(a) Except as provided in Subsection (d) of this section, if chattel paper is evidenced only by an authoritative electronic copy of the chattel paper or is evidenced by an authoritative electronic copy and an authoritative tangible copy, the local law of the chattel paper's jurisdiction governs perfection, the effect of perfection or nonperfection and the priority of a security interest in the chattel paper, even if the transaction does not bear any relation to the chattel paper's jurisdiction. (b) The following rules determine the chattel paper's jurisdiction under this section: (1) if the authoritative electronic copy of the record evidencing chattel paper, or a record attached to or logically associated with the electronic copy and readily available for review, expressly provides that a particular jurisdiction is the chattel paper's jurisdiction for purposes of this part or the Uniform Commercial Code, that jurisdiction is the chattel paper's jurisdiction; (2) if Paragraph (1) of this subsection does not apply and the rules of the system in which the authoritative electronic copy is recorded are readily available for review and expressly provide that a particular jurisdiction is the chattel paper's jurisdiction for purposes of this part or the Uniform Commercial Code, that jurisdiction is the chattel paper's jurisdiction; (3) if Paragraphs (1) and (2) of this section do not apply and the authoritative electronic copy, or a record attached to or logically associated with the electronic copy and readily available for review, expressly provides that the chattel paper is governed by the law of a particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction; (4) if Paragraphs (1), (2) and (3) of this subsection do not apply and the rules of the system in which the authoritative electronic copy is recorded are readily available for review and expressly provide that the chattel paper or the system is governed by the law of a particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction; and (5) if Paragraphs (1) through (4) of this subsection do not apply, the chattel paper's jurisdiction is the jurisdiction in which the debtor is located. (c) If an authoritative tangible copy of a record evidences chattel paper and the chattel paper is not evidenced by an authoritative electronic copy, while the authoritative tangible copy of the record evidencing chattel paper is located in a jurisdiction, the local law of that jurisdiction governs: (1) perfection of a security interest in the chattel paper by possession under Section 55-9-314A NMSA 1978; and (2) the effect of perfection or nonperfection and the priority of a security interest in the chattel paper. (d) The local law of the jurisdiction in which the debtor is located governs perfection of a security interest in chattel paper by filing. History: 1978 Comp., § 55-9-306A, enacted by Laws 2023, ch. 142, § 59. OFFICIAL COMMENTS UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. 1. Source. Section 9-306A(a) and (b) [55-9-306 NMSA 1978] derive from Sections 8-110(e) [55-8-110 NMSA 1978] and 9-305 [55-9-305 NMSA 1978] on law governing perfection and priority of security interests in investment property (as do Sections 9-306B and 12-107 [55-12-107 NMSA 1978]). 2. Applicability of this Section. This section determines the law governing perfection and priority of security interests in chattel paper. Subsections (a) and (b) apply to chattel paper that is evidenced only by an authoritative electronic copy of the chattel paper or by an authoritative electronic copy and an authoritative tangible copy. Subsection (c) applies to chattel paper that is evidenced by an authoritative tangible copy but not evidenced by an authoritative electronic copy. Subsection (d) applies to perfection by filing for all chattel paper. 3. Authoritative Electronic Copy: Chattel Paper's Jurisdiction. Subsection (a) specifies the law governing perfection and priority of security interests in chattel paper evidenced by an authoritative electronic copy of the chattel paper, even if it is also evidenced by an authoritative tangible copy. Subject to subsection (d) on perfection by filing, the law governing perfection and priority is the local law of the chattel paper's jurisdiction. Drawing on Sections 8-110 and 9-305 [55-8-110, 55-9-305 NMSA 1978, respectively], it is the authoritative electronic copy itself, records attached thereto or associated therewith, or the system in which the authoritative electronic copy is recorded that determines the chattel paper's jurisdiction and, therefore, the governing law. Subsection (b) provides a "waterfall" of rules based on provisions that identify a particular jurisdiction as the chattel paper's jurisdiction or alternatively that provide the governing law of the chattel paper or of the system in which the electronic copy is recorded. When no such identification or provision is made, it is the debtor's location, determined under Section 9-307 [55-9-307 NMSA 1978], that is the chattel paper's jurisdiction. As to the final clause of subsection (a), see Section 8-110, Comment 5A. 4. Rationale for Subsection (a). A buyer of, or secured lender against, chattel paper may arrange for authoritative electronic copies of chattel paper that it wishes to have assigned to it to be originated in or submitted into a system for the control and assignment of the chattel paper. The secured parties and lessors that will be assigning the chattel paper may be located in many different jurisdictions. As to assignments of the chattel paper by these secured parties and lessors (assignor-debtors), but for this section perfection and priority would be governed by the law of each assignor-debtor's location under Section 9-301(1) [55-9-301 NMSA 1978]. Under this section, however, the law of a single jurisdiction—the chattel paper's jurisdiction—could govern perfection and priority with respect to all of the assignments. By avoiding the application of the laws of multiple jurisdictions to perfection and priority, this rule could substantially reduce transaction costs. 5. Authoritative tangible copy. Subsection (c) ties the choice-of-law rules to the location of the authoritative tangible copy when no authoritative electronic copy exists. In that circumstance, the local law of the jurisdiction where the authoritative tangible copy is physically located governs perfection of a security interest in the chattel paper by possession, under Section 9-314A [55-9-314A NMSA 1978], and priority. Like its predecessor, subsection (c) assumes that all the authoritative tangible copies are located in the same jurisdiction. However, assuming the secured party is in possession of all the tangible copies, even if the copies are located in more than one jurisdiction the situation is unlikely to be problematic. 6. Perfection by filing. Subsection (d) provides that the local law of the jurisdiction where the debtor is located governs perfection by filing for all chattel paper. Effective dates. — Laws 2023, ch. 142, § 112 made Laws 2023, ch. 142, § 59 effective January 1, 2024.
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