2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 9 - Secured Transactions › Part 4 - RIGHTS OF THIRD PARTIES › Section 55-9-408 - Restrictions on assignment of promissory notes, health-care-insurance receivables and certain general intangibles ineffective. (Effective January 1, 2024.)

(a) Except as otherwise provided in Subsections (b) and (e) of this section, a term in a promissory note or in an agreement between an account debtor and a debtor that relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license or franchise, and that prohibits, restricts or requires the consent of the person obligated on the promissory note or the account debtor to the assignment or transfer of, or creation, attachment or perfection of a security interest in, the promissory note, health-care-insurance receivable or general intangible is ineffective to the extent that the term:
(1) would impair the creation, attachment or perfection of a security interest; or
(2) provides that the assignment or transfer or the creation, attachment or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the promissory note, health-care-insurance receivable or general intangible.
(b) Subsection (a) of this section applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note other than a sale pursuant to a disposition under Section 55-9-610 NMSA 1978 or an acceptance of collateral under Section 55-9-620 NMSA 1978.
(c) Except as otherwise provided in Subsection (e) of this section, a rule of law, statute or regulation that prohibits, restricts or requires the consent of a government, governmental body or official, person obligated on a promissory note or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable or general intangible, including a contract, permit, license or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute or regulation:
(1) would impair the creation, attachment or perfection of a security interest; or
(2) provides that the assignment or transfer or the creation, attachment or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination or remedy under the promissory note, health-care-insurance receivable or general intangible.
(d) To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor that relates to a health-care-insurance receivable or general intangible or a rule of law, statute or regulation described in Subsection (c) of this section would be effective under law other than Chapter 55, Article 9 NMSA 1978 but is ineffective under Subsection (a) or (c) of this section, the creation, attachment or perfection of a security interest in the promissory note, health-care-insurance receivable or general intangible:
(1) is not enforceable against the person obligated on the promissory note or the account debtor;
(2) does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;
(3) does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party or accept payment or performance from the secured party;
(4) does not entitle the secured party to use or assign the debtor's rights under the promissory note, health-care-insurance receivable or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable or general intangible;
(5) does not entitle the secured party to use, assign, possess or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and
(6) does not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable or general intangible. The provisions of this section shall prevail over an inconsistent provision of an existing or future statute or rule of this state, unless the inconsistent provision is set forth in a statute of this state that refers expressly to this section and states that the inconsistent provision shall prevail over the provisions of this section.
(e) This section does not apply to a security interest in an ownership interest in a general partnership, limited liability partnership, limited partnership, limited liability limited partnership or limited liability company.
(f) In this section, "promissory note" includes a negotiable instrument that evidences chattel paper.
History:
1978 Comp., § 55-9-408, enacted by Laws 2001, ch. 139, § 70; 2013, ch. 137, § 11; 2023, ch. 142, § 78.
ANNOTATIONS
The 2023 amendment,
effective January 1, 2024, provided that this section does not apply to a security interest in an ownership interest in a general partnership, limited liability partnership, limited partnership, limited liability limited partnership or limited liability company, and revised the definition of "promissory note"; in Subsection (a), in the introductory clause, after "provided in", changed "Subsection (b)" to "Subsections (b) and (e)"; in Subsection (c), in the introductory clause, added "Except as otherwise provided in Subsection (e) of this section"; and added Subsections (e) and (f).