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Commerce and trade, uniform commercial code, article 9. secured transactions.

(a) Filing offices. — Except as otherwise provided in subsection (b), if the local law of this State governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is:

(1) the office designated for the filing or recording of a record of a mortgage on the related real property, if:

(A) the collateral is as-extracted collateral or timber to be cut; or

(B) the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; or

(2) the office of the Secretary of State, in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.

(b) Filing office for transmitting utilities. — The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the Secretary of State. The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures.

(a) Sufficiency of financing statement. — Subject to subsection (b), a financing statement is sufficient only if it:

(1) provides the name of the debtor;

(2) provides the name of the secured party or a representative of the secured party; and

(3) indicates the collateral covered by the financing statement.

(b) Real property-related financing statements. — Except as otherwise provided in Section 9-501(b), to be sufficient, a financing statement that covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy subsection (a) and also:

(1) indicate that it covers this type of collateral;

(2) indicate that it is to be filed in the real property records;

(3) provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage under the law of this State if the description were contained in a record of the mortgage of the real property; and

(4) if the debtor does not have an interest of record in the real property, provide the name of a record owner.

(c) Record of mortgage as financing statement. — A record of a mortgage is effective, from the date of recording, as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if:

(1) the record indicates the goods or accounts that it covers;

(2) the goods are or are to become fixtures related to the real property described in the record or the collateral is related to the real property described in the record and is as-extracted collateral or timber to be cut;

(3) the record satisfies the requirements for a financing statement in this section, but the record need not indicate that it is to be filed in the real property records; and

(4) the record is duly recorded.

A record of a mortgage is not a financing statement but is effective as a financing statement as provided in § 9-502(c) of this title.

(d) Filing before security agreement or attachment. — A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.

(a) Sufficiency of debtor’s name. — A financing statement sufficiently provides the name of the debtor:

(1) except as otherwise provided in paragraph (3), if the debtor is a registered organization or the collateral is held in a trust that is a registered organization, only if the financing statement provides the name that is stated to be the registered organization’s name on the public organic record inclusive of the record most recently filed with or issued or enacted by the registered organization’s jurisdiction of organization which purports to state, amend, restate, or correct the registered organization’s name;

(2) subject to subsection (f), if the collateral is being administered by the personal representative of a decedent, only if the financing statement provides, as the name of the debtor, the name of the decedent and, in a separate part of the financing statement, indicates that the collateral is being administered by a personal representative;

(3) if the collateral is held in a trust that is not a registered organization, only if the financing statement:

(A) provides, as the name of the debtor:

(i) if the organic record of the trust specifies a name for the trust, the name specified; or

(ii) if the organic record of the trust does not specify a name for the trust, the name of the settlor or testator; and

(B) in a separate part of the financing statement:

(i) if the name is provided in accordance with subparagraph (A)(i), indicates that the collateral is held in trust; or

(ii) if the name is provided in accordance with subparagraph (A)(ii), provides additional information sufficient to distinguish the trust from other trusts having one or more of the same settlors or the same testator and indicates that the collateral is held in a trust, unless the additional information so indicates;

(4) if the debtor is an individual, only if the financing statement:

(A) provides the individual name of the debtor;

(B) provides the surname and first personal name of the debtor; or

(C) subject to subsection (g), provides the name of the individual which is indicated on a driver’s license or identification card that this State has issued to the individual and which has not expired; and

(5) in other cases:

(A) if the debtor has a name, only if the financing statement provides the organizational name of the debtor; and

(B) if the debtor does not have a name, only if the financing statement provides the names of the partners, members, associates, or other persons comprising the debtor, in a manner that each name provided would be sufficient if the person named were the debtor.

(b) Additional debtor-related information. — A financing statement that provides the name of the debtor in accordance with subsection (a) is not rendered ineffective by the absence of:

(1) a trade name or other name of the debtor; or

(2) unless required under subsection (a)(5)(B), names of partners, members, associates, or other persons comprising the debtor.

(c) Debtor’s trade name insufficient. — A financing statement that provides only the debtor’s trade name does not sufficiently provide the name of the debtor.

(d) Representative capacity. — Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement.

(e) Multiple debtors and secured parties. — A financing statement may provide the name of more than one debtor and the name of more than one secured party.

(f) Name of decedent. — The name of the decedent indicated on the order appointing the personal representative of the decedent issued by the court having jurisdiction over the collateral is sufficient as the “name of the decedent” under subsection (a)(2).

(g) Multiple driver’s licenses or identification cards. — If this State has issued to an individual more than one driver’s license or identification card of a kind described in subsection (a)(4)(C), the one that was issued most recently is the one to which subsection (a)(4)(C) refers.

(h) Definition. — In this section, the “name of the settlor or testator” means:

(1) if the settlor is a registered organization, the name that is stated to be the settlor’s name on the public organic record inclusive of the record most recently filed with or issued or enacted by the settlor’s jurisdiction of organization which purports to state, amend, restate, or correct the settlor’s name; or

(2) in other cases, the name of the settlor or testator indicated in the trust’s organic record.

A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:

(1) a description of the collateral pursuant to Section 9-108; or

(2) an indication that the financing statement covers all assets or all personal property.

(a) A financing statement sufficiently indicates the collateral that it covers if the collateral is accounts, chattel paper, instruments or general intangibles and:

(1) The financing statement provides a description of one or more records (such as a computer file, microfiche list, printed list or other record) in the possession or control of the secured party and such record or records identify the specific accounts, chattel paper, instruments or general intangibles constituting the collateral;

(2) The financing statement indicates:

(A) That the items described on the record or records in the possession or control of the secured party are accounts, chattel paper, instruments or general intangibles; or

(B) The nature of the items on the record or records in the possession or control of the secured party by general description or category; and

(3) The record or records in the possession or control of the secured party contain:

(A) Confidential information, such as credit card numbers, loan numbers or taxpayer identification numbers, identifying the specific account debtors or persons obligated on the instruments; or

(B) A description of 100 or more specific accounts, chattel paper, instruments or general intangibles.

(b) Subsection (a) provides an additional method of sufficiently indicating collateral in a financing statement for purposes of this Article. A financing statement not complying with subsection (a) but otherwise complying with § 9-504 shall sufficiently indicate the collateral it covers for purposes of this Article.

(a) Use of terms other than “debtor” and “secured party.” — A consignor, lessor, or other bailor of goods, a licensor, or a buyer of a payment intangible or promissory note may file a financing statement, or may comply with a statute or treaty described in Section 9-311(a), using the terms “consignor”, “consignee”, “lessor”, “lessee”, “bailor”, “bailee”, “licensor”, “licensee”, “owner”, “registered owner”, “buyer”, “seller”, or words of similar import, instead of the terms “secured party” and “debtor”.

(b) Effect of financing statement under subsection (a). — This part applies to the filing of a financing statement under subsection (a) and, as appropriate, to compliance that is equivalent to filing a financing statement under Section 9-311(b), but the filing or compliance is not of itself a factor in determining whether the collateral secures an obligation. If it is determined for another reason that the collateral secures an obligation, a security interest held by the consignor, lessor, bailor, licensor, owner, or buyer which attaches to the collateral is perfected by the filing or compliance.

(a) Minor errors and omissions. — A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.

(b) Financing statement seriously misleading. — Except in the case of individual debtors and as otherwise provided in subsection (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a) is seriously misleading.

(c) Financing statement not seriously misleading. — If a search of the records of the filing office under the debtor’s correct name, using the filing office’s standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a), the name provided does not make the financing statement seriously misleading.

(d) “Debtor’s correct name.” — For purposes of Section 9-508(b), the “debtor’s correct name” in subsection (c) means the correct name of the new debtor.

(a) Disposition. — A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest or agricultural lien continues, even if the secured party knows of or consents to the disposition.

(b) Information becoming seriously misleading. — Except as otherwise provided in subsection (c) and Section 9-508, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 9-506.

(c) Change in debtor’s name. — If the name that a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under Section 9-503(a) so that the filed financing statement becomes seriously misleading under Section 9-506:

(1) the financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the filed financing statement becomes seriously misleading; and

(2) the financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the filed financing statement becomes seriously misleading, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the financing statement became seriously misleading.

(a) Financing statement naming original debtor. — Except as otherwise provided in this section, a filed financing statement naming an original debtor is effective to perfect a security interest in collateral in which a new debtor has or acquires rights to the extent that the financing statement would have been effective had the original debtor acquired rights in the collateral.

(b) Financing statement becoming seriously misleading. — If the difference between the name of the original debtor and that of the new debtor causes a filed financing statement that is effective under subsection (a) to be seriously misleading under Section 9-506:

(1) the financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under Section 9-203(d); and

(2) the financing statement is not effective to perfect a security interest in collateral acquired by the new debtor more than four months after the new debtor becomes bound under Section 9-203(d) unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time.

(c) When section not applicable. — This section does not apply to collateral as to which a filed financing statement remains effective against the new debtor under Section 9-507(a).

(a) Person entitled to file record. — A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if:

(1) the debtor authorizes the filing in a signed record or pursuant to subsection (b) or (c); or

(2) the person holds an agricultural lien that has become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.

(b) Security agreement as authorization. — By signing or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering:

(1) the collateral described in the security agreement; and

(2) property that becomes collateral under Section 9-315(a)(2), whether or not the security agreement expressly covers proceeds.

(c) Acquisition of collateral as authorization. — By acquiring collateral in which a security interest or agricultural lien continues under Section 9-315(a)(1), a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under Section 9-315(a)(2).

(d) Person entitled to file certain amendments. — A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if:

(1) the secured party of record authorizes the filing; or

(2) the amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement as required by Section 9-513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.

(e) Multiple secured parties of record. — If there is more than one secured party of record for a financing statement, each secured party of record may authorize the filing of an amendment under subsection (d).

