41-09-34. (9-314) Perfection by control.
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/nd/title-41/chapter-41-09-secured-transactions/41-09-34·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
1. A security interest in controllable accounts, controllable electronic records, controllable
payment intangibles, deposit accounts, uncertificated certificates of deposit, electronic
documents, electronic money, investment property, or letter-of-credit rights may be
perfected by control of the collateral under section 41-07-06, 41-09-04, 41-09-05.1,
41-09-06, 41-09-07, or 41-09-07.1.
2. A security interest in controllable accounts, controllable electronic records, controllable
payment intangibles, deposit accounts, electronic documents, uncertificated
certificates of deposit, electronic money, or letter-of-credit rights is perfected by control
under section 41-07-06, 41-09-04, 41-09-05.1, 41-09-07, or 41-09-07.1 not earlier than
the time the secured party obtains control and remains perfected by control only while
the secured party retains control. 3. A security interest in investment property is perfected by control under section
41-09-06 not earlier than the time the secured party obtains control and remains
perfected by control until:
a. The secured party does not have control; and
b. One of the following occurs:
(1)If the collateral is a certificated security, the debtor has or acquires
possession of the security certificate;
(2)If the collateral is an uncertificated security, the issuer has registered or
registers the debtor as the registered owner; or
(3)If the collateral is a security entitlement, the debtor is or becomes the
entitlement holder.
41-09-34.1. (9-314A) Perfection by possession and control of chattel paper. 1. A secured party may perfect a security interest in chattel paper by taking possession of
each authoritative tangible copy of the record evidencing the chattel paper and
obtaining control of each authoritative electronic copy of the electronic record
evidencing the chattel paper. 2. A security interest is perfected under subsection 1 not earlier than the time the secured
party takes possession and obtains control and remains perfected under subsection 1
only while the secured party retains possession and control. 3. Subsections 3 and 6 through 9 of section 41-09-33 applies to perfection by possession
of an authoritative tangible copy of a record evidencing chattel paper.
41-09-35. (9-315) Secured party's rights on disposition of collateral and in proceeds. 1. Except as otherwise provided in this chapter and in subsection 2 of section 41-02-48:
a. A security interest or agricultural lien continues in collateral notwithstanding sale,
lease, license, exchange, or other disposition thereof unless the secured party
authorized the disposition free of the security interest or agricultural lien; and
b. A security interest attaches to any identifiable proceeds of collateral. 2. Proceeds that are commingled with other property are identifiable proceeds:
a. If the proceeds are goods, to the extent provided by section 41-09-56; and
b. If the proceeds are not goods, to the extent that the secured party identifies the
proceeds by a method of tracing, including application of equitable principles, that
is permitted under law other than this chapter with respect to commingled
property of the type involved. 3. A security interest in proceeds is a perfected security interest if the security interest in
the original collateral was perfected. 4. A perfected security interest in proceeds becomes unperfected on the twenty-first day
after the security interest attaches to the proceeds unless:
a. The following conditions are satisfied:
(1)A filed financing statement covers the original collateral;
(2)The proceeds are collateral in which a security interest may be perfected by
filing in the office in which the financing statement has been filed; and
(3)The proceeds are not acquired with cash proceeds;
b. The proceeds are identifiable cash proceeds; or
c. The security interest in the proceeds is perfected other than under subsection 3
when the security interest attaches to the proceeds or within twenty days
thereafter. 5. If a filed financing statement covers the original collateral, a security interest in
proceeds which remains perfected under subdivision a of subsection 4 becomes
unperfected at the later of:
a. When the effectiveness of the filed financing statement lapses under section
41-09-86 or is terminated under section 41-09-84; or
b. The twenty-first day after the security interest attaches to the proceeds.
