ASSEMBLY FINANCIAL INSTITUTIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 978

STATE OF NEW JERSEY

DATED: FEBRUARY 15, 1996

      The Assembly Financial Institutions Committee reports favorably Assembly Bill No. 978.

      The Uniform Commercial Code provides that a purchase money security interest must be perfected within a certain period of time in order for the secured party or creditor to have priority over a conflicting security interest, transferee in bulk, or lien creditor. This bill extends the period for perfection of a purchase money security interest from 10 to 20 days. The benefits of a 20-day period are: it is more cost-effective; it allows for trial periods and inspection periods; it provides a creditor with adequate time to perfect his security interest; and it has already been adopted by approximately 40 states so that a similar adoption by the State of New Jersey will serve to foster achievement of the fundamental objective of establishing uniformity in the various jurisdictions under the Uniform Commercial Code.

      This bill was pre-filed for introduction in the 1996 session pending technical review. As reported, the bill includes the changes required by technical review which has been performed.