), or 62A.2A-508(5), or under the comparable statute of another jurisdiction, until the

debtor obtains possession of the collateral;

(7) A security interest of a collecting bank arising under Revised Code of Washington § 62A.4210 or under the comparable statute of another jurisdiction;

(8) A security interest of an issuer or nominated person arising under Revised Code of Washington

§ 62A.5-118 or under the comparable statute of another jurisdiction;

(9) A security interest arising in the delivery of a financial asset under section 12-9-25(c);

(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 there under; and

(13) A security interest created by an assignment of a beneficial interest in a decedent’s estate.

June 2011 Chapter 12-9

12-9-50

When filing required to perfect security interest or agricultural lien; security interests and

agricultural liens to which filing provisions do not apply

(a) General rule: Perfection by filing. Except as otherwise provided in subsections (b) and (d) of this

section and section 12-9-52(b), 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 section 12-9-48(d), (e), (f), or (g);

(2) That is perfected under section 12-9-49 when it attaches;

(3) In property subject to a statute, regulation, or treaty described in section 12-9-51(a);

(4) In goods in possession of a bailee which is perfected under section 12-9-52(d)(1) or(2);

(5) In certificated securities, documents, goods, or instruments which is perfected without filing or

possession under section 12-9-52(e), (f), or (g);

(6) In collateral in the secured party’s possession under section 12-9-53;

(7) In a certificated security which is perfected by delivery of the security certificate to the secured

party under section 12-9-53;

(8) In deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights

which is perfected by control under section 12-9-54;

(9) In proceeds which is perfected under section 12-9-55; or

(10) That is perfected under section 12-9-56.

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.

(d) Further exception: Filing not necessary for handler’s lien. The filing of a financing statement is not

necessary to perfect the agricultural lien of a handler on orchard crops as provided in Revised Code of

Washington § 60.11.020(3).

12-9-51

Perfection of security interests in property subject to certain statutes, regulations, and treaties

(a) Security interest subject to other law. Except as otherwise provided in subsection (d) of this 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 section 129-50(a);

(2) Revised Code of Washington § 46.12.095 or 88.02.070, or chapter 65.12 of Revised Code of

Washington; or

(3) A certificate-of-title statute of another jurisdiction which provides for a security interest 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 property.

(b) Compliance with other law. Compliance with the requirements of a statute, regulation, or treaty

described in subsection (a) of this 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 section, section 12-9-53, and section 12-9-56(d) and (e) for goods covered by a

certificate of title, a security interest in property subject to a statute, regulation, or treaty described in

June 2011 Chapter 12-9

subsection (a) of this 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.

section 12-9-56(d) and (e), 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 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 Revised Code of

Washington § 46.12.095 or 88.02.070, or chapter 65.12 of Revised Code of Washington is inventory held

for sale or lease by a person or leased by that person as lessor and that person is in the business of selling

goods of that kind, this section does not apply to a security interest in that collateral created by that person.

12-9-52

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

(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 section 12-9-55(c) and (d)

for proceeds:

(1) A security interest in a deposit account may be perfected only by control under section 12-954;

(2) And except as otherwise provided in section 12-9-48(d), a security interest in a letter-of-credit

right may be perfected only by control under section 12-9-54; and

(3) A security interest in money may be perfected only by the secured party’s taking possession

under section 12-9-53.

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 for a period of twenty 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 twenty days without filing if the secured party makes

available to the debtor the goods or documents representing the goods for the purpose of:

June 2011 Chapter 12-9

(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 twenty 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 twenty-day period specified in subsection (e), (f), or (g) of

this section expires, perfection depends upon compliance with this Chapter.

12-9-53

When possession by or delivery to secured party perfects security interest without filing

(a) Perfection by possession or delivery. Except as otherwise provided in subsection (b) of this section, a

secured party may perfect a security interest in 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 Revised Code of Washington

§ 62A.8-301 or under the comparable statute of another jurisdiction.

