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Part 4: Rights of Third Parties

Part 5: Filing

Sub-Part 1: Place of Filing, Contents and Effectiveness of Financing
Statement

Sub-Part 2: Duties and Operation of Filing Office

Part 6: Default

Sub-Part 1: Default and Enforcement of Security Interest

Sub-Part 2: Noncompliance With This Title

Part 7: Judicial Procedure

The MTC consolidates the definition provisions from throughout the Sections into Section 1201. Additionally any reference to code sections not included within the scope of this drafting project are incorporated into the text of the MTC.

The MTC also includes provisions specifically relating to security interests in agricultural liens. The MTC, following the lead of NCCUSL, includes agricultural liens within the scope of this code. Similarly the MTC allows for a security interest is a deposit account.

Provisional Variations

1-106 (1-105) Territorial Application of the Title. The MTC removes the choice of law provision.

1-110 (new) Special Limitation on Application of Code. Any barter transaction which has an aggregate value less then a determined amount is excluded from coverage by the MTC. The parties to the transaction may elect to apply the provisions of the MTC to the transaction is they so desire.

1-207 (1-208) Option to Accelerate at Will. The Code continues to provide for acceleration, but only if the debtor agrees to the acceleration when the secured party exercises the option or if the secured party obtains leave of court. During a repossession proceeding in tribal court where the secured party includes a plea for acceleration, if the court grants an order of repossession the court must also grant the secured parties plea for acceleration. Part 7 contains the provisions for obtaining leave of court.

9-103 (new) Sufficiency of Description. The code places specific requirements for the description of a deposit account that is the subject of a security agreement.

9-304 (new) Perfection and Priority of Security Interest in Deposit Accounts. Tribal law governs perfection or nonperfection of a security interest in a deposit account.

9-306 (9-103) Perfection and Priority of Security Interest in Minerals. The Code excludes tribal resources held in trust by the federal government from the scope of coverage.

9-315 (9-301) Interests That Take Priority Over and Take Free of Unperfected Security Interests or Agricultural Lien. A security interest does not disrupt the possession of a lessee of goods provided the lessee takes delivery without knowledge of the security interest and before it is perfected.

9-318 (new) Lessees of Goods in Ordinary Course of Business. A lessee in the ordinary course of business takes free of a security interest created as part of the lessors ordinary course of business.

9-321 (9-312) Priority of Production Money Security Interests and Agricultural Liens. The NCCUSL has determined that the old section is unworkable. The Production Money Security Interest is patterned after a Purchase Money Security Interest.

9-326 (new) Priority of Security Interest in Deposit Accounts. This section establishes a priority structure for security interests in deposit accounts. A secured party in control has priority followed by the depositary institution and then other perfected security interests.

9-327 (new) Priority of Security Interest in Letters of Credit. The MTC essentially treats letters of credit the same as deposit accounts. Control is the determinative factor.

9-330 (new) Transfer of Money, Transfer of Funds From Deposit Account. A person who receives monies covered by a security interest takes the money free of the interest unless the transfer was an attempt to defraud the secured party.

9-338 (new) Effectiveness of Right of Recoupment or Set-off Against Deposit Account. The code preserves the right o set-off but adds a requirement for leave of court before exercising the right.

9-403 (9-206) Agreement Not to Assert Defenses Against Assignee, Modification of Sales Warranties Where Security Agreement Exists. The code adopts a provision from consumer law that makes an agreement not to assert defenses ineffective if there is a substantial relation between the assignor and assignee.

9-501 (9-401) Place of Filing. Filing must be in the tribal filing system if the transaction is within tribal jurisdiction.

9-504 (9-502) Indication of Collateral. The code specifies that a financing statement indicating all personal property is subject to a security interest is an effective indication of collateral.

9-506 (9-402) Effect of Minor Errors. If a financing statement fails to give the correct name of a debtor, the code provides that the secured party may still have a perfected interest if a search conducted following rules adopted pursuant to this code for conducting a search would have revealed the debtor's identity.

9-508 (new) Authorization of Financing Statement, Liability for Unauthorized Filing. The debtor must authorize the filing of an initial financing statement. The code provides a remedy if someone files a financing statement in violation of the code.

9-515/9-521 What Constitutes Filing a Record, Effectiveness of Filing / Acceptance of Refusal to Accept Record. The code specifies that the function of the filing office is that of a recorder. Deciding the validity or accuracy of information contained within a financing statement or record is not a duty of the filing office. The MTC specifically enumerates the grounds upon which a filing officer can refuse a filing. The filing office must give the filing party the reason the office did not accept the filing.

9-519 (new) Claim Concerning Inaccurate or Wrongfully filed Record, Failure to Send or File Termination Statement. A debtor has specified procedures and remedies if the Secured Party fails to conform with the requirements of this Title.

9-524 (new) Assignment of Functions to Third Party. The tribe can legally transfer some or all of the filing office requirements to a third party except that the tribe may not transfer the authority to adopt rules of operation. This would allow the tribe to transfer the filing office requirements to a private contractor or to take advantage of an existing state filing system.

9-602 (9-501) Waiver and Variance of Rights and Duties. The number of rights that may not be waived has increased. The increase focuses primarily on restricting the ability of a consumer debtor to waive the debtor's rights.

9-608 (9-503) Secured Party's Right to Take Possession After Default. The MTC does not allow self-help repossessions. The secured party must obtain leave from tribal court to reposes or otherwise take possession of property.

9-610 (9-504) Persons Entitled to Notification Before Disposition of Collateral. The notice requirement before disposition of collateral includes any secondary obligor. 9-622 of the MTC allows for the waiver of this right only at the time of default.

9-617/9-618 (9-505) Acceptance of Collateral in Full or Partial Satisfaction of Obligation, Compulsory Disposition of Collateral / Notification of Proposal to Accept Collateral. Generally this provision is the same except that the MTC goes into greater detail concerning the offer and acceptance of a proposal to retain the collateral. The MTC also requires notification of any secondary obligor of a proposed retention of collateral.

9-621 (new) Reinstatement of Secured Obligation Without Acceleration. With consumer goods, the debtor has the right to cure a default at least once before the disposition of the collateral without the secured party being able to exercise the right of acceleration.

9-622 (9-505) Waiver of Agreement by Debtor or Consumer Obligor. A debtor or consumer obligor can waive the right to notification of disposition only after default.

9-624 (9-507) Action in Which Deficiency or Surplus is at Issue. The MTC adopts the absolute bar rule for a consumer secured transactions and in all other cases the rebuttable presumption rule.

9-626 (new) Nonliability of Secure Party in Certain Circumstances, Liability of Secondary Obligor. The secured party is not liable for damages suffered by unknown debtor, secured party or secondary obligor if the secured party has made a good faith effort to detect the existence and location of other parties.

9-627 (new) Attorney's Fees in Consumer Secured Transactions. In a consumer secured transaction, the judge may award reasonable attorney fees and costs if the judge determines such an award to be appropriate. If the security agreement calls for the secured party to receive attorney fees and costs, a successful debtor is entitled to receive attorney fees and costs. In this scenario the award of attorney fees and cost is mandatory.

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