S.B. 106

1

MUNICIPAL BOND SECURED TRANSACTIONS
2 2001 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Lyle W. Hillyard
5 This act modifies the Utah Municipal Bond Act by establishing a method for creating and
6 perfecting security interests for governmental obligations.
7 This act affects sections of Utah Code Annotated 1953 as follows:
8 ENACTS:
9 11-14-28, Utah Code Annotated 1953
10 Be it enacted by the Legislature of the state of Utah:
11 Section 1. Section 11-14-28 is enacted to read:
12 11-14-28. Creation and perfection of government security interests.
13 (1) As used in this section:
14 (a) "Bonds" means any bond, note, lease, or other obligation of a governmental unit.
15 S [ (b) "Governmental unit" has the meaning assigned in Subsection 70A-9a-102 (45). ]
15a (b) "GOVERNMENTAL UNIT" MEANS:
15b (i) THE STATE OF UTAH;
15c (ii) ANY COUNTY, MUNICIPALITY, QUASI-MUNICIPAL CORPORATION, POLITICAL
15d SUBDIVISION, SCHOOL DISTRICT, SPECIAL DISTRICT, BUILDING AUTHORITY, OR OTHER
15e GOVERNMENTAL ENTITY IN UTAH; OR
15f (iii) ANY SUBDIVISION, AGENCY, DEPARTMENT, AUTHORITY, INSTRUMENTALITY, OR
15g INSTITUTION OF THE ENTITIES DESCRIBED IN SUBSECTIONS (1)(b)(i) OR (ii) THAT ARE
15h AUTHORIZED TO ISSUE BONDS. s
16 (c) "Pledge" means the creation of a security interest of any kind.
17 (d) "Property" means any property or interests in property, other than real property.
18 (e) "Security agreement" means any resolution, ordinance, indenture, document, or other
19 agreement or instrument under which the revenues, fees, rents, charges, taxes, or other property
20 are pledged to secure the bonds.
21 (2) This section expressly governs the creation, perfection, priority, and enforcement of

22 a security interest created by the state or a governmental unit of the state, notwithstanding anything
23 in Title 70A, Chapter 9a, Uniform Commercial Code - Secured Transactions, to the contrary.
24 (3) (a) The revenues, fees, rents, charges, taxes, or other property pledged by a
25 governmental unit for the purpose of securing its bonds are immediately subject to the lien of the
26 pledge.
27 (b) (i) The lien is a perfected lien upon the effective date of the security agreement.

28 (ii) The physical delivery, filing, or recording of a security agreement or financing
29 statement under the Uniform Commercial Code or otherwise, or any other similar act, is not
30 necessary to perfect the lien.
31 (c) The lien of any pledge is valid, binding, perfected, and enforceable from the time the
32 pledge is made.
33 (d) The lien of the pledge has priority:
34 (i) based on the time of the creation of the pledge unless otherwise provided in the security
35 agreement; and
36 (ii) as against all parties having claims of any kind in tort, contract, or otherwise against
37 the governmental unit, regardless of whether or not the parties have notice of the lien.
38 (e) Each pledge and security agreement made for the benefit or security of any of the bonds
39 shall continue to be effective until:
40 (i) the principal, interest, and premium, if any, on the bonds have been fully paid;
41 (ii) provision for payment has been made; or
42 (iii) the lien created by the security agreement has been released by agreement of the
43 parties in interest or as provided by the security agreement that created the lien.




Legislative Review Note
as of 1-9-01 1:15 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel