(a) A security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property or letter-of-credit rights may be perfected by control of the collateral under Section 55-7-106, 55-9-104, 55-9-105A, 55-9-106, 55-9-107 or 55-9-107A NMSA 1978. (b) A security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money or letter-of-credit rights is perfected by control under Section 55-7-106, 55-9-104, 55-9-105A, 55-9-107 or 55-9-107A NMSA 1978 when the secured party obtains control and remains perfected by control only while the secured party retains control. (c) A security interest in investment property is perfected by control under Section 55-9-106 NMSA 1978 not earlier than the time the secured party obtains control and remains perfected by control until: (1) the secured party does not have control; and (2) one of the following occurs: (A) if the collateral is a certificated security, the debtor has or acquires possession of the security certificate; (B) if the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner; or (C) if the collateral is a security entitlement, the debtor is or becomes the entitlement holder. History: 1978 Comp., § 55-9-314, enacted by Laws 2001, ch. 139, § 34; 2005, ch. 144, § 104; 2023, ch. 142, § 64. OFFICIAL COMMENTS UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved. 1. Source. Substantially new; derived in part from former Section 9-115(4). 2. Control. This section provides for perfection by control with respect to controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, and letter-of-credit rights. Concerning how a secured party takes control of these types of collateral, see Sections 7-106, 9-104, 9-105A, 9-107, and 9-107A, [55-7-106, 55-9-104, 55-9-105A, 55-9-107, 55-9-107A NMSA 1978, respectively] and Comments. Subsection (b) explains when a security interest is perfected by control and how long a security interest remains perfected by control. Like Section 9-313(d) [55-9-313 NMSA 1978] and for the same reasons, subsection (b) makes no reference to the doctrine of "relation back." See Section 9-313, Comment 5. As to an electronic document that is reissued in a tangible medium, ( see Section 7-105 [55-7-105 NMSA 1978]), a secured party that is perfected by control in the electronic document should file as to the document before relinquishing control in order to maintain continuous perfection in the document. See Section 9-308 [55-9-308 NMSA 1978]. If a secured party's control is based on an acknowledgment under Section 7-106(g), 9-104(a)(4), or 9-105A(e) or under 9-107A and 12-105(e) [55-12-105 NMSA 1978] by another person having control, the secured party remains perfected by control only while the other person retains control. This result necessarily follows because such a secured party's control derives solely from the other person's continued control. Perfection by control of chattel paper evidenced by an authoritative electronic record (formerly defined as "electronic chattel paper") has been removed from this section. Instead, perfection by possession and control of chattel paper is governed by Section 9-314A [55-9-314 NMSA 1978]. 3. Investment Property. Subsection (c) provides a special rule for investment property. Once a secured party has control, its security interest remains perfected by control until the secured party ceases to have control and the debtor receives possession of collateral that is a certificated security, becomes the registered owner of collateral that is an uncertificated security, or becomes the entitlement holder of collateral that is a security entitlement. The result is particularly important in the "repledge" context. See Section 9-207 [55-9-207 NMSA 1978], Comment 5. In a transaction in which a secured party who has control grants a security interest in investment property or sells outright the investment property, by virtue of the debtor's consent or applicable legal rules, a purchaser from the secured party typically will cut off the debtor's rights in the investment property or be immune from the debtor's claims. See Section 9-207, Comments 5 and 6. If the investment property is a security, the debtor normally would retain no interest in the security following the purchase from the secured party, and a claim of the debtor against the secured party for redemption (Section 9-623 [55-9-623 NMSA 1978]) or otherwise with respect to the security would be a purely personal claim. If the investment property transferred by the secured party is a financial asset in which the debtor had a security entitlement credited to a securities account maintained with the secured party as a securities intermediary, the debtor's claim against the secured party could arise as a part of its securities account notwithstanding its personal nature. (This claim would be analogous to a "credit balance" in the securities account, which is a component of the securities account even though it is a personal claim against the intermediary.) In the case in which the debtor may retain an interest in investment property notwithstanding a repledge or sale by the secured party, subsection (c) makes clear that the security interest will remain perfected.by control. Notwithstanding subsection (c), if a secured party's control is based on an acknowledgment under Section 8-106(d)(3) [55-8-106 NMSA 1978] by another person having control, the secured party remains perfected by control only while the other person retains control. This result necessarily follows because such a secured party's control derives solely from the other person's continued control. Although Section 8-106(d)(3) was amended by the 2022 Article 9 Revisions, this result also applied to a secured party in control under pre-2022 Subsection (d)(3). 