FINAL BILL REPORT

HB 1047

                                  C 251 L 89

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

SYNOPSIS AS ENACTED

BACKGROUND:

The 1972 version of the Uniform Commercial Code (UCC), was adopted by the state of Washington in 1982. Generally, the UCC applies to any transaction which is intended to create a security interest in personal property or fixtures including goods, documents, instruments, general intangibles, chattel paper or accounts.

The UCC 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.

To amend a filed financing statement under the UCC, one must file a writing signed by both the debtor and the secured party, regardless of the nature of the amendment.

SUMMARY:

Lien priority rights of security interests in crops are made subject to Washington law on crop liens instead of being subject to the Uniform Commercial Code.  This change gives the highest lien priority to persons who furnish work or labor upon the land. Next priority is given to a later filed lien or security interest if the obligations secured by an earlier filed security interest or lien were not incurred to produce the crops.  A landlord's lien has priority over an earlier filed security interest.  Aside from these three situations, the rule of priority is that the first party to file has priority.

An exception is made to the general rule that a debtor must sign any amendment to a filed financing agreement.  The debtor's signature is unnecessary if the only change is the secured party's name or address.

VOTES ON FINAL PASSAGE:

      House 89   0

      Senate    46     0 (Senate amended)

      House 97   0 (House concurred)

EFFECTIVE:July 23, 1989