(b) Goods covered by certificate of title. With respect to goods covered by a certificate of title issued by the

State of Washington, a secured party may perfect a security interest in the goods by taking possession of

the goods only in the circumstances described in section 12-9-56(d).

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 Revised

Code of Washington § 62A.8-301, or under the comparable statute of another jurisdiction, 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 section or Revised Code of

Washington § 62A.8-301(1), or under the comparable statute of another jurisdiction, 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.

June 2011 Chapter 12-9

(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); no duties or confirmation. A secured party does not relinquish

possession, even if a delivery under subsection (h) of this section violates the rights of a debtor. A person to

which collateral is delivered under subsection (h) of this 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.

12-9-54

Perfection by control

(a) Perfection by control. A security interest in investment property, deposit accounts, letter-of-credit rights,

or electronic chattel paper may be perfected by control of the collateral under section 12-9-6, 12-9-7, 12-98, or 12-9-9.

(b) Specified collateral: Time of perfection by control; continuation of perfection. A security interest in

deposit accounts, electronic chattel paper, or letter-of-credit rights is perfected by control under section 129-6, 12-9-7, or 12-9-9 when the secured party obtains control and remains perfected by control only while

the secured party retains control.

investment property is perfected by control under section 12-9-8 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

holder.

12-9-55

Secured party’s rights on disposition of collateral and in proceeds.

(a) Disposition of collateral: Continuation of security interest or agricultural lien; Proceeds. Except as

otherwise provided in this Article and in Revised Code of Washington § 62A.2-403(2) or under the

comparable statute of another jurisdiction:

(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 section 12-9-76; and

June 2011 Chapter 12-9

(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.

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

(2) The proceeds are identifiable cash proceeds; or

(3) The security interest in the proceeds is perfected other than under subsection (c) of this section

when the security interest attaches to the proceeds or within twenty 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 subsection (d)(1) of

this section becomes unperfected at the later of:

(1) When the effectiveness of the filed financing statement lapses under section 12-9-134 or is

terminated under section 12-9-132; or

(2) The twenty-first day after the security interest attaches to the proceeds.

12-9-56

Continued perfection of security interest following change in governing law

(a) General rule: Effect on perfection of change in governing law. A security interest perfected pursuant to

the law of the jurisdiction designated in section 12-9-40(1) or 12-9-43(c) 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 section becomes perfected under the law of the other jurisdiction before the earliest

time or event described in subsection (a) of this section, 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.

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

June 2011 Chapter 12-9

(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 the State of Washington. Except as otherwise provided in

subsection (e) of this 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 the State of Washington 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) security interest becomes unperfected against purchasers. A security interest

described in subsection (d) of this 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 section 12-9-51(b) or 12-9-53 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 the State of

Washington; 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 section security interest perfected or unperfected under law of new jurisdiction. If

a security interest described in subsection (f) of this section becomes perfected under the law of the other

jurisdiction before the earlier of the time or the end of the period described in subsection (f) of this section,

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.

12-9-57

Interests that take priority over or take free of security interest or agricultural lien

(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 section 12-9-62; and

(2) Except as otherwise provided in subsection (e) of this 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) One of the conditions specified in section 12-9-22(b)(3) is met and a financing

statement covering the collateral is filed.

(b) Buyers that receive delivery. Except as otherwise provided in subsection (e) of this section, a buyer,

other than a secured party, of tangible chattel paper, documents, goods, instruments, or a security certificate

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.

June 2011 Chapter 12-9

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 accounts, electronic chattel paper, general intangibles, or investment property other than 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 sections 12-9-60 and 12-9-61, if a

person files a financing statement with respect to a purchase-money security interest before or within

twenty days after the debtor receives delivery of the collateral, the security interest takes priority over the

rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the

time of filing.

(f) Tribal cultural gift exchange. A recipient of an item from a Colville Tribal member in a Tribal cultural

event commonly known as a “give away” shall take such item free of any applicable security interest;

provided that upon notice of this event, the last prior secured obligor shall promptly offer to the secured

party comparable security of equivalent value and otherwise provide accommodation for any change in

value or priority from the prior security interest.

