Lenders must prepare for New York UCC amendments

With New York’s adoption of the 2022 UCC amendments taking effect next year, lenders must prepare to ensure that transactions meet updated perfection standards. 

New York enacted the 2022 amendments to the Uniform Commercial Code on Dec. 5, becoming the 33rd jurisdiction to adopt a version of the rules on digital assets, hybrid transactions and technology-neutral commercial law. 

While the amendments don’t take effect until June 3, 2026, as well as a one-year adjustment period ending June 3, 2027, lenders should act early by updating documents, control platforms and practices, Joann Sternheimer, automotive and truck finance partner at law firm Lippes Mathias, told Equipment Finance News. 

“If you have pre-effective date filings perfecting an interest in controllable electronic records, or CERs, and somebody comes in the day after this becomes effective on June 4, 2026, and perfects their competing interest in those CERs by control, their interest will have first priority over your earlier-in-time perfection by filing,” she said. “Anybody who has CERs that they think they have perfected by filing should take every step they can to perfect those interests by control before the effective date, so as not to be vulnerable to a loss priority on Day One of the new law.” 

Perfection standards refers to steps creditors take to make their security interest in collateral legally enforceable against third parties. 

Transacting in New York 

With New York’s UCC amendments set to allow multiple authoritative copies of the same CER or hybrid lease and strengthen purchaser protections, they should increase certainty and attractiveness for purchasers of commercial paper, especially in New York, Sternheimer said. 

“The buyer protections will lead more businesses to shift the choice of law provisions in their contracts to New York, keeping New York as the market of choice,” she said. “More certain paper is more valuable, so I think these provisions will benefit New York sellers, and those who use New York as their choice of law, in these transactions.” 

Creating desirability for transactions in New York was key to the unique version of the amendments in the state, New York Assembly Member Alex Bores, one of the bill’s sponsors, said in a Dec. 5 New York City Bar Association release. 

“New York can’t stay the financial capital of the world if the rules for business are written for 1925, not 2025,” he said. “Now our businesses can use digital money, electronic contracts, and do business smoothly with other states.” 

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