SENATE BILL REPORT

EHB 1047

BYRepresentatives R. Meyers, Schmidt, Inslee and P. King 

Modifying secured transaction requirements as they apply to crops.

House Committe on Judiciary

Senate Committee on Agriculture

Senate Hearing Date(s):March 21, 1989; March 23, 1989

Majority Report:  Do pass as amended.

      Signed by Senators Barr, Chairman; Anderson, Vice Chairman; Bailey, Gaspard, Hansen, Madsen, Newhouse.

Senate Staff:Bob Lee (786-7404)

                  March 24, 1989

AS REPORTED BY COMMITTEE ON AGRICULTURE, MARCH 23, 1989

BACKGROUND:

The Uniform Commercial Code provides a formula for determining who has priority when two parties have conflicting security interests in crops.  The formula gives a perfected security interest priority over an already existing security interest if new value is given within three months of when the crops become growing crops, and if the earlier interest secures obligations due more than six months before the crops become growing crops.

The crop lien law was recodified in 1986 and provides a priority ranking for crop liens and security interests.  Generally, crop liens and security interests are ranked according to time of filing with the following exceptions:

      1.Liens for work or labor shall be preferred over all other liens and security interests.

      2.Liens and security interests which were not incurred to produce the crop are subordinate to later filed liens and security interests.

      3.Landlord liens take priority over other liens and security interests, except labor and those incurred to produce a new crop.

To amend a filed financing statement under the current code, one must file a writing signed by both the debtor and the secured party, regardless of the nature of the amendment.  In addition, where a debtor's name is changed so as to make a filed financing statement seriously misleading, the filing is not effective more than four months after the change unless a new financing statement is filed.  The signature of the debtor is required on any new financing statement.

SUMMARY:

Priority conflicts between security interests in crops are governed by Washington law on crop liens.

A financing statement may be amended by filing a writing signed by only the secured party.  If collateral is added, then the signature of the debtor is also required on the amendment.  Where there is a name change of the debtor which makes the financing statement seriously misleading, an amendment, rather than a new financing statement, is needed to record the name change.  An amendment may be obtained without the signature of the debtor.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

SUMMARY OF PROPOSED SENATE AMENDMENT:

The stiking amendment incorporates all provisions that were in the bill passed by the House except that a secured party can amend a financing statement only to the secured parties' own name or address without the signature of the debtor.

Senate Committee - Testified: Bob Wallace, Bar Association (pro); Bruce Lee, Puregro Company/Northwest AgriBusiness Coalition (pro)