12-9-58

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

(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.

12-9-59

Rights and title of consignee with respect to creditors and purchasers

(a) Consignee has consignor’s rights. Except as otherwise provided in subsection (b) of this 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.

12-9-60

Buyer of goods

(a) Buyer in ordinary course of business. Except as otherwise provided in subsection (e) of this 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 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) In the case of goods having a value of $3,000.00 or more, before the filing of a financing

statement covering the goods.

June 2011 Chapter 12-9

security interest over a buyer of goods under subsection (b) of this section, the period of effectiveness of a

filing made in the jurisdiction in which the seller is located is governed by section 12-9-56(a) and (b).

(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 section do not affect a security

interest in goods in the possession of the secured party under section 12-9-53.

12-9-61

Licensee of general intangible and lessee of goods in ordinary course of business

(a) “Licensee in ordinary course of business.” In this section, “licensee in ordinary course of business”

means a person that becomes a licensee of a general intangible in good faith, without knowledge that the

license violates the rights of another person in the general intangible, and in the ordinary course from a

person in the business of licensing general intangibles of that kind. A person becomes a licensee in the

ordinary course if the license to the person comports with the usual or customary practices in the kind of

business in which the licensor is engaged or with the licensor’s own usual or customary practices.

(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.

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.

12-9-62

Priorities among conflicting security interests in and agricultural liens on same collateral

(a) General priority rules. Except as otherwise provided in this section, priority among conflicting security

interests and agricultural liens in the same collateral is determined according to the following rules:

(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.

(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 of subsection (a)(1) of this

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.

(f) of this section, a security interest in collateral which qualifies for priority over a conflicting security

interest under section 12-9-67, 12-9-68, 12-9-69, 12-9-70, or 12-9-71 also has priority over a conflicting

security interest in:

(1) Any supporting obligation for the collateral; and

June 2011 Chapter 12-9

(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

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 section and except as

otherwise provided in subsection (f) of this 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. Subsection (d) of this section applies only if the proceeds of the collateral

are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter-ofcredit rights.

(f) Limitations on subsections (a) through (e) of this section. Subsections (a) through (e) of this section are

subject to:

(1) Subsection (g) of this section and the other provisions of this part;

(2) Revised Code of Washington § 62A.4-210 or the comparable statute of another jurisdiction,

with respect to a security interest of a collecting bank;

(3) Revised Code of Washington § 62A.5-118 or the comparable statute of another jurisdiction,

with respect to a security interest of an issuer or nominated person; and

(4) Section 12-9-12 with respect to a security interest arising under Article 2 or 2A of Chapter 62A

of the Revised Code of Washington or under the comparable statute of another jurisdiction.

(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. Conflicts as to priority between and among security interests in crops and

agricultural liens subject to chapter 60.11 of the Revised Code of Washington are governed by the

provisions of that chapter.

12-9-63

Future advances

(a) When priority based on time of advance. Except as otherwise provided in subsection (c) of this section,

for purposes of determining the priority of a perfected security interest under section 12-9-62(a)(1),

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 section 12-9-49 when it attaches; or

(B) Temporarily under section 12-9-52(e), (f), or (g); 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 section 12-9-49 or 12-9-52(e), (f), or (g).

(b) Lien creditor. Except as otherwise provided in subsection (c) of this section, a security interest is

subordinate to the rights of a person that becomes a lien creditor to the extent that the security interest

secures an advance made more than forty-five days after the person becomes a lien creditor unless the

advance is made:

June 2011 Chapter 12-9

(1) Without knowledge of the lien; or

(2) Pursuant to a commitment entered into without knowledge of the lien.

secured party that is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a

consignor.

(d) Buyer of goods. Except as otherwise provided in subsection (e) of this 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.

