HBA-ATS S.B. 478 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 478
By: Carona
Business & Industry
3/31/1999
Engrossed



BACKGROUND AND PURPOSE 

Generally, a financing statement (a document that  notifies third parties
that a debtor's property is or may be encumbered) must be filed to perfect
a security interest (an interest in personal property or fixtures that
secures the payment or performance of an obligation).  Rules adopted by the
secretary of state authorize a person to file a financing statement
electronically as an alternative to the traditional filing of a paper form.
Because no statutory provision expressly permits electronic filing, some
lenders have been hesitant to transmit filings electronically due to their
concerns regarding the permissibility of electronic filing under the law.
This ambiguity requires clarification. 

S.B. 478 sets forth that the Business & Commerce Code does not require that
a financing statement or other filing made under Subchapter D (Filing),
Chapter 9 (Secured Transactions; Sales of Accounts and Chattel Paper),
Business & Commerce Code, be created or transmitted to the secretary of
state on paper.  Under this bill, a statement or other filing made in
accordance with rules adopted under Subchapter D is not ineffective or
insufficient because the statement or other filing is generated or
transmitted electronically. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 9.402, Business & Commerce Code, by adding
Subsection (i), as follows: 

(i)  Sets forth that the Business & Commerce Code does not require that a
financing statement (statement) or other filing made under Subchapter D
(Filing) be created or transmitted to the secretary of state on paper.
Provides that a statement or other filing made in accordance with rules
adopted under Subchapter D is not ineffective or insufficient because the
statement or other filing is generated or transmitted electronically. 

SECTION 2.  Provides that Subsection (i) is intended to clarify law
existing before the effective date of this Act.  Sets forth that the
authority expressed in Section 9.402 (Formal Requisites of Financing
Statement; Amendments; Mortgage as Financing Statement) is within the
authority previously granted to the secretary of state under Section 9.411
(Rules).  Provides that this Act applies to the filing of a statement or
other filing made before, on, or after the effective date of this Act. 

SECTION 3.Emergency clause.
  Effective date: upon passage.