(f) Trusts and trustees. — If either the debtor or the secured party is a trust (including a trust that is a registered organization) or a trustee acting with respect to property held in trust and is otherwise entitled to file a record pursuant to Section 9-509, authorization by an authorized person in the name of either the trust or the trustee shall be effective.

(a) Filed record effective if authorized. — A filed record is effective only to the extent that it was filed by a person that may file it under Section 9-509.

(b) Authorization by one secured party of record. — A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.

(c) Continuation statement not timely filed. — A continuation statement that is not filed within the six-month period prescribed by Section 9-515(d) is ineffective.

(a) Secured party of record. — A secured party of record with respect to a financing statement is a person whose name is provided as the name of the secured party or a representative of the secured party in an initial financing statement that has been filed. If an initial financing statement is filed under Section 9-514(a), the assignee named in the initial financing statement is the secured party of record with respect to the financing statement.

(b) Amendment naming secured party of record. — If an amendment of a financing statement which provides the name of a person as a secured party or a representative of a secured party is filed, the person named in the amendment is a secured party of record. If an amendment is filed under Section 9-514(b), the assignee named in the amendment is a secured party of record.

(c) Amendment deleting secured party of record. — A person remains a secured party of record until the filing of an amendment of the financing statement which deletes the person.

(a) Amendment of information in financing statement. — Subject to Section 9-509, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to subsection (e), otherwise amend the information provided in, a financing statement by filing an amendment that:

(1) identifies, by its file number, the initial financing statement to which the amendment relates; and

(2) if the amendment relates to an initial financing statement filed in a filing office described in Section 9-501(a)(1), provides the information specified in Section 9-502(b).

(b) Period of effectiveness not affected. — Except as otherwise provided in Section 9-515, the filing of an amendment does not extend the period of effectiveness of the financing statement.

(c) Effectiveness of amendment adding collateral. — A financing statement that is amended by an amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment.

(d) Effectiveness of amendment adding debtor. — A financing statement that is amended by an amendment that adds a debtor is effective as to the added debtor only from the date of the filing of the amendment.

(e) Certain amendments ineffective. — An amendment is ineffective to the extent it:

(1) purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing statement; or

(2) purports to delete all secured parties of record and fails to provide the name of a new secured party of record.

(f) Conversion of debtor. — Subject to Section 9-316:

(1) If a conversion of a debtor from one type of organization to another results in the converted organization being the same organization by operation of the laws governing such conversion and the name of the debtor changes as a result of such conversion, then such conversion shall constitute a change in such debtor’s name for purposes of Section 9-507(c);

(2) If a conversion of a debtor from one type of organization to another results in the converted organization being the same organization by operation of the laws governing such conversion, then such organization shall not constitute a new debtor for purposes of Section 9-508; and

(3) If a conversion of a debtor from one type of organization to another results in the converted organization being a different organization by operation of the laws governing such conversion, then such organization shall constitute a new debtor for purposes of Section 9-508.

(a) Consumer goods. — A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if the financing statement covers consumer goods and:

(1) there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or

(2) the debtor did not authorize the filing of the initial financing statement.

(b) Time for compliance with subsection (a). — To comply with subsection (a), a secured party shall cause the secured party of record to file the termination statement:

(1) within one month after there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or

(2) if earlier, within 20 days after the secured party receives a signed demand from a debtor.

(c) Other collateral. — In cases not governed by subsection (a), within 20 days after a secured party receives a signed demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if:

(1) except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value;

(2) the financing statement covers accounts or chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation;

(3) the financing statement covers goods that were the subject of a consignment to the debtor but are not in the debtor’s possession; or

(4) the debtor did not authorize the filing of the initial financing statement.

(d) Effect of filing termination statement. — Except as otherwise provided in Section 9-510, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective. Except as otherwise provided in Section 9-510, for purposes of Sections 9-519(g), 9-522(a), and 9-523(c), the filing with the filing office of a termination statement relating to a financing statement that indicates that the debtor is a transmitting utility also causes the effectiveness of the financing statement to lapse.

(a) Assignment reflected on initial financing statement. — Except as otherwise provided in subsection (c), an initial financing statement may reflect an assignment of all of the secured party’s power to authorize an amendment to the financing statement by providing the name and mailing address of the assignee as the name and address of the secured party.

(b) Assignment of filed financing statement. — Except as otherwise provided in subsection (c), a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which:

(1) identifies, by its file number, the initial financing statement to which it relates;

(2) provides the name of the assignor; and

(3) provides the name and mailing address of the assignee.

(c) Assignment of record of mortgage. — An assignment of record of a security interest in a fixture covered by a record of a mortgage which is effective as a financing statement filed as a fixture filing under Section 9-502(c) may be made only by an assignment of record of the mortgage in the manner provided by law of this State other than the Uniform Commercial Code.

(a) Five-year effectiveness. — Except as otherwise provided in subsections (b), (e), (f), and (g), a filed financing statement is effective for a period of five years after the date of filing.

(b) Public-finance or manufactured-home transaction. — Except as otherwise provided in subsections (e), (f), and (g), an initial financing statement filed in connection with a public-finance transaction or manufactured-home transaction is effective for a period of 30 years after the date of filing if it indicates that it is filed in connection with a public-finance transaction or manufactured-home transaction.

(c) Lapse and continuation of financing statement. — The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless before the lapse a continuation statement is filed pursuant to subsection (d). Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement becomes unperfected, unless the security interest is perfected otherwise. If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the collateral for value.

(d) When continuation statement may be filed. — A continuation statement may be filed only within six months before the expiration of the five-year period specified in subsection (a) or the 30-year period specified in subsection (b), whichever is applicable.

(e) Effect of filing continuation statement. — Except as otherwise provided in Section 9-510, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five years commencing on the day on which the financing statement would have become ineffective in the absence of the filing. Upon the expiration of the five-year period, the financing statement lapses in the same manner as provided in subsection (c), unless, before the lapse, another continuation statement is filed pursuant to subsection (d). Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.

(f) Transmitting utility financing statement. — If a debtor is a transmitting utility and a filed initial financing statement so indicates, the financing statement is effective until a termination statement is filed.

(g) Record of mortgage as financing statement. — A record of a mortgage that is effective as a financing statement filed as a fixture filing under Section 9-502(c) remains effective as a financing statement filed as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property.

(a) What constitutes filing. — Except as otherwise provided in subsection (b), communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing.

(b) Refusal to accept record; filing does not occur. — Filing does not occur with respect to a record that a filing office refuses to accept because:

(1) the record is not communicated by a method or medium of communication authorized by the filing office;

(2) an amount equal to or greater than the applicable filing fee is not tendered;

(3) the filing office is unable to index the record because:

(A) in the case of an initial financing statement, the record does not provide a name for the debtor;

(B) in the case of an amendment or information statement, the record:

(i) does not identify the initial financing statement as required by Section 9-512 or 9-518, as applicable; or

(ii) identifies an initial financing statement whose effectiveness has lapsed under Section 9-515;

(C) in the case of an initial financing statement that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual which was not previously provided in the financing statement to which the record relates, the record does not identify the debtor’s surname; or

(D) in the case of a record filed in the filing office described in Section 9-501(a)(1), the record does not provide a sufficient description of the real property to which it relates;

(4) in the case of an initial financing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record;

(5) in the case of an initial financing statement or an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not:

(A) provide a mailing address for the debtor; or

(B) indicate whether the name provided as the name of the debtor is the name of an individual or an organization;

(C) [Repealed.]

(6) in the case of an assignment reflected in an initial financing statement under Section 9-514(a) or an amendment filed under Section 9-514(b), the record does not provide a name and mailing address for the assignee; or

(7) in the case of a continuation statement, the record is not filed within the six-month period prescribed by Section 9-515(d).

(c) Rules applicable to subsection (b). — For purposes of subsection (b):

(1) a record does not provide information if the filing office is unable to read or decipher the information;

(2) a record that does not indicate that it is an amendment or identify an initial financing statement to which it relates, as required by Section 9-512, 9-514, or 9-518, is an initial financing statement;

(3) for an initial financing statement filed in a filing office described in § 9-501(a)(1) of this title, the requirements of § 9605(f) of Title 9 may be satisfied by placing the county tax assessment parcel identification number in item 4 of the form specified in § 9-521(a) of this title or the comparable item on any other form of initial financing statement;

(4) for a financing statement amendment filed in a filing office described in § 9-501(a)(1) of this title, the requirements of § 9605(f) of Title 9 may be satisfied by placing the county tax assessment parcel identification number in item 8 of the form specified in § 9-521(b) of this title or the comparable item on any other form of financing statement amendment;

(5) for an initial financing statement filed in a filing office described in § 9-501(a)(1) of this title, the requirements of § 9605(h) of Title 9 shall be satisfied by including the information required by § 9-502(b) of this title; and

(6) for a financing statement amendment filed in a filing office described in § 9-501(a)(1) of this title, the requirements of § 9605(h) of Title 9 shall be satisfied by including the information required by § 9-512(a) of this title.

(d) Refusal to accept record; record effective as filed record. — A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set forth in subsection (b), is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files.

(e) Trusts and trustees. — If collateral is held in a trust (including a trust that is a registered organization), the information required by subsection (b)(5) with respect to the debtor may be provided with respect to either the trust or the trustee.

The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.

(a) Statement with respect to record indexed under person’s name. — A person may file in the filing office an information statement with respect to a record indexed there under the person’s name if the person believes that the record is inaccurate or was wrongfully filed.

(b) Contents of statement under subsection (a). — An information statement under subsection (a) must:

(1) identify the record to which it relates by:

(A) the file number assigned to the initial financing statement to which the record relates; and

(B) if the information statement relates to a record filed in a filing office described in Section 9-501(a)(1), the date that the initial financing statement was filed and the information specified in Section 9-502(b);

(2) indicate that it is an information statement; and

(3) provide the basis for the person’s belief that the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure any inaccuracy or provide the basis for the person’s belief that the record was wrongfully filed.

