The task of the Subcommittee is to care and feed for the hub Article that holds the Code together. Previously, the Subcommittee was principally responsible for a study outlining the need to revise Article 1. Now that the Article is in revision, our task is adding input to that process. There is both frustration and elation in this work because some of our suggestions have been rejected but we know the ideas that have been accepted will be important law well into the next century. In the future, we need to monitor how revised Article 1 is working, detect any disharmony among Code Articles or the Code and other law, and make appropriate suggestions for remedy. If helping to wield the pen that writes probably the most important private law in this country (and perhaps the world) turns you on, membership in the Article 1 Subcommittee is for you. We meet at the Section of Business Law Spring Meeting and at the American Bar Association Annual Meeting, with much communication in between.

Article 9 and Certificate of Titles Statutes: Should the UCC Address the Risk of a Fumbled Handoff?

At the ABA Annual meeting in Chicago, the General Provisions and Relations to Other Law Subcommittee explored ways in which courts have used � 1-103 in recent years to supplement and occasionally supplant the UCC with background principles drawn from other law. Kristen Adams, our past chair, prepared excellent materials that guided our discussions. They are posted on the Subcommittee web page in the "Subcommittee Meeting Materials and Reports" section.

At the Business Law Section's 2010 Spring Meeting in Denver, we will turn our attention to an area where the UCC expressly defers/delegates a function to other law and consider what role the UCC should play in managing the relationship. Our focus will be on Article 9's express delegation to certificate of title statutes.

Every state provides a mechanism for a security interest to be listed on a motor vehicle certificate of title. In many states, this practice dates back to the early days of the automobile. The drafters of UCC Article 9 wisely chose to delegate matters relating to the method of perfection, duration of perfection, and renewal of perfection to the title statutes, rather than disrupt the long-standing practice of the vehicle financing market by requiring a UCC filing. See � 9-311(a). Article 9's mechanism for handing off these functions to the title statutes relies on (i) each state legislature identifying its own title statutes in � 9-311(a)(2), (ii) on the title statute from other jurisdictions qualifying as a "certificate of title" statutes under � 9-311(a)(3), and (iii) the certificates issued under the title statutes fitting within the definition of "certificate of title" under � 9-102(a)(10). Each of these branches requires that the title statute in question provide "for the security interest in question to be indicated on the certificate of title as a condition or result of the security interest's obtaining priority over the rights of a lien creditor." See e.g., � 9-102(a)(10).

At the Denver meeting we will explore whether the statutes that the marketplace believes are certificate of title statutes are clearly eligible to receive the handoff contemplated by Article 9, and consider what, if anything, the UCC should attempt to do address any uncertainty. We will examine three areas of concern:

• Priority over Lien Creditors: Not all title statutes expressly or impliedly refer to the means of achieving perfection or priority over lien creditors. However, it appears that this priority has, in practice, been achieved through compliance with these statutes ? probably through a combination of judicial interpretation and reliance on other statutory law.
  
  
• Connection between Achieving Priority and Indication on the Certificate: Many title statutes provide that perfection is achieved by properly submitting an application for a certificate of title that identifies the security interest. Many of these statutes also require the state agency responsible for titles to list the security interest on the certificate when issued. In some states, the state agency simply indicates the security interest on the certificate as matter of practice. The lack of a direct connection between the act resulting in perfection and the indication on the title creates some uncertainty about whether the statute "provides" that the security interest be indicated on the certificate as a "result" of perfection.
  
  (For a more complete discussion of the first two issues, see Stephen Sepinuck's February 2009 report at http://www.law.upenn.edu/bll/archives/ulc/ucc9/sepinuck%20memo%20021309.pdf.)
  
  
• Status of Electronic Titles: A number of states have revised their title statutes to allow a security interest to be perfected by recording it in the electronic records of the state agency as a substitute for actually issuing a paper certificate of title that indicates the secured interest. There is some uncertainty about whether these electronic records qualify as a "certificate of title" under UCC Article 9, particularly where the title statute suggests that these records are kept instead of issuing a certificate of title. See e.g., Tex. Transp. Code� 501.117.

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Sub-Committee Chair:  Thomas Jude Buiteweg

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