41-09-36. (9-316) Effect of change in governing law. 1. A security interest perfected pursuant to the law of the jurisdiction designated in
subsection 1 of section 41-09-21, subsection 3 of section 41-09-25, subsection 4 of
section 41-09-26.1, or subsection 2 of section 41-09-26.2 remains perfected until the
earliest of:
a. The time perfection would have ceased under the law of that jurisdiction;
b. The expiration of four months after a change of the debtor's location to another
jurisdiction; or
c. The expiration of one year after a transfer of collateral to a person that thereby
becomes a debtor and is located in another jurisdiction. 2. If a security interest described in subsection 1 becomes perfected under the law of the
other jurisdiction before the earliest time or event described in that subsection, it
remains perfected thereafter. If the security interest does not become perfected under
the law of the other jurisdiction before the earliest time or event, it becomes
unperfected and is deemed never to have been perfected as against a purchaser of
the collateral for value. 3. A possessory security interest in collateral, other than goods covered by a certificate of
title and as-extracted collateral consisting of goods, remains continuously perfected if:
a. The collateral is located in one jurisdiction and subject to a security interest
perfected under the law of that jurisdiction;
b. Thereafter the collateral is brought into another jurisdiction; and
c. Upon entry into the other jurisdiction, the security interest is perfected under the
law of the other jurisdiction. 4. Except as otherwise provided in subsection 5, a security interest in goods covered by
a certificate of title which is perfected by any method under the law of another
jurisdiction when the goods become covered by a certificate of title from this state
remains perfected until the security interest would have become unperfected under the
law of the other jurisdiction had the goods not become so covered. 5. A security interest described in subsection 4 becomes unperfected as against a
purchaser of the goods for value and is deemed never to have been perfected as
against a purchaser of the goods for value if the applicable requirements for perfection
under subsection 2 of section 41-09-31 or section 41-09-33 are not satisfied before the
earlier of:
a. The time the security interest would have become unperfected under the law of
the other jurisdiction had the goods not become covered by a certificate of title
from this state; or
b. The expiration of four months after the goods had become so covered. 6. A security interest in chattel paper, controllable accounts, controllable electronic
records, controllable payment intangibles, deposit accounts, certificates of deposit,
letter-of-credit rights, or investment property which is perfected under the law of the
chattel paper's jurisdiction, the controllable electronic record's jurisdiction, the bank's
jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, the securities
intermediary's jurisdiction, or the commodity intermediary's jurisdiction, as applicable,
remains perfected until the earlier of:
a. The time the security interest would have become unperfected under the law of
that jurisdiction; or
b. The expiration of four months after a change of the applicable jurisdiction to
another jurisdiction. 7. If a security interest described in subsection 6 becomes perfected under the law of the
other jurisdiction before the earlier of the time or the end of the period described in that
subsection, it remains perfected thereafter. If the security interest does not become
perfected under the law of the other jurisdiction before the earlier of that time or the
end of that period, it becomes unperfected and is deemed never to have been
perfected as against a purchaser of the collateral for value. 8. The following rules apply to collateral to which a security interest attaches within four
months after the debtor changes its location to another jurisdiction:
a. A financing statement filed before the change pursuant to the law of the
jurisdiction designated in subsection 1 of section 41-09-21 or subsection 3 of
section 41-09-25 is effective to perfect a security interest in the collateral if the
financing statement would have been effective to perfect a security interest in the
collateral if the debtor had not changed its location.
b. If a security interest that is perfected by a financing statement that is effective
under subdivision a becomes perfected under the law of the other jurisdiction
before the earlier of the time the financing statement would have become
ineffective under the law of the jurisdiction designated in subsection 1 of section
41-09-21 or subsection 3 of section 41-09-25 or the expiration of the four-month
period, it remains perfected thereafter. If the security interest does not become
perfected under the law of the other jurisdiction before the earlier time or event, it
becomes unperfected and is deemed never to have been perfected as against a
purchaser of the collateral for value.
9. If a financing statement naming an original debtor is filed pursuant to the law of the
jurisdiction designated in subsection 1 of section 41-09-21 or subsection 3 of section
41-09-25 and the new debtor is located in another jurisdiction, the following rules
apply:
a. The financing statement is effective to perfect a security interest in collateral in
which the new debtor has or acquires rights before or within four months after the
new debtor becomes bound under subsection 4 of section 41-09-13, if the
financing statement would have been effective to perfect a security interest in the
collateral if the collateral had been acquired by the original debtor.
b. A security interest that is perfected by the financing statement and which
becomes perfected under the law of the other jurisdiction before the earlier of the
expiration of the four-month period or the time the financing statement would
have become ineffective under the law of the jurisdiction designated in
subsection 1 of section 41-09-21 or subsection 3 of section 41-09-25 remains
perfected thereafter. A security interest that is perfected by the financing
statement but which does not become perfected under the law of the other
jurisdiction before the earlier time or event becomes unperfected and is deemed
never to have been perfected as against a purchaser of the collateral for value.