(c) Statement by secured party of record. — A person may file in the filing office an information statement with respect to a record filed there if the person is a secured party of record with respect to the financing statement to which the record relates and believes that the person that filed the record was not entitled to do so under Section 9-509(d).

(d) Contents of statement under subsection (c). — An information statement under subsection (c) must:

(3) provide the basis for the person’s belief that the person that filed the record was not entitled to do so under Section 9-509(d).

(e) Record not affected by information statement. — The filing of an information statement does not affect the effectiveness of an initial financing statement or other filed record.

(a) Filing office duties. — For each record filed in a filing office, the filing office shall:

(1) assign a unique number to the filed record;

(2) create a record that bears the number assigned to the filed record and the date and time of filing;

(3) maintain the filed record for public inspection; and

(4) index the filed record in accordance with subsections (c), (d), and (e).

(b) File number. — A file number assigned after January 1, 2002 must include a digit that:

(1) is mathematically derived from or related to the other digits of the file number; and

(2) aids the filing office in determining whether a number communicated as the file number includes a single-digit or transpositional error.

(c) Indexing: general. — Except as otherwise provided in subsections (d) and (e), the filing office shall:

(1) index an initial financing statement according to the name of the debtor and index all filed records relating to the initial financing statement in a manner that associates with one another an initial financing statement and all filed records relating to the initial financing statement; and

(2) index a record that provides a name of a debtor which was not previously provided in the financing statement to which the record relates also according to the name that was not previously provided.

(d) Indexing: real property-related financing statement. — If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, the filing office shall index it:

(1) under the names of the debtor and of each owner of record shown on the financing statement as if they were the mortgagors under a mortgage of the real property described; and

(2) to the extent that the law of this State provides for indexing of records of mortgages under the name of the mortgagee, under the name of the secured party as if the secured party were the mortgagee thereunder, or, if indexing is by description, as if the financing statement were a record of a mortgage of the real property described.

(e) Indexing: real property-related assignment. — If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, the filing office shall index an assignment filed under Section 9-514(a) or an amendment filed under Section 9-514(b):

(1) under the name of the assignor as grantor; and

(2) to the extent that the law of this State provides for indexing a record of the assignment of a mortgage under the name of the assignee, under the name of the assignee.

(f) Retrieval and association capability. — The filing office shall maintain a capability:

(1) to retrieve a record by the name of the debtor and by the file number assigned to the initial financing statement to which the record relates; and

(2) to associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement.

(g) Removal of debtor’s name. — The filing office may not remove a debtor’s name from the index until one year after the effectiveness of a financing statement naming the debtor lapses under Section 9-515 with respect to all secured parties of record.

(h) Timeliness of filing office performance. — The filing office shall perform the acts required by subsections (a) through (e) at the time and in the manner prescribed by filing-office rule.

(a) Mandatory refusal to accept record. — A filing office shall refuse to accept a record for filing for a reason set forth in Section 9-516(b) and may not refuse to accept a record for filing for any other reason.

(b) Communication concerning refusal. — If a filing office refuses to accept a record for filing, it shall communicate to the person that presented the record the fact of and reason for the refusal and the date and time the record would have been filed had the filing office accepted it. The communication must be made at the time and in the manner prescribed by filing-office rule.

(c) When filed financing statement effective. — A filed financing statement satisfying Section 9-502(a) and (b) is effective, even if the filing office is required to refuse to accept it for filing under subsection (a). However, Section 9-338 applies to a filed financing statement providing information described in Section 9-516(b)(5) which is incorrect at the time the financing statement is filed.

(d) Separate application to multiple debtors. — If a record communicated to a filing office provides information that relates to more than one debtor, this part applies as to each debtor separately.

(a) Initial financing statement form. — A filing office that accepts written records may not refuse to accept a written initial financing statement in the following form and format except for a reason set forth in Section 9-516(b):

(b) Amendment form. — A filing office that accepts written records may not refuse to accept a written record in the following forms and formats except for a reason set forth in § 9-516(b):

(a) Post-lapse maintenance and retrieval of information. — The filing office shall maintain a record of the information provided in a filed financing statement for at least one year after the effectiveness of the financing statement has lapsed under Section 9-515 with respect to all secured parties of record. The record must be retrievable by using the name of the debtor and by using the file number assigned to the initial financing statement to which the record relates.

(b) Destruction of written records. — Except to the extent that a statute governing disposition of public records provides otherwise, the filing office immediately may destroy any written record evidencing a financing statement. However, if the filing office destroys a written record, it shall maintain another record of the financing statement which complies with subsection (a).

(a) Acknowledgment of filing written record. — If a person that files a written record requests an acknowledgment of the filing, the filing office shall send to the person an image of the record showing the number assigned to the record pursuant to Section 9-519(a)(1) and the date and time of the filing of the record. However, if the person furnishes a copy of the record to the filing office, the filing office may instead:

(1) note upon the copy the number assigned to the record pursuant to Section 9-519(a)(1) and the date and time of the filing of the record; and

(2) send the copy to the person.

(b) Acknowledgment of filing other record. — If a person files a record other than a written record, the filing office shall communicate to the person an acknowledgment that provides:

(1) the information in the record;

(2) the number assigned to the record pursuant to Section 9-519(a)(1); and

(3) the date and time of the filing of the record.

(c) Communication of requested information. — The filing office shall communicate or otherwise make available in a record the following information to any person that requests it:

(1) whether there is on file on a date and time specified by the filing office, but not a date earlier than three business days before the filing office receives the request, any financing statement that:

(A) designates a particular debtor;

(B) has not lapsed under Section 9-515 with respect to all secured parties of record; and

(C) if the request so states, has lapsed under Section 9-515 and a record of which is maintained by the filing office under Section 9-522(a);

(2) the date and time of filing of each financing statement; and

(3) the information provided in each financing statement.

(d) Medium for communicating information. — In complying with its duty under subsection (c), the filing office may communicate information in any medium. However, if requested, the filing office shall communicate information by issuing a record that can be admitted into evidence in the courts of this State without extrinsic evidence of its authenticity.

(e) Timeliness of filing office performance. — The filing office shall perform the acts required by subsections (a) through (d) at the time and in the manner prescribed by filing-office rule.

(f) Public availability of records. — At least weekly, the office of the Secretary of State may offer to sell or license to the public on a nonexclusive basis, in bulk, copies of all records filed in it under this part, in every medium from time to time available to the filing office.

Delay by the filing office beyond a time limit prescribed by this part is excused if:

(1) the delay is caused by interruption of communication or computer facilities, war, emergency conditions, failure of equipment, or other circumstances beyond control of the filing office; and

(2) the filing office exercises reasonable diligence under the circumstances.

(a) Initial financing statement or other record; general rule. —

Except as otherwise provided in subsection (e), the fee for filing and indexing a record under this part, other than an initial financing statement of the kind described in subsection (b), is:

(1) The amount specified in subsection (c), if applicable, plus an amount not to exceed $ 125 and an amount of $2 per page for each page in excess of 4 pages if the record is communicated in writing or as an image; or

(2) An amount not to exceed $ 100 if the record is communicated via the Internet or a similar medium authorized by filing office rule, provided that filings complying with such rule shall be exempt from fees described in subsection (c) and paragraph (d)(3) of this section.

(b) Initial financing statement: public-finance or manufactured-home transaction. — Except as otherwise provided in subsection (e), the fee for filing and indexing an initial financing statement of the following kind is the amount specified in subsection (a)(and, if applicable, subsection (c)), plus $20 if the financing statement indicates that it is filed in connection with a public-finance transaction or a manufactured-home transaction.

(c) Number of names. — Except as otherwise provided in subsection (e), if a record is communicated in writing or as an image, the fee for each name more than two required to be indexed is $25.

(d) Response to information request and expediting services. — (1) The fee for responding to a request for information from the filing office, including for communicating whether there is on file any financing statement naming a particular debtor, is:

(A) $25 if the request is communicated in writing; and

(B) $25 if the request is communicated by another medium authorized by filing-office rule.

(2) Upon request the filing office shall provide a copy of any record for a uniform fee of $10 for the first page and $2 for each additional page; provided however, that the office of the Secretary of State may, in its discretion, establish different rate schedules for bulk copies pursuant to § 9-523(f) of this title.

(3) For each service described in this subsection or in Section 9-523(a) that is requested to be completed: (i) within a twenty-four hour period from the time of the request, the Secretary of State shall charge the additional sum of up to $100; (ii) within the same day as the day of the request, the Secretary of State shall charge the additional sum of up to $200; (iii) within a two-hour period from the time of the request, the Secretary of State shall charge the additional sum of up to $500; and (iv) within a one-hour period from the time of the request, the Secretary of State shall charge the additional sum of up to $1,000.

(e) Record of mortgage. — This section does not require a fee with respect to a record of a mortgage which is effective as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut under Section 9-502(c). However, the recording and satisfaction fees that otherwise would be applicable to the record of the mortgage apply.

(a) Adoption of filing-office rules. — The Secretary of State shall adopt and publish rules to implement this Article. The filing-office rules must be:

(1) consistent with this Article; and

(2) adopted and published in accordance with Chapter 101 of Title 29 (the Delaware Administrative Procedures Act).

(b) Harmonization of rules. — To keep the filing-office rules and practices of the filing office in harmony with the rules and practices of filing offices in other jurisdictions that enact substantially this part, and to keep the technology used by the filing office compatible with the technology used by filing offices in other jurisdictions that enact substantially this part, the office of the Secretary of State, so far as is consistent with the purposes, policies, and provisions of this Article, in adopting, amending, and repealing filing-office rules, shall:

(1) consult with filing offices in other jurisdictions that enact substantially this part; and

(2) consult the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators or any successor organization; and

(3) take into consideration the rules and practices of, and the technology used by, filing offices in other jurisdictions that enact substantially this part.

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Presentation

Ucc3 financing statement amendments: avoiding loss of lien perfection or priority.

