Law regulating secured debt comes from a complicated blend of state and federal legislation, cases, and regulations, reflecting the fact that debtors and creditors operate (though often not consciously) in the context of what Professor Lynn LoPucki has termed "the state remedies system" and "the bankruptcy system". L. Lopucki, A General Theory of the Dynamics of the State Remedies/Bankruptcy System, 1982 Wisc. L. Rev. 311.

     Creditors and debtors operate in the state remedies system, that is, the remedies of creditors and the rights of debtors are governed by state law (except to the extent of some federal pre-emption), until and unless the relationship between them is removed to the bankruptcy system by the voluntary petition of a debtor or the involuntary petition of creditors. However, because financial distress creates a significant possibility that the bankruptcy system may be invoked, informed debtors and creditors in the state remedies system operate in the shadow of, that is, their choices of behavior must take account of, the law of the bankruptcy system.  Of course some debtors and creditors, either not well informed or whose behavior is influenced by other forces, may not be influenced by the law of the bankruptcy system.

     In the state remedies system, debt secured by personal property and fixtures is largely governed by a state's version of Article 9 of the Uniform Commercial Code.  You are no doubt familiar with the nature and basic purposes of the Uniform Commercial Code from your study of Article 2 (Sales) in your Contracts class.   In California, Article 9 is referred to as Division 9 of the California Uniform Commercial Code.  In these materials we refer generally to sections of the Uniform Commercial Code rather than to sections of the California Uniform Commercial Code.   References are through the notation "U.C.C." followed by a section number. 

     All states, and the District of Columbia, have adopted the 1998 Official Version of Article 9 (sometimes referred to as Revised Article 9).   Revised Article 9, approved by the American Law Institute (ALI) and promulgated by the National Conference of Commissioners on Uniform State Laws (NCCUSL) after nearly a decade of study and revision during the 1990's, replaces the 1972 Official Version of Article 9 (sometimes referred to as old Article 9).  Because all states have adopted a version of Revised Article 9, most of the law here is uniform throughout the country.  Bear in mind, however, that many states have adopted some non-uniform amendments to the uniform version.  From time to time we refer to non-uniform amendments, particularly those adopted in California.  Also bear in mind that case law interpreting even uniform provisions may vary among jurisdictions.  Case law interpreting and applying Revised Article 9 will only begin to appear after July 1, 2001, its initial effective date.  This 2001 version of the electronic teaching materials therefore includes, of necessity, only case law interpreting the 1972 (or an earlier 1962 version) of Article 9.  Such case law may or may not be helpful or dispositive in interpreting Revised Article 9. 

     In addition to Article 9, all states have adopted "certificate of title" legislation governing some aspects of security interests in mobile goods, such as automobiles. In addition, many states have adopted legislation that affords to consumer debtors greater protections against secured creditors than those afforded by Article 9.  See U.C.C. 9-201(b),(c).  Portions of some federal legislation (such as legislation governing aircraft or legislation governing copyright) and some federal regulation partially pre-empts Article 9. See U.C.C. 9-109(c)(1) and Official Comment 8 to U.C.C. 9-109.

     Efforts to make uniform the state law which governs real property secured debt have failed. Instead, each state's real property security law reflects its own peculiar mix of legislation and common law, pre-empted, in a few instances, by federal legislation. These materials are being designed with several templates to enable the instructor to select for student consideration the real property law of one of several jurisdictions. Your instructor's choice of law governing real property secured debt is indicated by the name of the template displayed on the home page of these materials.  However, the themes and issues considered in these materials are common to every jurisdiction; by exploring those themes and issues in the context of the law of one jurisdiction, you should be able to recognize and research the resolution of issues in other jurisdictions.

     When the bankruptcy system is invoked, federal bankruptcy law governs. That law consists of federal legislation (Title 11 of the United States Code, known as the Bankruptcy Code, together with some portions of Title 18, Crimes and Criminal Procedure, and Title 28, Judiciary and Judicial Procedure) and the federal common law interpreting and applying that legislation.  However, as we shall see, the Bankruptcy Code partially defers to state law on some important issues, including the validity, enforceability, and priority of liens.

     You will therefore be encountering a wide variety of primary sources in these materials: state legislation, both uniform and non-uniform, some general and some focused on consumer debtors; federal legislation, some pre-empting the state law that would otherwise operate in the state remedies system and some governing only in the case of bankruptcy; federal regulations; state common law, both interpreting state legislation and developing principles where no legislation governs; and, federal common law, primarily that which interprets provisions of the Bankruptcy Code.