(e) Advances made pursuant to commitment: Priority of buyer of goods. Subsection (d) of this 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 forty-five day period.

(f) Lessee of goods. Except as otherwise provided in subsection (g) of this 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.

(g) Advances made pursuant to commitment: Priority of lessee of goods. Subsection (f) of this 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 forty-five day period.

12-9-64

Priority of purchase-money security interests

(a) General rule: Purchase-money priority. Except as otherwise provided in subsection (g) of this 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 section 12-9-67, a

perfected security interest in its identifiable proceeds also has priority, if the purchase-money security

interest is perfected when the debtor receives possession of the collateral or within twenty days thereafter.

(b) Inventory purchase-money priority. Subject to subsection (c) of this section and except as otherwise

provided in subsection (g) of this 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 section 12-9-70, and, except as otherwise provided in section 12-9-67, 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.

June 2011 Chapter 12-9

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 section 12-9-52(f), before the beginning of the twenty-day period thereunder.

(d) Livestock purchase-money priority. Subject to subsection (e) of this section and except as otherwise

provided in subsection (g) of this 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 section 12-9-67, 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. Subsections (d)(2) through (4) of this

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 section 12-9-52(f), before the beginning of the twenty-day period thereunder.

(f) Software purchase-money priority. Except as otherwise provided in subsection (g) of this 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 section 12-9-67, a perfected security interest in its

identifiable proceeds also has priority, to the extent that the purchase-money security interest in the goods

in which the software was acquired for use has priority in the goods and proceeds of the goods under this

section.

(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 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, section 12-9-62(a) applies to the qualifying security interests.

12-9-65

Priority of security interests in transferred collateral

(a) Subordination of security interest in transferred collateral. Except as otherwise provided in subsection

(b) of this 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;

June 2011 Chapter 12-9

(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. Subsection (a) of this section subordinates a security interest only if the

security interest:

(1) Otherwise would have priority solely under section 12-9-62(a) or 12-9-64; or

(2) Arose solely under Revised Code of Washington § 62A.2-711(3) or 62A.2A-508(5) or the

comparable statute of another jurisdiction.

12-9-66

Priority of security interests created by new debtor

(a) Subordination of security interest created by new debtor. Subject to subsection (b) of this section, a

security interest created by a new debtor which is perfected by a filed financing statement that is effective

solely under section 12-9-127 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 section 12-9-127.

(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 that are effective solely under section 12-9-127. 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.

12-9-67

Priority of security interests in deposit account

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 section

12-9-6 has priority over a conflicting security interest held by a secured party that does not have

control.

(2) Except as otherwise provided in subsections (3) and (4) of this section, security interests

perfected by control under section 12-9-54 rank according to priority in time of obtaining control.

(3) Except as otherwise provided in subsection (4) of this 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.

(4) A security interest perfected by control under section 12-9-6 (a)(3) has priority over a security

interest held by the bank with which the deposit account is maintained.

12-9-68

Priority of security interests in investment property

(a) The following rules govern priority among conflicting security interests in the same investment

property:

(1) A security interest held by a secured party having control of investment property under section

12-9-8 has priority over a security interest held by a secured party that does not have control of the

investment property.

(2) Except as otherwise provided in subsections (3) and (4) of this section, conflicting security

interests held by secured parties each of which has control under section 12-9-8 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:

June 2011 Chapter 12-9

(i) If the secured party obtained control under Revised Code of Washington §

62A.8-106(4)(a) or the comparable statute of another jurisdiction, the secured

party’s becoming the person for which the securities account is maintained;

(ii) If the secured party obtained control under Revised Code of Washington §

62A.8-106(4)(b) or the comparable statute of another jurisdiction, 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 Revised

Code of Washington § 62A.8-106(4)(c) or the comparable statute of another

jurisdiction, the time on which priority would be based under this paragraph if

the other person were the secured party; or

satisfaction of the requirement for control specified in section 12-9-8(b)(2) 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 section 12-9-53(a) and not by control under section 12-9-54 has priority over a

conflicting security interest perfected by a method other than control.

