2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 9 - Secured Transactions › Part 3 - PERFECTION AND PRIORITY › Subpart 2 - PERFECTION › Section 55-9-314A - Perfection by possession and control of chattel paper. (Effective January 1, 2024.)

(a) A secured party may perfect a security interest in chattel paper by taking possession of each authoritative tangible copy of the record evidencing the chattel paper and obtaining control of each authoritative electronic copy of the electronic record evidencing the chattel paper.
(b) A security interest is perfected under Subsection (a) of this section not earlier than the time the secured party takes possession and obtains control and remains perfected under that subsection only while the secured party retains possession and control.
(c) Subsections (c) and (f) through (i) of Section 55-9-313 NMSA 1978 apply to perfection by possession of an authoritative tangible copy of a record evidencing chattel paper.
History:
1978 Comp., § 55-9-314A, enacted by Laws 2023, ch. 142, § 65.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
1.
"Authoritative copy."
To perfect a security interest in chattel paper other than by filing, this section provides that a secured party must obtain control of all authoritative electronic copies and take possession of all authoritative tangible copies.
Like the pre-2022 text, Section 9-105(b) [55-9-105 NMSA 1978] distinguishes between authoritative and nonauthoritative copies of electronic chattel paper and refers to copies that are "authoritative." And, like its predecessor, Section 9-105(b) does not define the term "authoritative." However, it also applies this concept to tangible records that evidence chattel paper.
To show that it has possession of all authoritative tangible copies of a record evidencing chattel paper and all authoritative electronic copies of a record evidencing chattel paper, a purchaser can produce the tangible copies in its possession and prove control of the electronic copies and provide evidence that these are authoritative copies. The purchaser need not prove a negative—i.e., that no other tangible or electronic authoritative copies exist—to make a prima facie case. The purchaser's possession of the authoritative tangible copies and control of the authoritative electronic copies gives the purchaser the power to prevent others from taking possession or control of the copies and the power to transfer possession and control of the copies.
Perfection of a security interest in chattel paper by taking possession of the collateral generally has been understood to mean taking possession of the wet-ink "original." Experience has shown that the concept of an original breaks down when one allows for the possibility of the same monetary obligation being evidenced by different media over time, such as where electronic records evidencing the chattel paper are "papered out" (replaced with tangible records evidencing the same chattel paper) or tangible records are "converted" to electronic records.
Whether an electronic or tangible copy of a record evidencing chattel paper is authoritative depends on the facts and circumstances. The determination should turn on whether the copy provides reasonable notice to third parties that it is one that must be subject to control or possession for purposes of perfection and priority. To accommodate current practices and future technology, parties are allowed considerable flexibility in determining the method used to establish whether a particular copy is authoritative, provided that third parties are able to reasonably identify the authoritative copies that must be possessed or controlled to achieve perfection. For example, the parties could develop a system or protocol where each tangible or electronic copy is "watermarked" as authoritative or nonauthoritative or where the terms of the records themselves describe how to determine which copies are authoritative and which are not.
2.
Time of perfection; continuation of perfection.
Subsection (b) is modeled on Sections 9-313(d) and 9-314(b) [55-9-313, 55-9-314 NMSA 1978, respectively]. If a secured party's possession or control is based on the acknowledgment under Section 9-313(c) or 9-105(g) by another person in possession or control, the secured party remains perfected by possession or control only while the other person retains possession or control. This result necessarily follows because such a secured party's possession or control derives solely from the other person's continued possession or control.
3.
Applicability of Section 9-313.
Subsection (c) makes specified subsections of Section 9-313 applicable to possession of authoritative tangible copies of records evidencing chattel paper.
4.
Shared control.
As to the sharing of powers over an authoritative electronic copy of a record evidencing chattel paper (see Section 9-105(c)(2)) by a debtor and a secured party (or by another transferor and transferee) and control through another person (see Section 9-105(g)), see Sections 9-314, Comment 3A; 12-105 [55-12-105 NMSA 1978], Comment 9.
ANNOTATIONS
Effective dates.
— Laws 2023, ch. 142, § 112 made Laws 2023, ch. 142, § 65 effective January 1, 2024.