June 20, 2024

The Uniform Commercial Code-3 (UCC3) amendment is used to change information regarding the collateral and parties or indicate changes in the effectiveness of the financing statement.

While creating and filing a UCC3 record may seem straightforward, amending a UCC financing statement can be fraught with hidden risks and pitfalls. The effect of UCC3 amendments may not be what the filer expected – the termination that does not terminate or the assignment that does not assign. If not used properly, a UCC3 may not achieve the secured party’s desired result, or, worse, it can jeopardize the secured party’s ability to enforce its security interest.

Member Marshall Grodner (Baton Rouge) is co-presenting a Strafford webinar, “UCC3 Financing Statement Amendments: Avoiding Loss of Lien Perfection or Priority,” on June 20th, 2024. This presentation will brief counsel on the proper use of the UCC3 amendment form and its electronic equivalent, identify surprising traps for the unwary that can result in the loss of perfection or priority of a lender’s security interest, and offer best practices for secured parties to avoid unnecessary risks and costly mistakes.

Learn more.

News Release

June 28, 2024

McGlinchey proudly announces that R. Marshall Grodner, a member in our Baton Rouge office, has been appointed to the Bank Counsel Committee of the Louisiana Bankers Association (LBA). This prestigious appointment highlights Marshall's extensive knowledge and dedication to the legal field, particularly in banking and finance law.

June 6, 2024

McGlinchey is pleased to announce that 25 attorneys and eight practice areas have been recognized in the 2024 Chambers USA Guide. This year’s rankings include two nationally ranked practices and three newly ranked attorneys.

November 28, 2023

McGlinchey Stafford is pleased to announce that several members of the firm have been appointed to leadership roles within the American Bar Association’s Business Law Section.

August 29, 2023

Marshall Grodner (Baton Rouge) will participate in a Strafford CLE panel webinar on Tuesday, August 29, 2023, for real estate practitioners offering guidance on giving and reviewing opinion letters relating to Uniform Commercial Code matters.

Published Article

May 8, 2023

Baton Rouge Member R. Marshall Grodner addressed moral and ethical dilemmas in the transactional context in an article for The Abstract, a biannual publication from the American College of Mortgage Attorneys (ACMA).

December 14, 2022

Often we hear of companies dismissing the need for a title search prior to entering into a commercial lease of real property. While there may be different reasons, beyond simply the cost, why a prospective tenant may choose to forego a title search; however, no matter what the reason, not undertaking a title search comes with serious risks, even when the transaction is a lease rather than a purchase.

September 13, 2022

Marshall Grodner (Baton Rogue) will co-present "Structuring Opinions of Counsel in Real Estate Finance Transactions" in a Strafford webinar on Tuesday, September 13, 2022. This webinar will prepare counsel to draft third-party opinions for real estate finance transactions. The panel will cover the opinions required--including authority, enforceability, and property-related opinions--and the assumptions, limitations, and qualifications that counsel should include to limit exposure.

UCC-3 Financing Statement | Practical Law

UCC-3 Financing Statement

Practical law glossary item 1-382-3886  (approx. 2 pages).

• Knowledge Center

Lessons from Delaware: Navigating the 2018 Amendments to Sections 9-406 and 9-408 of Article 9 of the Uniform Commercial Code

February 2020

Publication

Since 2001, Sections 9-406 and 9-408 of Article 9 of the Uniform Commercial Code (“UCC”) have contained provisions that void certain restrictions against assignability. Interestingly, in 2002, the State of Delaware approved amendments ( the “Delaware Amendments”) to Sections 9-406 and 9-408 of the version of the UCC enacted in Delaware (the “Delaware UCC”) which, in part, provided that the restrictions against assignability do not apply to “an interest in a partnership or limited liability company.” At its July 2018 annual meeting, the Uniform Law Commission enacted amendments to Article 9 of the UCC4 modifying the “antiassignment override” provisions, thereby aligning the UCC with the Delaware UCC by excluding partnership and limited liability company interests from the override provisions. The amendments to the anti-assignment override provisions of Sections 9-406 and 9-408 adopted by the Uniform Law Commission (the “2018 Amendments”) align the UCC with what has long been the case in the State of Delaware.

Read the full article from ACREL's News & Notes

Sara T. Wagner R. Parker Havis

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What Is a UCC-3 Filing and Why Should You File One?

Have you filed a UCC-1 to secure your interest in certain collateral? Well, if you have and you need to continue, amend, assign, or terminate your UCC filing, you will file a UCC-3. You may have already guessed, but today’s post is all about the UCC-3, including its magical powers. OK, it may not be magical per se, but it is certainly powerful and shouldn’t be ignored.

UCC-1, UCC-3, UCC-5, UCC-11

It may seem like an odd numbering system, but each form is important in its own right. A UCC-1 is the initial Financing Statement and is filed to provide notice to other creditors of your security interest. Typically, when we talk about perfecting your security interest or filing a UCC, we are usually referring to a UCC-1 or your initial filing.

Let’s skip the UCC-3 for now and jump ahead to the UCC-5 and the UCC-11. A UCC-5 is an information statement you file when you believe an existing record is inaccurate or was wrongfully filed. In compliance with Article §9-518 , this statement should include reference to the original filing (the filing with the alleged errors). It should indicate it is an information statement and it should identify what you believe to be inaccurate in the original filing. It’s important to note, this filing does not amend any information – you will need to file the UCC-3 if you need to amend info.

The UCC-11 is an information request to determine whether there are other secured parties, whether specific collateral is already secured by a UCC, and to determine a creditor’s priority.

Bouncing back to the UCC-3.

A UCC-3 Wears Many Hats

It’s true, a UCC-3 is used to continue your existing filing, amend your existing filing, terminate your existing filing, or assign your interest to another secured party.

Continuation

A UCC is effective for 5 years. If you need to extend the filing, you will file a UCC-3 Continuation within 6 months before the expiration date of the existing filing. Once the continuation has been filed, your UCC is effective for another 5 years. If you don’t file your continuation timely, your UCC will become ineffective.

How often should you continue a filing? It depends on what you are providing as the creditor. If you are a lender, and your customer’s loan period is longer than 5 years, you would need to file continuations every 5 years until the loan is paid off/closed, to maintain your security. If you are a distributor of goods, and your customer operates on a revolving line of credit with you, you should file a continuation every 5 years as your relationship continues.

I’m going to repeat what I just said moments ago: if you do not file a continuation timely, your existing UCC will become ineffective. And, as we’ve discussed on our blog before, you can’t revive your security interest; you will lose your place in line.

Ah, UCC Amendments, let me count the ways! Why would you need to amend your UCC? The most common reasons to amend a filing include a change in your customer’s name or address, a change in your company’s name or address, or a change in the collateral.

The most common, and arguably most critical, reason to amend your filing is if your customer’s name or address changes. We talk about this a lot, because not only is it vital to your security interest, it’s also one that consistently stymies creditors . Article §9-507(c) clearly states you have a 4-month window to amend your filing for a debtor name change to maintain your priority. If you fail to timely amend your filing, your filing will be considered seriously misleading, and your security interest will be unperfected. Remember, names matter in UCCs, after all, a search by name is how parties identify whether a security interest already exists on certain collateral.

I mentioned you may want to amend a filing if your company’s name or address changes, and while this is not dictated by Article 9, it is a best practice. I recommend amending the filing to alleviate delays or missed notifications about a debtor’s bankruptcy. For example, let’s say your customer files for bankruptcy. The bankruptcy trustee will go through public records (i.e., UCC filings) to ensure notifications of the bankruptcy – including the mega important bar date info – are mailed to all parties. If your address is wrong and the mail is either delayed or returned, you could miss the bar date. Yes, you could likely argue you missed the bar date because you didn’t receive timely notification, but the court may say “Hey, not my problem, you should have maintained the public record.” Is it worth the hassle?

If there is a change in the collateral, you will need to amend your filing. Other creditors are relying on the information you provide to determine whether an interest already exists on certain collateral. If your Financing Statement doesn’t correctly identify the collateral, other creditors can assume there is collateral available for them to use as security – keep it current, don’t let that happen.

If you need to assign or transfer all or some of your rights to the collateral to another secured party, you will file an Assignment.

9-514 Assignment of Powers of Secured Party of Record

(b) [Assignment of filed financing statement.]

Except as otherwise provided in subsection (c), a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which:

(1) identifies, by its file number, the initial financing statement to which it relates;

(2) provides the name of the assignor; and

(3) provides the name and mailing address of the assignee.

Assignments occur frequently with banks, as one bank transfers its security to another bank.

Termination

Seems fitting to end today’s post with Terminations. The filing of a termination ceases the effectiveness of the original UCC. Typically, terminations are filed at the end of the relationship when monies have been paid and/or collateral returned. As an example, your bank filed a UCC when you signed for your car loan; once your car loan is paid off, the bank terminates their UCC, which frees up the collateral (i.e., your car).

Use caution when terminating filings because you can’t un-terminate them. If you need a billion dollar warning, check out How JP Morgan Chase Bank’s Billion Dollar Mistake Can Make You a Better Credit Manager .

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UCC3 Amendments: The Essentials

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It can be difficult to understand the nuance of both filing and searching Uniform Commercial Code (UCC) financing statements (also known as UCC3s). Sometimes, filers could find the effect of their filed UCC3 to be different than intended. Other times, there are multiple amendment actions that can be taken to achieve the same effect on the UCC3 record.

The result is that this process can become cumbersome for both filers and those who interpret the record. CSC Associate General Counsel Paul Hodnefield will seek to clear up the uncertainty surrounding the different types of amendments, their effect on the record, and the risks involved in the process.

Webinar transcript

Disclaimer: Please be advised that this recorded webinar has been edited from its original format, which may have included a product demo. To set up a live demo or to request more information, please complete the form to the right. Or if you are currently not on CSC Global, there is a link to the website in the description of this video. Thank you.