(6) Conflicting security interests created by a broker, securities intermediary, or commodity

intermediary which are perfected without control under section 12-9-8 rank equally.

(7) In all other cases, priority among conflicting security interests in investment property is

governed by sections 12-9-62 and 12-9-63.

12-9-69

Priority of security interests in letter-of-credit right

(a) The following rules govern priority among conflicting security interests in the same letter-of-credit

right:

(1) A security interest held by a secured party having control of the letter-of-credit right under

section 12-9-9 has priority to the extent of its control over a conflicting security interest held by a

secured party that does not have control.

(2) Security interests perfected by control under section 12-9-54 rank according to priority in time

of obtaining control.

12-9-70

Priority of purchaser of chattel paper or instrument

(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 section

12-9-7; and

(2) The chattel paper does not indicate that it has been assigned to an identified assignee other than

the purchaser.

June 2011 Chapter 12-9

(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 section 12-9-7 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.

purchaser having priority in chattel paper under subsection (a) or (b) of this section also has priority in

proceeds of the chattel paper to the extent that:

(1) Section 12-9-62 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 section 12-9-71(a), 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 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 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.

12-9-71

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

(a) Rights under Articles 3, 7, and 8 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 Chapter 62A of the

Revised Code of Washington or the comparable statute of another jurisdiction.

(b) Protection under Article 8. 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 Chapter 62A of the

Revised Code of Washington or the comparable statute of another jurisdiction.

or purchasers, or persons described in subsections (a) and (b) of this section.

12-9-72

Transfer of money; transfer of funds from deposit account

(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.

12-9-73

Priority of certain liens arising by operation of law

(a) “Possessory lien.” In this section, “possessory lien” means an interest, other than a security interest or

an agricultural lien:

(1) Which secures payment or performance of an obligation for services or materials furnished

with respect to goods by a person in the ordinary course of the person’s business;

(2) Which is created by statute or rule of law in favor of the person; and

June 2011 Chapter 12-9

(3) Whose effectiveness depends on the person’s possession of the goods.

(b) Priority of possessory lien. A possessory lien on goods has priority over a security interest in the goods

only if the lien is created by a statute that expressly so provides.

pursuant to chapter 60.13 of the Revised Code of Washington or a depositor’s lien created pursuant to

chapter 22.09 of the Revised Code of Washington takes priority over any perfected or unperfected security

interest.

12-9-74

Priority of security interests in fixtures and crops

(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.

through (h) of this 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 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

twenty 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

(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.

June 2011 Chapter 12-9

(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)(2) priority. The priority of the security interest under subsection (f)(2) of

this 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 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 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.

(j) Subsection (i) prevails. Subsection (i) of this section prevails over inconsistent provisions of any other

statute except Revised Code of Washington § 60.11.050.

12-9-75

Accessions

(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.

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-oftitle statute under section 12-9-51(b).

(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 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.

12-9-76

Commingled Goods

(a) “Commingled goods.” In this section, “commingled goods” means goods that are physically united with

other goods in such a manner that their identity is lost in a product or mass.

(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.

June 2011 Chapter 12-9

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 section is perfected.

(e) Priority of security interest. Except as otherwise provided in subsection (f) of this 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 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 section, the following rules determine priority:

(1) A security interest that is perfected under subsection (d) of this section has priority over a

security interest that is unperfected at the time the collateral becomes commingled goods.

(2) If more than one security interest is perfected under subsection (d) of this section, the security

interests rank equally in proportion to the value of the collateral at the time it became commingled

goods.

12-9-77

Priority of security interests in goods covered by certificate of title

(a) If, while a security interest in goods is perfected by any method under the law of another jurisdiction,

the State of Washington 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 section 12-9-51(b), after issuance of the certificate and without the

conflicting secured party’s knowledge of the security interest.

