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.

     Debtors and creditors operate in the state remedies system, that is, they are governed by state law (except to the extent of some federal pre-emption), until and unless their relationship 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, known in California as Division 9 of the California Uniform Commercial Code.  In these materials we refer generally to sections of the Uniform Commercial Code (through the notation "U.C.C." followed by a section number).  All states have adopted Article 9. Thus, consistent with one of the expressed purposes of the Uniform Commercial Code, much of the law here is uniform throughout the country.  (As of January, 2000, some states have adopted and other states are considering adoption of Revised Article 9, to become effective July 1, 2001.  Anticipating its uniform or near uniform adoption, these materials focus on Revised Article 9.)  Bear in mind, however, that most states have adopted some non-uniform amendments to the uniform version and that case law interpreting even uniform provisions may vary among jurisdictions.  From time to time we refer to non-uniform amendments, particularly those adopted in California.  Moreover, 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.