3A. Shared control between debtor and secured party (and other transferor and transferee) and control through another person. Sections 7-106 (control of electronic documents), 9-105 (control of authoritative electronic records evidencing chattel paper), 9-105A (control of electronic money), and 12-105 (control of controllable electronic records, on which control of controllable accounts and controllable payment intangibles under Section 9-107A depends) contemplate the possibility that both a debtor and a secured party may have control of the relevant collateral by sharing an exclusive power. Such shared control between a debtor and secured party does not necessarily impair perfection of a security interest under this section or Section 9-314A [55-9-314A NMSA 1978]. On shared exclusive powers, see generally Section 12-105, Comment 5. However, if a secured party can exercise a power only if the power is exercised also by the debtor, the power would not be shared and, consequently, the secured party would not have control based on the exclusive power. This result follows from Section 12-105(c) and corresponding subsections in the other provisions on control cited above. Under Section 12-105(c), because a debtor would be a "transferor of an interest" in a controllable electronic record or a controllable account or payment intangible evidenced by the record, the debtor's "blocking power" ( i.e. , the secured party can exercise the power only if the debtor also exercises the power) with respect to the secured party's exercise of the power would disqualify the secured party from sharing (and, consequently, enjoying) the exclusive power and perfection by control based on exclusive powers. Similarly, a purchaser in that situation would be disqualified from having control and thereby from enjoying the status and benefits of a qualifying purchaser (Section 12-102(a)(2)) under Section 12-104(e) and (g) if the purchaser takes from a transferor of an interest and the transferor has such a blocking power (whether or not the transferor is a debtor). Section 12-105(e) contains a similar limitation in connection with control through another person. An acknowledging person must be one "other than the transferor of an interest in the electronic record." The same or a similar limitation is found in the other provisions relating to control through another person. See Sections 7-106(g) (control of electronic document of title); 8-106(d)(3) (control of a security entitlement); 9-104(a)(4) (control of deposit accounts); 9-105(g) (control of authoritative electronic copy of record evidencing chattel paper); 9-105A)(e) (control of electronic money). For a discussion of the rationale for these limitations on sharing exclusive control and control through another person, see Section 12-105, Comment 9. Repeals and reenactments. — Laws 2001, ch. 139, § 34 repealed former 55-9-314 NMSA 1978, as enacted by Laws 1961, ch. 96, § 9-314, and enacted a new section, effective July 1, 2001. The 2023 amendment, effective January 1, 2024, revised provisions related to perfecting a security interest by control, and updated certain language in the section; in Subsection (a), deleted "investment property, deposit accounts, letter-of-credit rights, electronic chattel paper or electronic documents" and added "controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property or letter-of-credit rights", and after "55-9-104", deleted "55-9-105" and added "55-9-105A", and after "55-9-107", added "or 55-9-107A"; in Subsection (b), deleted "deposit accounts, electronic chattel paper, letter-of-credit rights or electronic documents" and added "controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money or letter-of-credit rights", and after "55-9-104", deleted "55-9-105" and added "55-9-105A", and after "55-9-107", added "or 55-9-107A"; and in Subsection (c), after "55-9-106 NMSA 1978", deleted "from" and added "not earlier than". The 2005 amendment, effective January 1, 2006, provides in Subsection (a) that a security interest in electronic documents may perfected by control. And in Subsection (b) that a security interest in electronic documents is perfected by control under the listed statutory references and adds Section 55-7-106 NMSA 1978 as a statutory reference.
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