12-9-78

Priority of security interest or agricultural lien perfected by filed financing statement providing

certain incorrect information

(a) If a security interest or agricultural lien is perfected by a filed financing statement providing information

described in Revised Code of Washington § 62A.9-516(b)(5) 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 chattel paper, documents, goods, instruments, or a

security certificate, receives delivery of the collateral.

12-9-79

Priority subject to subordination

This Article does not preclude subordination by agreement by a person entitled to priority.

12-9-80

Effectiveness of right of recoupment or set-off against deposit account

(a) Exercise of recoupment or set-off. Except as otherwise provided in subsection (c) of this 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.

June 2011 Chapter 12-9

(b) Recoupment or set-off not affected by security interest. Except as otherwise provided in subsection (c)

of this 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.

against a secured party that holds a security interest in the deposit account which is perfected by control

under section 12-9-6(a)(3), if the set-off is based on a claim against the debtor.

12-9-81

Bank’s rights and duties with respect to deposit account

(a) Except as otherwise provided in section 12-9-80(c), 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.

12-9-82

Bank’s right to refuse to enter into or disclose existence of control agreement

This Article does not require a bank to enter into an agreement of the kind described in section 12-96(a)(2), 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.

PART 4

RIGHTS OF THIRD PARTIES

12-9-100

Alienability of debtor’s rights

(a) Other law governs alienability; exceptions. Except as otherwise provided in subsection (b) of this

section and sections 12-9-105, 12-9-106, 12-9-107, and 12-9-108, 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.

12-9-101

Secured party not obligated on contract of debtor or in tort

The existence of a security interest, agricultural lien, or authority given to a debtor to dispose of or use

collateral, without more, does not subject a secured party to liability in contract or tort for the debtor’s acts

or omissions.

12-9-102

Agreement not to assert defenses against assignee

(a) “Value.” In this section, “value” has the meaning provided in Revised Code of Washington § 62A.3303(a).

(b) Agreement not to assert claim or defense. Except as otherwise provided in this section, an agreement

between an account debtor and an assignor not to assert against an assignee any claim or defense that the

account debtor may have against the assignor is enforceable by an assignee that takes an assignment:

(1) For value;

(2) In good faith;

(3) Without notice of a claim of a property or possessory right to the property assigned; and

June 2011 Chapter 12-9

(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 Revised Code of Washington § 62A.3305(a) or comparable statute of another jurisdiction.

defenses of a type that may be asserted against a holder in due course of a negotiable instrument under

Revised Code of Washington § 62A.3-305(b) or comparable statute of another jurisdiction.

(d) Omission of required statement in consumer transaction. In a consumer transaction, if a record

evidences the account debtor’s obligation, and applicable 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 section is subject to applicable 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 section, this section does

not displace applicable 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.

12-9-103

Rights acquired by assignee; claims and defenses against assignee

(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

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 section, and

except as otherwise provided in subsection (d) of this section, the claim of an account debtor against an

assignor may be asserted against an assignee under subsection (a) of this section only to reduce the amount

the account debtor owes.

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, applicable 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 section does not apply to an assignment of a

health-care-insurance receivable.

June 2011 Chapter 12-9

12-9-104

Modification of assigned contract

(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 section.

(b) Applicability of subsection (a) of this section. Subsection (a) of this 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 section 12-9-105(a).

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 section does not apply to an assignment of a

health-care-insurance receivable.

12-9-105

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

(a) Discharge of account debtor; effect of notification. Subject to subsections (b) through (j) of this 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 section, notification is ineffective under

subsection (a) of this 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

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 section.

(d) Term restricting assignment generally ineffective. Except as otherwise provided in subsection (e) of this

section, section 12-9-106, and Revised Code of Washington § 62A.2A-303 or the comparable statute of

another jurisdiction, and subject to subsections (h) and (j) of this section, a term in an agreement between

an account debtor and an assignor or in a promissory note is ineffective to the extent that it:

June 2011 Chapter 12-9

(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 or transfer or the creation, attachment, perfection, or enforcement

of the security interest may give rise to a default, breach, right of recoupment, claim, defense,

termination, right of termination, or remedy under the account, chattel paper, payment intangible,

or promissory note.

