One of the most significant changes brought about by Revised Article 9 is its coverage of statutory agricultural liens, (i.e. liens against farm products created by operation of law and based on the status of the claimant rather than consensual security interests based on contract).
Revised Article 9 includes within its scope nonpossessory, statutory agricultural liens, including landlord’s liens against crops. Other examples include feeder’s liens against livestock and liens against crops in favor of suppliers of fertilizer and pesticides. The definition of “agricultural lien,” which is distinguished from a “security interest,” is set forth in U.C.C. 9-102(a)(5), as follows:
“Agricultural lien” means an interest, other than a security interest in farm products: (A) which secures payment or performance of an obligation for; (i) goods or services furnished in connection with a debtor’s farming operation; or (ii) rent on real property leased by a debtor in connection with its farming operation; (B) which is created by statute and in favor of a person that: (i) in the ordinary course of business furnished goods or services to a debtor in connection with a debtor’s farming operation; or (ii) leased real property to a debtor in connection with the debtor’s farming operation; and (C) whose effectiveness does not depend on the person’s possession of the personal property.
NOTE: The term “Agricultural Lien” also includes every statutory lien created under Neb.Rev.Stat. §§ 52-202, 52-501, 52-701, 52-901, 52-1101, 52-1201, 52-201, 54-208 and Chapter 52, Article 14
Perfection of statutory agricultural liens is generally accomplished by a UCC filing, and priority rules applicable to security interests generally apply to statutory agricultural liens, unless the statute creating the lien expressly gives priority to the statutory lien. If the lien statute contains no priority rule, the first-to-file rule of Article 9 will control.
Statutory liens dependent upon possession of farm products are not “agricultural liens” and the priority of possessory liens is governed by a special rule under Article 9, pursuant to which the possessory lien prevails unless the statute expressly gives priority to the Article 9 security interest.
A statutory agricultural lien does not automatically carry over to proceeds. Unless the statute creating the agricultural lien states that the lien continues in proceeds from the disposition of farm products, the lien doesn’t extend to the proceeds, even though they may be identifiable.
The rules for “where to file” are different for security interests and agricultural liens. For security interests, the place to file is the state where the debtor is located. For agricultural liens, however, the place to file is the state where the farm products (crops and livestock) against which the lien is imposed are physically located. As a result, an agricultural lender may need to search in two jurisdictions: (1) the state where the crops or livestock are located, to find competing statutory agricultural liens; and (2) the state where the debtor resides, to find competing consensual security interests in farm products.