§ 66-h. Restriction on sale in the event of nonappropriation. 1. Any agreement for the issuance of certificates of participation to fund installment purchases or lease purchases by the state may provide that the certificates are secured by the underlying property and that, in the event that the legislature fails to appropriate funds sufficient for the underlying installment payments, the financed property may be sold on behalf of the holders of the certificates, provided that any excess proceeds from such a sale, after deduction for and payment of fees, expenses and any taxes levied on the sale, and distribution to the holders of the certificates in the amount of the face value of the certificates plus accrued interest, or in the case of a certificate issued with an original issue discount, its accreted value, shall be paid to the state.

2. Any security interest in personal property made or created by any such agreement shall be valid, binding and perfected from the time when such security interest attaches, without any physical delivery of the collateral or further act. The lien of any such security interest shall be valid, binding and perfected as against all parties having claims of any kind in tort, contract or otherwise against the state irrespective of whether or not such parties have notice hereof. No instrument by which such security interest is created nor any financing statement or other document need be recorded or filed. This section shall apply notwithstanding the provisions of the uniform commercial code and the vehicle and traffic law.