(e) Inapplicability of subsection (d) to certain sales. Subsection (d) of this section does not apply to the sale

of a payment intangible or promissory note.

(f) Subsection (b)(3) not waivable. Subject to subsection (h) of this section, an account debtor may not

waive or vary its option under subsection (b)(3) of this section.

(g) Rule for individual under other law. This 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.

(h) Inapplicability to health-care-insurance receivable. This section does not apply to an assignment of a

health-care-insurance receivable.

(i) Inapplicability of subsection (d) of this section to certain transactions.

(1) Subsection (d) of this section does not apply to the assignment or transfer of or creation of a

security interest in:

(A) A claim or right to receive compensation for injuries or sickness as described in 26

U.S.C. § 104(a)(1) or (2); or

(B) A claim or right to receive benefits under a special needs trust as described in 42

U.S.C. § 1396p(d)(4).

(2) This subsection will not affect a transfer of structured settlement payment rights under chapter

19.205 of the Revised Code of Washington.

12-9-106

Restrictions on creation or enforcement of security interest in leasehold interest or in lessor’s

residual interest

(a) Term restricting assignment generally ineffective. Except as otherwise provided in subsection (b) of this

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 or transfer

of, or the 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 or transfer or the creation, attachment, perfection, or enforcement

of the security interest may give rise to a default, breach, right of recoupment, claim, defense,

termination, right of termination, or remedy under the lease.

(b) Effectiveness of certain terms. Except as otherwise provided in Revised Code of Washington § 62A.2A303(7) or the comparable statute of another jurisdiction, a term described in subsection (a)(2) of this 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.

June 2011 Chapter 12-9

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

Revised Code of Washington § 62A.2A-303(4) or the comparable statute of another jurisdiction unless, and

then only to the extent that, enforcement actually results in a delegation of material performance of the

lessor.

12-9-107

Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain

general intangibles ineffective

(a) Term restricting assignment generally ineffective. Except as otherwise provided in subsection (b) of this

section, a term in a promissory note or in an agreement between an account debtor and a debtor which

relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license, or

franchise, and which term prohibits, restricts, or requires the consent of the person obligated on the

promissory note or the account debtor to, the assignment or transfer of, or creation, attachment, or

perfection of a security interest in, the promissory note, health-care-insurance receivable, or general

intangible, is ineffective to the extent that the term:

(1) Would impair the creation, attachment, or perfection of a security interest; or

(2) Provides that the assignment or transfer or the 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 section to sales of certain rights to payment. Subsection (a) of this

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.

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, healthcare-insurance receivable, or general intangible, including a contract, permit,

license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law,

statute, or regulation is not a Colville Tribal law, statute, or regulation, and:

(1) Would impair the creation, attachment, or perfection of a security interest; or

(2) Provides that the assignment or transfer or the 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 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-careinsurance receivable or general intangible or a rule of law, statute, or regulation described in subsection (c)

of this section would be effective under law other than this Article but is ineffective under subsection (a) or

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;

June 2011 Chapter 12-9

(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-careinsurance 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.

(e) Inapplicability of subsections (a) and (c) of this section to certain payment intangibles.

(1) Subsections (a) and (c) of this section does not apply to the assignment or transfer of or

creation of a security interest in:

(A) A claim or right to receive compensation for injuries or sickness as described in 26

U.S.C. § 104(a)(1) or (2); or

(B) A claim or right to receive benefits under a special needs trust as described in 42

U.S.C. § 1396p(d)(4).

(2) This subsection will not affect a transfer of structured settlement payment rights under chapter

19.205 of the Revised Code of Washington.

12-9-108

Restrictions on assignment of letter-of-credit rights ineffective

(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 or the 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 section. To the extent that a term in a letter of

credit is ineffective under subsection (a) of this 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 t

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.