SENATE COMMERCE COMMITTEE

STATEMENT TO

ASSEMBLY, No. 978

STATE OF NEW JERSEY

DATED: JUNE 3, 1996

      The Senate Commerce 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.