Tarik: Hello, everyone, and welcome to today's webinar, "UCC3 Amendments: The Essentials." My name is Tarik Hopkins, and I will be your moderator.

Paul: Thank you, Tarik. Well, before I get into the presentation, I just want to introduce myself a little bit. As Tarik said, my name is Paul Hodnefield. I'm Associate General Counsel for CSC, and in that capacity, it's my responsibility to be the go-to person for all things related to the UCC search and filing process.

And to carry that out, I'm heavily involved in the industry. I participate with the filing officers and their organization, IACA. I co-chair a task force for filing office operations and search logic for the ABA. I am frequently in contact with filing offices around the country, troubleshooting various issues, and a lot of other . . . oh, I also monitor case law and legislation on a daily basis.

So needless to say, I get a lot of information from a lot of different sources, and one of the favorite parts of my job is when I can share that with our customers. So I'm really glad to be here today.

And the topic we have today happens to be UCC3 Amendments. Understanding UCC3 Amendments can be a challenge for both filers and searchers. These records don't always have the effect that their title implies, and in some cases, there are multiple options for accomplishing the same effect on the record.

Yeah, it is critical for those involved in the process to know how UCC3 records work. I mean, filing a UCC3 Amendment incorrectly or misinterpreting an amendment when it appears on a search can have costly consequences for the parties involved.

What I plan to do today is provide a high-level overview of the essentials regarding the different types of UCC3 Amendments. In the process, I will point out some of the best practices and identify common traps for the unwary searcher and filer.

More specifically, I'm going to begin with some basic concepts about the UCC system and UCC3 records, including the rules for sufficiency and design of the UCC3 form. Then I'll move on to the specific types of amendments.

The program will finish with some specific case issues, and then I'll take questions for the remaining time.

A couple of caveats about this program. As noted, this is a high-level overview. There are a lot of details and nuances for some types of amendments that require much more time to cover than we have available today.

And likewise, post-filing changes that require amendments are outside the scope of the program today. These topics all require their own sessions and much more time to cover thoroughly, but we do offer other programs as well from time to time.

So with no further ado, we'll go ahead and get into the basics of the UCC3 process.

A couple of general concepts that are important to understand. Actually, a few of them. For one, it's really important to understand that the UCC is a notice filing system. And what that means is that what gets filed in the UCC records are not liens or security interests. They're merely notices that indicate a security interest may exist.

These records are not enforceable in their own right. You can't sue to enforce a Financing Statement. That's not what they're for. You can sue to enforce the underlying documents, but all a UCC Financing Statement does is provide notice so the security interest may exist.

That same notice filing principle applies to amendments as well as to Financing Statements. So all amendments are really nothing more than notices either.

Another important concept to understand is that a UCC3 amendment has no separate existence apart from the Financing Statement technically in the definitions of Article 9. A Financing Statement as defined in Article 9 means a record composed of an initial Financing Statement and any filed records related to the initial Financing Statement. In other words, UCC3 Amendments are subsumed into the Financing Statement to which they relate.

Another very important thing to understand about UCC3 records, especially in a notice filing context, is that the effect of a UCC3 Amendment cannot be determined by the record itself. Again, these are just notices. They don't provide all the details somebody would need to know the effectiveness, and that means that further inquiry is necessary to understand the full state of affairs with regard to the amendment.

Another important concept to understand when it comes to UCC3s is the role of the filing office. The filing office plays less of a role than many people realize in the filing of amendments.

The filing office role is purely ministerial. The Article 9 drafting policy is to make the filing office's role ministerial. That means they don't exercise judgment or discretion when it comes to filing or search.

The filing office does not interpret UCC records. They do not determine the effect or meaning. In fact, the filing office has no power to make a record effective or ineffective. All it can do is make it retrievable or hidden. And what this does is it places the responsibility on interested parties, those who search the records, to determine what they mean and what the effect is.

The filing office has, as a matter of policy under Article 9, an open-door policy. And what that means is when a search is conducted, the filing office simply turns over everything that's been filed that's related to a Financing Statement disclosed by the search. They have to maintain all the records related to a search until a year after the lapse date, so they can't get rid of anything until that period of time.

So the search results include any disclosed initial Financing Statement and all related records. And what this really means for the searcher is that all UCC Amendments are cumulative, meaning nothing is ever removed from the record. They always add to it. Even an amendment to delete a party doesn't actually delete the party. It just adds a record that the searcher can take a look at to interpret who is a party, but the parties will continue to appear in the index.

Now, not all amendments that get filed are effective. They have to satisfy certain requirements under Article 9, so I want to talk about the effectiveness of UCC Amendments.

First of all, an amendment of any type is only effective to the extent it was filed by a person that may file it under Section 9-509. In other words, it's got to be authorized. It has to be filed with the authority of a person who is authorized to do so under 9-509.

Now, under 9-509, the people entitled to authorize a record will depend on the nature of the record. Any record that expands the scope of the Financing Statement, such as adding collateral or adding a debtor, that must be authorized by the debtor. Now, that authority isn't required to be indicated on the UCC3, but it does have to be authorized.

Now, authorization always takes place outside the public record. I can't be proven from the record itself.

Any other amendments, such as to change party information, change a party address, continue, terminate, assign, all of these things must be authorized by the secured party of record.

Now, one thing to bear in mind, too, is that there may be limited effect to a UCC3 Amendment because under 9-510 (b), an amendment authorized by one secured party of record does not affect the Financing Statement with respect to another secured party of record, unless that other secured party of record has also authorized the filing.

Now, as I mentioned, authority to file cannot be determined from the record itself. It isn't required to be indicated in the record. And in fact, it can't be proven by the record. That can only be determined through conducting further inquiry outside the public record to reach that point.

In addition to being filed by somebody who has authority to file it under 9-509, in order to be effective, an amendment has to also be sufficient. In other words, it has to comply with the statutory requirements of Article 9.

These are fairly straightforward. For one, it has to identify by file number, the initial Financing Statement to which it relates, at least if it's filed in the State Central Index. So it has to have a correct initial Financing Statement file number.

If it is a fixture filing or other record that's filed in the real estate records, then the filer must provide additional information required by section 9-502 (b), which typically is what's required to get it filed in the land records, like it has to indicate it's to be filed and the land records, has to contain a description of the real property, and so forth.

So these are all things that are required to index the record in the appropriate index. In addition to that, the record has to indicate what type of amendment it is because the filing office has to know how to index it appropriately. So this is done by using the appropriate checkbox on the form.

Finally, the record must provide any additional information that's required based on the type of amendment. For example, an amendment to add a debtor must have a debtor name and address. That information is provided in Sections 6 through 8 of the UCC3 form or its electronic equivalent.

Now, there are multiple types of amendments that can be done using the UCC3 record. There are either 12 or 13, depending on how you count them. I tend to think there are 12, because I don't draw a distinction between full or partial assignment. That's not really a filing office issue. That's just to provide additional information for those who search the records.

You can add, delete, or change parties and collateral. There are assignments, continuations, and terminations. A total of 12, maybe 13 if you count full and partial assignments separately.

Now, these are all done using the UCC3 form, or its electronic equivalent. A couple of things about the UCC3 form.

Before I do that, though, I want to point out one of the reasons that understanding the UCC3 form is important is because that while paper is becoming less and less common . . . In fact, in many states now, they no longer accept paper forms. But the layout of this form serves as a template for the design of the electronic filing systems used by the states. So it is important to understand what this record really means and how it's designed.

First of all, it's intended to be a multi-purpose form. It's used for all different types of amendments. And because of that, certain fields are used for different purposes. For example, Field 7 might be used to provide new information for a new debtor, but it might also be used for providing assignee information, things like that.

The collateral field might be used to add collateral, but it also might be used to indicate a partial assignment.

The form was not designed with the intent of carrying out multiple actions. And in fact, there are certain combinations of actions that do conflict with each other because they would use the same fields for different purposes.

So the design really assumes one amendment per form, and even in states that do accept multiple actions on the same form, there oftentimes isn't an advantage to that because there isn't necessarily a cost savings because they'll charge multiple fees, and there's a greater risk of indexing errors. So it's generally recommended to do only one action per form. Most state electronic filing systems only allow one action per UCC3 record.

Now, the form and the electronic equivalent were designed intentionally to limit the types of actions that can be done only to those actions that are either required or permitted under Article 9. That's why the standard forms do not have a miscellaneous amendment action or provide for subordinations or other types of things that people might want to file in the UCC records.

The idea was that the filing offices did not want to turn the UCC index into a bulletin board for anything that could be filed. They wanted to keep it narrowed down to just the required documents or the required actions that need to be filed under Article 9.

So enough about the form and other general concepts. Now, I want to move on and talk about some of the specific types of amendments. And I want to begin with one that probably has caused the most confusion out there for both filers and searchers trying to figure out exactly what it means and when it's used, and that is the UCC3 Assignment.

Now, the purpose of the UCC3 Assignment is to assign some or all of the secured parties' right to amend the Financing Statement. It does not assign the security interest. That is something entirely separate.

In fact, a UCC3 Assignment doesn't even really assign the secured party's right to amend the Financing Statement. What it does is it grants another secured party the right to amend the Financing Statement, because it doesn't remove the assignor as a secured party.

In fact, the effect of a UCC3 Assignment is that the assignee becomes a secured party of record, and the assignor remains a secured party of record. They still have authority to amend the Financing Statement.

There's some dispute on this. Some commentators have said, "No, once an assignment is filed, the assignor has no more interest in the record." But I think that's a risky view to take of it, because the black letter of the statute does draw a distinction between a UCC3 Assignment and the effect it has on the parties that are secured parties of record.

So the safest course of action is to assume that the assignor remains a secured party of record until an amendment is filed to delete the party.

So really, a UCC3 Assignment has the same effect on the record as an amendment to add a secured party. This is one of those cases where you can accomplish the same thing through different amendments. An assignment adds a secured party. An amendment to add a secured party adds a secured party. They pretty much do the same thing when it comes to the filing office index.

