2024 New Mexico Statutes
Chapter 55 - Uniform Commercial Code
Article 12A - Transitional Provisions for Uniform Commercial Code Amendments (2022)
Part 3 - TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND 12
Section 55-12A-306 - Priority of claims when priority rules of Article 9 of the Uniform Commercial Code do not apply.
(a) Subject to Subsections (b) and (c) of this section, Article 12 of the Uniform Commercial Code determines the priority of conflicting claims to Article 12 property when the priority rules of Article 9 of the Uniform Commercial Code as amended by this 2023 act do not apply.
(b) Subject to Subsection (c) of this section, when the priority rules of Article 9 of the Uniform Commercial Code as amended by this 2023 act do not apply and the priorities of claims to Article 12 property were established before January 1, 2024, law other than Article 12 of the Uniform Commercial Code determines priority.
(c) When the priority rules of Article 9 of the Uniform Commercial Code as amended by this 2023 act do not apply, to the extent the priorities determined by this 2023 act modify the priorities established before January 1, 2024, the priorities of claims to Article 12 property established before January 1, 2024 cease to apply on the adjustment date.
History: 1978 Comp., § 55-12A-306, enacted by Laws 2023, ch. 142, § 111.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
1. Source. This section derives from Section 9-709 and, in part, from Section 8-510.
2. Applicability of this section to Article 12 property. Although this section applies to Article 12 property (controllable accounts, controllable electronic records, and controllable payment intangibles) when the priority rules of Article 9 do not apply, it applies primarily to controllable electronic records. Its application to controllable accounts and controllable payment intangibles is quite limited because Article 9 applies to most sales of accounts and payment intangibles (as well as to the use of that property to secure an obligation). Section 9-109(a)(3). There is a very limited exclusion from the scope of Article 9 for a sale of accounts and payment intangibles in connection with a sale of the business out of which they arose. Section 9-109(d)(4).
3. Law governing priority and established priorities. Ordinarily, when the priority rules of Article 9 do not apply, Article 12 determines the priority of conflicting claims to Article 12 property under Subsection (a). However, when the relative priorities of the claims were established before the effective date, under Subsection (b) law other than Article 12 governs. Subsection (c) provides an exception to Subsection (b).
4. Law governing priority and established priorities.
Example 1: In 2021, prior to the effective date, Aiko owned 500 happicoins (a cryptocurrency consisting of controllable electronic records) over which Aiko had control (within the meaning of Section 12-105, which was not yet effective) on the happicoin blockchain. In December 2021 Aiko sold the 500 happicoins to Barbara for $10,000 cash. Aiko provided Barbara with a signed memorandum acknowledging the sale and Aiko's receipt of the purchase price and agreeing to hold the happicoins for Barbara pending Barbara's further instructions.
In January 2022 (also prior to the effective date), Aiko sold the same 500 happicoins to Molly for $12,000 cash. Aiko provided Molly with a signed memorandum similar to the one Aiko had provided to Barbara. Assume that, under the non-Uniform Commercial Code applicable law, Barbara remained the owner of the happicoins and under that law Molly obtained no interest in the happicoins pursuant to the purported sale because Aiko had retained no interest and had nothing to transfer to Molly. Because the priorities of the claims of Aiko, Barbara, and Molly were established before the effective date, under Subsection (a) those priorities remained in effect after the effective date and Barbara remains the owner of the happicoins.
Example 2: The facts are the same as in Example 1, except that before the effective date, Aiko transferred control of the happicoins to Molly on the happicoins blockchain. Again, assume that under the non-Uniform Commercial Code applicable law that transfer of control had no legal effect. After the effective date the relative priorities are unchanged from those described in Example 1 because the relative priorities were established before the effective date and Subsection (b) applies.
Example 3: The facts are the same as in Example 1, except that after the effective date, Aiko transferred control of the happicoins to Molly on the happicoins blockchain. Under Article 12, the happicoins were controllable electronic records and the transfer of control of the happicoins gave Molly "control" of the happicoins as provided in Section 12-105. Because (it is assumed) Molly met the requirements for a "qualifying purchaser" under Section 12-104(e), Molly acquired the happicoins free of Barbara's property claim. The affirmative step of transferring control after the effective date established anew the relative priority of the conflicting claims after the effective date. Under Section A-301(a), Article 12 applies to the pre-effective-date transactions and property interests and Subsection (a) of this section applies.
5. Modification of established priorities on adjustment date. Subsection (c) provides an exception to the respect that Subsection (b) affords to pre-effective-date established priorities.
Example 4: The facts are the same as in Example 2. However, on the adjustment date the established priorities change. Because (it is assumed) Molly met the requirements for a "qualifying purchaser" under Section 12-104(e), on the adjustment date Molly acquired the happicoins free of Barbara's property claim. Under Section A-301(a), Article 12 applies to the pre-effective-date transactions and property interests and Subsection (a) of this section applies.
6. Transfers after the effective date.
Example 5: The facts are the same as in Example 1, except that after the effective date Aiko sold the happicoins to Jacob, for value, and also transferred control of the happicoins to Jacob on the happicoins blockchain. Because (it is assumed) Jacob met the requirements for a "qualifying purchaser" under Section 12-104(e), Jacob acquired the happicoins free of both Barbara's and Molly's property claims. Note that Jacob took the happicoins free of conflicting claims in the post-effective date acquisition immediately upon acquisition as a qualifying purchaser. Jacob's priority was established after the effective date and was not deferred until the adjustment date, as was the case for Molly's rights in Example 4.
ANNOTATIONSEffective dates. — Laws 2023, ch. 142, § 112 made Laws 2023, ch. 142, § 111 effective January 1, 2024.
