2023 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-305 - Priority. (Effective January 1, 2024.)

(a) Subject to Subsections (b) and (c) of this section, this 2023 act determines the priority of conflicting claims to collateral.
(b) Subject to Subsection (c) of this section, if the priorities of claims to collateral were established before January 1, 2024, Article 9 of the Uniform Commercial Code as in effect before January 1, 2024 determines priority.
(c) On the adjustment date, to the extent the priorities determined by Article 9 of the Uniform Commercial Code as amended by this 2023 act modify the priorities established before January 1, 2024, the priorities of claims to Article 12 property and electronic money established before January 1, 2024 cease to apply.
History:
1978 Comp., § 55-12A-305, enacted by Laws 2023, ch. 142, § 110.
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.
2.
Law governing priority and established priorities.
Ordinarily, 2022 Article 9 determines the priority of conflicting claims to collateral under subsection (a). However, when the relative priorities of the claims were established before the effective date, pre-2022 Article 9 governs under subsection (b). Subsection (c) provides an exception to subsection (b).
Example 1:
In 2021, prior to the effective date, Debtor obtained a loan from Secured Party and signed a security agreement covering "all cryptocurrency and money now owned or hereafter acquired." The security interest attached to various cryptocurrencies owned by Debtor, including 1,000 happicoins held by Debtor on the happicoins blockchain platform. Secured Party promptly filed a financing statement covering "all general intangibles, including cryptocurrencies." In 2022, also prior to the effective date, Debtor obtained a loan from Lender and signed a security agreement covering "all cryptocurrency." Although the happicoins are general intangibles, Lender failed to file a financing statement. Because the priorities of the claims were established before the effective date, pre-2022 Article 9 governs. Secured Party's perfected security interest has priority over Lender's unperfected security interest under pre-2022 Section 9-322(a)(2).
Example 2:
The facts are the same as in Example 1, except that Debtor transferred control of the 1,000 happicoins to Lender on the blockchain in 2022 before the effective date. Because Lender failed to file a financing statement and control was not a method of perfection under pre-2022 Article 9, Lender's security interest was unperfected immediately prior to the effective date. However, because under 2022 Article 9 the happicoins are controllable electronic records and Lender has "control" of the happicoins under Section 12 105, Lender's security interest became perfected on the effective date. Nevertheless, because the priorities of Secured Party's and Lender's security interests were established before the effective date, Secured Party's security interest continues to have priority after the effective date. (However, see Example 4 for the shift of priority on the adjustment date.)
Example 3:
The facts are the same as in Example 1, except that in 2023, after the effective date, Debtor transferred control of the 1,000 happicoins to Lender on the blockchain. Under 2022 Article 9, the happicoins were controllable electronic records and the transfer of control of the happicoins gave Lender "control" of the happicoins as provided in Section 12-105. The affirmative step of transferring control established anew the relative priority of the conflicting claims after the effective date. 2022 Article 9 determines priority and Lender's security interest has priority under Section 9-326A (without any deferral until the adjustment date). Moreover, Lender also may have priority over other property claims as a qualifying purchaser under Section 12-104(e).
One consequence of the rule on established priorities in subsection (b) is that the mere taking effect of this act does not of itself adversely affect the priority of conflicting claims to collateral, as Example 2 illustrates. However, as Example 3 illustrates, relative priorities that are "established" before the effective date do not necessarily remain unchanged following the effective date. Of course, unlike priority contests among security interests, some priorities are established permanently, for example, the rights of a buyer of property who took free of a security interest under pre-2022 Article 9.
3.
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, but only for security interests in Article 12 property—controllable accounts, controllable electronic records, and controllable payment intangibles—and electronic money.
Example 4:
The facts are the same as in Example 2. Lender's security interest became perfected by control on the effective date, Secured Party's established priority continued to apply under subsection (b). Under subsection (c), however, on the adjustment date the priorities shifted. Secured Party's established priority ceased to apply and Lender's perfection by control gave Lender priority under 2022 Section 9-326A.
4.
Transfers of collateral after the effective date.
Example 5:
The facts are the same as in Example 2. In 2023, after the effective date, Debtor acquired an additional 500 happicoins. The security interests of both Secured Party and Lender attached to the happicoins pursuant to the after-acquired property clauses in their respective security agreements. Secured Party's security interest was perfected by its earlier financing statement filing. Lender then perfected its security interest by Debtor's transfer of control of the happicoins to Lender. Lender's security interest in the additional happicoins perfected by control gave Lender priority as to those happicoins under Section 9-326A. Unlike the situation in Example 2, however, as to the newly acquired happicoins the priorities were not established prior to the effective date. Before the effective date neither creditor could have had a "perfected" security interest in happicoins in which Debtor had not yet acquired rights.
Example 6:
The facts are the same as in Example 1. In 2023, after the effective date, Debtor transferred 750 spitcoins, an electronic money, to Beier. Beier then obtained control of the spitcoins under Section 9-105A. Secured Party's security interest in the spitcoins, which were either money not capable of being possessed or general intangibles under pre-2022 Article 9, are assumed to be perfected by filing. See Section A-302, Comment 3, Example 2. Because there was no wrongful collusion with Debtor (indeed, Beier had no knowledge or notice of Secured Party's security interest), Beier took the spitcoin free of Secured Party's security interest under Section 9-332(c).
ANNOTATIONS
Effective dates.
— Laws 2023, ch. 142, § 112 made Laws 2023, ch. 142, § 110 effective January 1, 2024.