As far as a partial assignment goes, the purpose of this is to limit, actually, the assignee's right to amend the Financing Statement to affect only certain described collateral.

The status of the parties following a partial assignment is the same as for a full assignment. The assignee becomes a secured party of record. The assignor remains a secured party of record.

In fact, there's a case out there, which I might talk about if there's enough time, involving an assignment where the Court pointed out that because the secured party did not assign the security interests, the assignor remained perfected by the Financing Statement it originally filed.

So to indicate a partial assignment, very simple, you just check Box 3 for an assignment. And then in the Collateral field of the Amendment Form, Box 8, there is a checkbox for collateral assigned. That is not a collateral amendment. It is actually part of the assignment, even though it's in the collateral box.

Remember, the form is designed from multiple different types of actions, some of which are not compatible with each other. So a partial assignment is not compatible with a change to the collateral.

So the effect of a partial assignment is simply that it limits the effect of any amendments filed by the assignee to the particular collateral that's described in the assignment.

So if you have an assignee, and the partial assignment says Accounts Receivable, and later that assignee files a termination, that termination would only be effective with regard to the Accounts Receivable. That's the way it's designed to work.

I should point out as an aside, as I go through the different amendment actions, that some of these issues have not come up before the courts yet. And as a result, we don't know how the courts will interpret them. We can only speculate based upon the black letter of the law in the official comments to Article 9, but that's the way it should work.

So UCC3 Assignments, some practical considerations. From a searching perspective, remember that the effect of an assignment requires further inquiry beyond the public record. There's nothing in Article 9 that requires a filer to indicate that an assignment is full or partial. There are a couple of states that have required that, but Article 9 does not.

And Article 9 doesn't require a partial assignment to specify collateral. That's something that a searcher could learn through further inquiry of the parties involved.

Also important from a searching perspective to remember is that the assignor remains a secured party of record, or at least when it comes to the . . . As I said, this is something that's still being debated. The courts haven't really addressed it yet, but there is some case law out there that suggests this is how the courts will assume it.

But to be safe from a searching perspective, it's best to assume that the assignor remains a secured party of record, unless an amendment has been filed to delete that party or they have filed a termination statement.

And amongst other things, the assignor has authority to amend that Financing Statement, even if it appears to be a full assignment. So take that into consideration.

And there's a good reason for that, too, because, theoretically, a Financing Statement filed only by the assignee could remain effective for the assignor secured party. Even if the assignor doesn't have an interest in it at the time, they could issue a new loan and use that Financing Statement to obtain original priority. There's a strong argument that that could be done.

The case hasn't arisen before the court yet, but it could at some point, and nobody wants to be a test case on it. So it's always better to assume that the assignor remains a secured party of record.

So some best practices. From a filing perspective, if, after filing an assignment, the parties do not want the assignor to remain a secured party of record, they should be filing a separate UCC3 Amendment to delete the original secured party so that they don't remain a secured party of record.

From a searching perspective, the assignor should be treated as a secured party of record unless an amendment has been filed to delete that party. That means they should receive all notices to which a secured party is entitled to under Article 9 and be treated as a secured party in any action to enforce a foreclosure or anything like that, until they disclaim an interest anyway.

If a Financing Statement that includes a UCC3 Assignment has been terminated, it's going to be necessary to verify that the assignor actually authorized the termination, in addition to the assignee, in order to ensure that UCC3 is actually fully terminated and cannot come back to haunt a later secured party.

Remember that the authority to file and who provided that authority and the extent of that authority is not something that you can determine from the UCC3 record itself.

On to the Termination Statement. The Termination Statement is used to indicate that the Financing Statement to which it relates is no longer effective. This is just like any other UCC record.

Assuming that it was filed by a party that was authorized to file it under 9-509, then upon the filing of that Termination Statement, the Financing Statement to which it relates ceases to be effective.

Now, the filing office, however, will keep it active in the index. Termination doesn't trigger any filing office duties. All they have to do is index it as an Amendment so it shows up on a search.

Part of the issue is the filing officers do not know whether a Termination Statement was authorized and, therefore, effective. So they just file it, and they continue to maintain that Financing Statement until it lapses by time. And that means that they will continue to file Amendments after that termination has been filed. It's up to the searcher to determine what the effect of any Termination Statement is.

So, assuming it was filed with full authority, the practical effect is that the Termination Statement terminates the effectiveness of a Financing Statement, and it does so as a whole. The entire Financing Statement ceases to be effective, and that's the case for all debtors and all collateral, except for a rare case where a partial assignee might be filing a Termination Statement.

So really, there's no such thing as a partial termination. It's kind of all or nothing. It goes to all of the secured party's interest in that Financing Statement. And that creates some traps for the unwary here because a UCC3 Termination Statement may not terminate the record. If it wasn't authorized by the secured party of record, it's not effective. Simple as that.

The filing office will file it because they play no role in determining effectiveness. Their job is to file the records so that it's there and that when somebody conducts a search, it's there for them to examine.

Also, even if a secured party authorized the filing of a Termination Statement, the Financing Statement may still remain effective if there are multiple secured parties, and that's because the Termination Statement filed by one secured party of record has no effect with respect to the interests of the other secured parties of record.

So you may have Secured Party A and Secured Party B on a Financing Statement. Secured Party A authorizes the filing of a Termination Statement. Secured Party B does not. The Termination Statement will terminate Secured Party A's interest, but not Secured Party B's. So the Financing Statement will remain effective after that.

And this creates a potential trap for the searcher that sees Financing Statement, Termination, and assumes that that Financing Statement is no longer effective. You can't do that just from the records that have been filed. Further research is required.

So, if an unauthorized Termination Statement is filed, or one that has not been authorized by all secured parties of record, guess what? The Financing Statement remains fully effective against all the debtors and all the collateral, and that is a trap for the unwary searcher who relies solely on the public record.

And there is case law out there on that where the courts have found that a searcher who relied on an unauthorized Termination Statement, they lose. The secured party that filed the Financing Statement prevailed.

When it comes to authority to file a Termination Statement, you can't determine that from the record itself. Further investigation is always required.

I do want to point out, too, that there is one situation in which a debtor may authorize the filing of a Termination Statement. That is where the secured party, there's no obligation remaining, and the debtor has sent a demand to the secured party to terminate the Financing Statement.

If the secured party does not do so when there is no obligation remaining secured by the collateral, then if the secured party doesn't do so within 20 days, the debtor becomes authorized to file an effective Termination Statement. That is rare and requires compliance with the strict statutory requirements.

So some best practices when it comes to Termination Statements from a filing perspective. If it is intended to terminate with respect to multiple secured parties of record, make sure all secured parties of record authorize the filing of the Termination Statement if that's what is intended.

If there are multiple debtors, and the secured party only wants to terminate with respect to one, do not file a Termination Statement. Use an Amendment to delete the debtor. That will cut that debtor out of the scope of the Financing Statement.

Same thing with terminating with respect to some of the collateral. The proper thing to use at that point is an Amendment to Delete Collateral, not a termination. I mean, you can write debtor names onto a Termination Statement to try and limit it, but that doesn't do it. It doesn't limit it to particular debtors. It will affect the Financing Statement as a whole.

From a searching perspective, remember that the Termination Statement is only a notice, just like a Financing Statement, and that it's necessary to conduct further inquiry to determine the authority of the party or parties that filed the Termination Statement. You just can't determine it from the face of the public record itself.

Reliance on the Termination Statements without any further inquiry is going to be a risky proposition. And searchers who relied on that and later took their own security interests have found themselves in some cases subordinated to that prior secured party who did not authorize the filing of a Termination Statement.

And Termination Statements can be filed for all sorts of reasons without authority. Sometimes it's by mistake. Somebody transposes numbers on a Financing Statement file number. Sometimes, a new lender may assume they're authorized to file a Termination Statement, because there's no outstanding balance with the prior lender, or something like that. There are all sorts of reasons why they can be filed by mistake. And if it's not authorized, it's simply not going to be effective.

Next, I want to talk about the Continuation Statement. The purpose of the Continuation Statement is twofold. It does two different things. First of all, it extends the effectiveness of the Financing Statement to which it relates for an additional five-year period. And then the second part of it is it will keep the record active in the filing office records, so it will show up on searches for an additional five-year period.

Now, I want to be clear on something. Filing a Continuation Statement doesn't automatically perform both of these purposes. It is possible to file a Continuation Statement, for example, that will not extend the effectiveness, because it wasn't authorized or there was some other problem with the record. It gets filed and the filing office extends the lapse date by another five years. But if the record isn't effective, it's not going to extend the effectiveness of the record for an additional five years.

Likewise, there are times where a Continuation Statement might not get filed, such as a wrongful rejection case, and the lapse date won't be extended, but the effectiveness remains or it becomes a hidden lien due to the filing office actions.

So the purposes are independent. And it has to be authorized and sufficient. It has to meet all the requirements for filing a Continuation Statement in order to accomplish both purposes.

I also want to mention that the extension of a lapse date, calculating the extension of effectiveness and the new lapse date, runs five years from the date the record would have ceased to be effective, absent the filing of the Continuation Statement.

This isn't much of an issue at the state level, but at the county level, it is very common for counties who don't deal with UCC all the time to make a mistake when they get a Continuation Statement and extend the effectiveness for five years from the date the Continuation was filed.

When that happens, they can usually be talked into resetting the lapse date correctly, but it can cause problems five years down the road if another Continuation is required, because you've wound up with a shortened window in which to file, or at least the filing office believes that to be the case. So be aware of that potentially at the county level especially.

So, when a fully effective Continuation Statement is filed in compliance with the statute, the Financing Statement to which it relates will remain searchable for another five-year period, and it will remain effective for that additional five-year period.

Some things to be aware of when it comes to a Continuation Statement. One of the most important is that the Continuation Statement can only be filed within six months before the lapse date. The intent here is to make Article 9 of the filing system a self-purging system. If a Continuation Statement isn't filed before the lapse date, then the record can be purged a year later.

