Tennessee UCC Controllable Electronic Records Amendments

The Tennessee amendments create a commercial-law framework for electronic records that can be controlled, transferred, and used as collateral. The public chapter adds a new Title 47, Chapter 6, titled “Uniform Commercial Code—Controllable Electronic Records.” It also states in the transition chapter that “Article 12” means Chapter 6 of Title 47, so editors should treat Tennessee’s Chapter 6 as the state codification of the UCC Article 12 controllable electronic records provisions.

• Controllable electronic records: Chapter 6 defines a controllable electronic record as a record stored in an electronic medium that can be subjected to control under Section 47-6-105. The definition excludes controllable accounts, controllable payment intangibles, deposit accounts, electronic chattel paper, electronic documents of title, electronic money, investment property, and transferable records.
• Control standard: A person has control when the record or related system gives that person the power to obtain substantially all benefit from the record, exclusive power to prevent others from obtaining the benefit, power to transfer control, and a way to identify itself, including through a cryptographic key, account number, or similar identifier.
• Qualifying purchasers: The chapter gives special treatment to qualifying purchasers, defined as purchasers that obtain control for value, in good faith, and without notice of a property-right claim. The public chapter provides that such purchasers acquire rights in the controllable electronic record free of a property-right claim in that record.
• Article 9 collateral rules: The act amends secured-transactions rules for controllable accounts, controllable electronic records, controllable payment intangibles, and electronic money, including perfection by filing and perfection by control. A security interest perfected by control remains perfected only while control is retained.

The amendments also revise the UCC definition of “money.” The amended definition covers a medium of exchange authorized or adopted by a domestic or foreign government, while excluding an electronic record that was already recorded and transferable in a system before the government authorization or adoption. The transition chapter includes a separate clause stating that it must not be construed to support, endorse, create, or implement a national digital currency.

Tennessee’s transition provisions set an “adjustment date” as July 1, 2025, or one year after the act’s effective date, whichever is later. Because the act takes effect July 1, 2026, the practical adjustment date is July 1, 2027. The transition chapter preserves certain pre-effective-date transactions and then phases in the new enforceability, perfection, and priority rules for Article 12 property and electronic money.