And this is a way of making secured parties go back and double-check and make sure they really want to file a Continuation Statement, or that one is needed at that point. So it has to be filed within that six-month period before the lapse date.

Now, if the record is filed late any time after the lapse date, even if the filing office accepts, indexes the record, and extends the lapse date, still, it's too bad because by operation of law, the Financing Statement will cease to be effective. It will continue to show up in the searchable index, but it has lapsed by time as a matter of law.

So, if the Continuation is filed late, the Financing Statement lapses, and the secured party had better file a new Financing Statement if they want to remain perfected. They're going to lose their priority, of course.

But remember, the filing office has no power to make a record effective or ineffective if they accept it and reset the lapse date. After it's been filed late, it's an ineffective record.

And this has happened. There have been states that have done this. And the secured parties might think that they're perfected, that they have an effective Continuation Statement out there, but they don't.

Fortunately, it hasn't been something that's come up before the courts yet. But when it does, I think there's going to be a rude awakening if the filing office made that type of error, which they have in the past.

If the UCC Continuation Statement is filed earlier than the six-month window, it's not effective. And again, that's the case even if the filing office accepts the Continuation and resets the lapse date.

So it's the filer's compliance with Article 9 that determines whether the record is effective or ineffective, not anything the filing office does.

So best practices with Continuation Statements. You've got to get them filed within that six-month window. Don't file them any earlier than six months before the lapse date, and certainly don't file them after the lapse date.

Now, I want to move on and talk about Party Amendments. First, we'll talk about an Amendment to Add a Party, either the debtor or the secured party.

The purpose of this amendment is to add another party to the Financing Statement. In the case of an added debtor, it will perfect a security interest in the assets of the debtor that's being added. And the priority date for that will run only from the date when the amendment is filed. It is not retroactive to the original UCC-1 filing date.

And that's because until the amendment was filed with respect to the new debtor, it didn't provide any notice to third parties that this debtor's assets were encumbered. So, as a result, the priority will only run from the date of the filing of the amendment.

This can result in situations where Financing Statements have multiple priority dates with respect to different debtors and different collateral, because the same thing applies on an Amendment to Add Collateral.

When it comes to an Amendment to Add a Secured Party, the added secured party becomes a secured party of record. And it has no effect on the priority because it doesn't change the scope of the security interest. It only changes who's entitled to enforce the security interest and amend the Financing Statement. So there is no priority effect on an Amendment to Add a Secured Party of record.

Another type of Party Amendment is the Change Amendment. The purpose of this amendment is to change the name or address of either a debtor or a secured party of record on the Financing Statement.

This type of amendment typically applies to a party that is already of record. So it'll apply to a debtor or to a secured party that's already on the Financing Statement. It's not something typically that's used to add a different debtor or secured party.

But from a filing office perspective, they treat these much the same way as they would an Add Party Amendment. If the name that is provided is not already of record, then they will take the new name and add it as an additional debtor or as an additional secured party.

Remember, amendments always add to the record. They never delete. And as a result, the old name will continue to show up, even though an amendment has been filed to change that name.

So the new information that's provided becomes part of the Financing Statement. And any new name for a debtor, for example, becomes added to the searchable index. So a search under the new name will find that Financing Statement that was originally filed under the old name. A search under the old name will also continue to find the Financing Statement. And again, the original information that was on there remains part of that Financing Statement.

Next up is an Amendment to Delete a Party. This is used to remove a debtor or a secured party from the scope of the Financing Statement. An amendment such as this has to be authorized by the secured party of record.

And the effect of this is that the party named is deleted from the record. So if a secured party is deleted, it means that the secured party's interest is no longer perfected by the Financing Statement. If a debtor is deleted, that means that the debtor is no longer within the scope of the Financing Statement.

So the party named is deleted from the scope of the Financing Statement, but remember, an Amendment to Delete a Debtor is not going to remove the debtor name from the searchable index.

This can cause heartburn for debtors and lenders and legal counsel, because it'll keep showing up to a year past the lapse date after it lapses by time. So it's important to understand that just because it shows up, doesn't mean it's still effective.

So the filing office has to maintain these records as a matter of statute. They have to be in the searchable index until the record lapses, and then they have to maintain it so it can continue to be searched until at least a year after the record lapses by time.

So just because a debtor shows up doesn't mean the Financing Statement is effective with respect to that debtor. That's part of the cumulative nature of amendments.

There are some limits to deleting a party. An amendment that purports to delete all debtors or all secured parties of record isn't effective. The filing office will probably accept it, but it has no effect. It won't delete a party if there's nobody to replace them.

Also, I want to point out, too, that deleting a party has a retroactive effect as well. When you delete a debtor, it's as if that debtor was never part of the Financing Statement. Just like a Termination terminates Financing Statement, deleting a debtor terminates the debtor from that.

And same thing with a secured party. If the secured party is deleted, it's as if the secured party was never perfected by that Financing Statement.

A couple of tips here. To terminate a Financing Statement with respect to only one of multiple debtors, use the Amendment to Delete the Party. Don't terminate, because the termination affects the Financing Statement as a whole, whether intended or not.

And again, remember that it will not delete the name from the searchable index. Debtors may not be happy about that, that it'll continue to show up, but it has to be explained to them why. The filing offices simply can't purge the records in that type of situation.

Now, I'll move on and talk about Collateral. The next is the UCC3 Add Collateral Amendment. Here, the idea is to bring new assets within the scope of the Financing Statement. Again, this type of amendment must be authorized by the debtor because it's expanding the scope of the Financing Statement to additional assets.

However, the debtor's authority doesn't have to be indicated on the UCC3 record. Just like a debtor has to authorize the filing of an initial Financing Statement, there's no place on there where the debtor indicates that they have authorized the filing of that.

So once a UCC3 Amendment to Add Collateral has been filed, it perfects that security interest in the added collateral. It will do so, though, without retroactive effect. In other words, it's only effective for the added collateral from the date the amendment was filed. And that's because, until that date, the Financing Statement did not provide any notice to third parties that that added collateral was encumbered.

Delete Collateral Amendment, this amendment is designed to remove collateral from the scope of the Financing Statement. It used to be called a Partial Release. In this type of case, the secured party of record must authorize the filing to delete collateral. Once it's filed, the collateral that's described in the amendment is no longer subject to perfection under the security interest.

One word of caution here. Make sure that an Amendment to Delete Collateral does not inadvertently delete all collateral. An Amendment to Delete All Collateral would be effective, and it would delete all collateral, and the filing offices will accept it. This is a potential error that has happened and could continue to happen, so just be aware of this and be prepared to just double-check and make sure that it's not inadvertently deleting all the collateral.

Next up is an Amendment to Restate Collateral. This is a very helpful type of amendment, but people don't always understand what it means. The idea here is to allow for multiple additions and deletions with one amendment, rather than filing a bunch of separate UCC3 Amendments.

And it does this by replacing all prior collateral descriptions. That's what a Restate Collateral does. It's like starting over with your collateral description.

When an amendment is filed to restate collateral, if it expands the scope of the collateral, it will have priority only with respect to the expanded collateral from the date the amendment was filed, but it will maintain its original priority with respect to any collateral that was covered by the prior descriptions.

So it can have both a retroactive and an immediate effect. It depends on just whether collateral is being added as part of that restatement.

Here's an example of what a Collateral Restate looks like. Here, they've described all equipment, and then they provided a Schedule A, which is not included here, and on that Schedule A is all of the equipment. So that's one way to do it.

And this will become the collateral description upon filing. It will replace all the prior collateral descriptions. But using this type of amendment does create a trap because it replaces all prior collateral descriptions. Any error or omission when restating the collateral may leave the secured party without the degree of perfection or priority that they expected.

One example is a case of Northern Beef Packers. What happened here was the secured parties had a blanket security interest on all the debtor's assets. Later, the debtor pledged two additional assets, and the secured party filed an Amendment to Restate the Collateral and described just the new assets, which were actually a very small part of the collateral.

Well, the debtor filed for bankruptcy, and the bankruptcy trustee was able to limit the secured party's security interest to the collateral described on the restated collateral description. In other words, they lost the perfection and the vast majority of the collateral because they didn't include it as part of the restated description.

So it's very important to do it correctly. Always provide the full collateral description on a Restated Collateral Amendment, just as if this was the initial Financing Statement, because if there are any errors or omissions, that may leave the secured party unperfected or subordinate in priority.

To wrap up, I want to cover a couple of special cases that I get a lot of questions about.

One is what happens if assignments are filed out of order? There's a lot of concern that, "Oh, this is going to create a problem with the chain of assignments, and it's going to be a real problem." Well, actually, probably not. The courts haven't addressed it yet, but remember that the effect of the assignment is that it adds a secured party of record.

Article 9 is a notice filing system. There's not a chain like there would be in real estate records, where you have a chain of conveyances. There isn't a chain in Article 9. It's more of a bunch of photos rather than a filmstrip.

And as a result, the effect of them being filed out of order is the same. Both of the signees become secured parties of record regardless of the order in which the assignments are filed, and there is no priority effect. They both become secured parties of record based on the priority of the Financing Statement, not the priority of when the assignments were filed. So really, there is no harm.

Of course, like I said, the courts haven't addressed this specific issue yet, but it shouldn't cause a lot of loss of sleep if this was to occur.

What happens if a Continuation or other Amendment is filed after a Termination Statement? This happens frequently. Well, the bottom line on it is that a Continuation Statement or Amendment filed after the termination will only continue or amend the Financing Statement to the extent the Financing Statement remained effective after the termination.

In other words, if the termination was fully effective and the Financing Statement ceased to be effective, then the Continuation or other Amendment really has no effect on the effectiveness of the record. You simply cannot revive a Financing Statement that's been effectively terminated by filing another Amendment.

Typically, when this happens, it can mean that a Termination Statement was filed without the secured party's knowledge. And they just assume that it's still fully effective, and it probably is, if that's the case.

Frequently, though, it's just also a mistake of the secured party. They might have a release department that handles Terminations and Amendments that release collateral or debtors, and they may have a different department that's responsible for Continuations and other Amendments, and sometimes the information doesn't communicate fully between them.

So the only way to know for sure what the effect of the Amendments after a Termination Statement will have is to conduct further inquiry to determine.

Tarik: All right, everyone. Well, that's all the time that we have for today. If we didn't get to your question, as mentioned before, we will contact you with a response after the webinar.

In just a moment, you'll also see a brief survey appear, and we invite you to provide your feedback on today's session. We thank you for everyone who joined us today, and we hope we see you next time.

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§ 9-514. ASSIGNMENT OF POWERS OF SECURED PARTY OF RECORD.

(a) [Assignment reflected on initial financing statement.]

Except as otherwise provided in subsection (c), an initial financing statement may reflect an assignment of all of the secured party 's power to authorize an amendment to the financing statement by providing the name and mailing address of the assignee as the name and address of the secured party.

(b) [Assignment of filed financing statement.]

Except as otherwise provided in subsection (c), a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which:

(1) identifies, by its file number , the initial financing statement to which it relates;

(2) provides the name of the assignor; and

(3) provides the name and mailing address of the assignee.

(c) [Assignment of record of mortgage.]

An assignment of record of a security interest in a fixture covered by a record of a mortgage which is effective as a financing statement filed as a fixture filing under Section 9-502(c) may be made only by an assignment of record of the mortgage in the manner provided by law of this State other than [the Uniform Commercial Code].

UCC Filings

UCC Article 9 – Secured Transactions

• Article 9 applies to any transaction which is intended to create a security interest (a security interest is a type of property interest created by agreement or by operation of law over assets to secure payment of a debt) such as Office Equipment, fixtures, financed goods, farm equipment, heat pumps, documents, instruments, promissory notes, letters of credit, general intangibles, chattel paper or accounts and also to any sale of accounts or chattel paper.

WHAT IS A UCC?

• In a credit sale or a loan, the lender or creditor may demand collateral (securing the lender/creditor’s Interest) to ensure repayment from the debtor. In case of default, the lender which has secured their interest in specific collateral can take possession.  Often tangible (anything that can be touched) or intangible property (something which a person or corporation can have ownership of and can transfer ownership to another person or corporation, but has no physical substance such as copyright, trademarks, patents etc.) of the debtor serves as security for an obligation, with the creditor acquiring a security interest in the debtor’s property.
• The security interest is Perfected by filing a financing statement in the public record at the state or county level. This filing is legal notice that the secured party has a legally protected interest in the personal property of the debtor.  Perfection is extremely significant for achieving protection from third parties that also may have claims against the debtor, or in the collateral being used to secure the financial obligation.
• Conflicting security interests among secured parties are ranked according to priority in time of perfection. As a result, the secured party who perfects the security interest first, by filing a financing statement has priority to any secured party (parties) who filed at a later time.

INITIAL FINANCING STATEMENTS   (UCC-1)

• A Financing Statement is a standardized form that a lender files with the state to secure their interest in collateral from a borrower.
• Financing Statements are effective for 5 years
• A Transmitting Utility – The asset bonded (surety) is the “energy” or the labor of the debtor. Thus the Debtor/Grantee became the “utility” for the “transmission” of energy, designating the debtor as a Transmitting Utility, an individual utility transmitting public and private debt.  Transmitting Utility Filings have no expiration date.
• A manufactured-home transaction is a type of secured transaction which creates security interest in a manufactured home. A manufactured-home is used as primary security in a secured transaction. But a security interest will not vest in a manufactured-home if such home is held as an inventory. Manufactured Home filings are effective for 30 years.
• Public Finance Transaction means a secured transaction in connection with which debt securities are issued, and all or a portion of the securities have an initial stated maturity of at least 20 years. Public Finance Filings are effective for 30 years.

WHERE TO FILE INITIAL FINANCING STATEMENTS

• Financing Statements covering tangible property as collateral must be filed in the state(s) where the collateral is located.
• Financing Statement covering intangible property as collateral must be filed in the state of the debtor’s residence.
• Financing Statements that cover both tangible and intangible property should be filed both where the collateral is located and where the debtor resides.

AMENDMENTS   (UCC-3)

• An Amendment is used to change or add to information that was previously filed on the Initial Financing Statement such as changing, adding or deleting a Debtor or Secured Party’s name and/or address and any collateral change such as adding, deleting, restating covered collateral or assigning collateral.

CONTINUATIONS   (UCC-3)

• A Continuation is used to extend the Original Financing Statement’s effectiveness for an additional five years. A continuation statement will prevent a previously filed financing statement from lapsing if the continuation is filed by the secured party within six months prior to the expiration date.  (example:  If an Initial Financing Statement was filed on June 1, 2015 and is due to expire on June 1, 2020 the Continuation needs to be filed between January 1, 2020 and before June 1, 2020 within that six month window before expiration so the initial filing does not expire.  If an Original Financing Statement expires or lapses the lien I no longer perfected.  The creditor could not challenge the lien in court.

ASSIGNMENTS   (UCC-3)

• An Assignment is used to assign the rights or part of the rights to the collateral to another party.

TERMINATIONS   (UCC-3)

• A Termination is filed when a debtor no longer has an outstanding secured obligation or commitment to make advances, incur obligations, or otherwise give value to a secured transaction. Another creditor searching public records will see that there is no longer a lien on our business assets.

INFORMATION STATEMENT   (UCC-5)

• A person may file an Information Statement with respect to a record indexed under that person’s name if the person believes the record was inaccurate or wrongfully filed, or a person may file an Information Statement with respect to a record if the person is a Secured Party of record with respect to the financing statement to which the record relates and believes that the person that filed the record was not entitled to do so.

FEDERAL TAX LIENS

• A Federal Tax Lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets.
• Federal law provides that the place for filing these liens is determined by the laws of the state in which the property is situated. Therefore, each state can determine the office in which federal tax liens are to be filed and indexed.

STATE TAX LIENS

• A State Tax Lien is a lien imposed as a result of failure to pay income taxes or other taxes.
• The majority of those states that do record state tax liens require filing only in a local office. The filing office most often is in the county where the property is located.  Other states have state tax liens at both the Secretary of State and a local office.

JUDGMENT LIENS

• A Judgment Lien may be obtained after litigation where, based upon the judgment, a lien is placed on property in order to secure payment of a money judgment.
• Judgment liens are often indexed in the same office as state tax liens.

TIPS FOR PLACING SEARCH ORDERS

• If you are unsure where to search, start with the state of the debtor’s residence and the state(s) where the collateral might be located.
• Once you choose a state, always search the central filing office (usually the Secretary of State).
• Determine whether any county searches would be helpful. For most businesses, conducting a search in the county of the debtor’s residence is often a good practice.
• Where the party to be searched is involved in farming operations, a search in the county where the land is located may be beneficial.
• If the party conducting the search knows where any of the debtor’s collateral is located, searching in that county also may be of value.
• Since tax and judgment liens ordinarily attach to the debtor’s real property, a county search for those kinds of liens may prove helpful if conducted in the counties where the debtor owns land.

TIPS FOR UCC FILINGS

• Make sure all information is complete and correct when filing UCC’s. If the information is not complete or correct it will affect the Perfection of a UCC and the loss of Priority (example:  misspellings, typos, missing information, etc.).  If a UCC Filing is rejected for any reason you will lose the date of filing and will have to resubmit the filing once it is corrected on the date you get the corrected copy.  By losing a filing date you can potentially allow another creditor to file against the debtor and their filing will Perfected and Priority goes to that creditor.
• Required information of a UCC-1 Financing Statement is as follows: The debtor’s legal individual name or business name, address, City, State, Postal Code and Country. Make sure if there are any additional debtors that they are listed accordingly with all of the necessary information as previously stated and using the proper addendums if necessary for additional debtors.  The secured party’s name, address, City, State, Postal Code and Country.  Also make sure if there are any additional secured parties that they are listed accordingly with all the necessary information and using the proper addendums for additional secured parties. The UCC-1 must include a collateral description.
• Required information of a UCC-3 is as follows:

The original financing statement number entered in 1a.

Name of the secured party on the initial financing statement in box 9

One of the boxes checked on the following:

Box 2 – Termination – A Termination is an Amendment.  It does not affect the lapse date.  The lapse date is when the original financing statement lapses in 5 years unless such filing is Continued.

Box 3 – Assignment – Box 7 of the form needs to be completed as well with Organization or Individual name, mailing address, City, State, Postal Code and Country.

Box 4 – Continuation – Must be filed within six months of the Initial Financing Statement lapsing or will result in a lapse and the lien is no longer perfected.

Box 5 Party Information Change – Check either the debtor or Secured Party being affected and then check one of the three boxes (Change, ADD, or delete) depending what is being done. Boxes 6 and/or 7 will be used in this circumstance.

Box 8 – Collateral Change – Please check the box on how the collateral is to be changed. (ADD, Delete, Restate or Assign).  Provide a Collateral description of which action is to be taken.

• Required information of a UCC-5 Information Statement as follows:

Box 1 –   Initial Financing Statement Number required

Box 2 –   check one of the three boxes to indicate the claim made by the Information Statement.

Box 3 –    Basis for claim of box checked in Item 2 needs to be completed

Box 4 –    If this Information Statement relates to a record filed (or recorded) in a filing office described in Section 9-501(a)(1) provide the date and time on which the Initial Financing Statement identified in item 1a was filed (recorded).

Box 5 –   Name of Authorizing Party – This name must be the same name as a Secured Party of record or the name under which the record is indexed.

UCC FILING MISTAKES

• If the debtor name is not the legal name by adding additional information or a DBA is added can cause the lien to be deemed ineffective because it may not be found. (example:  “ABC, Inc., a Delaware corporation” which is adding additional information or ABC, Inc. D/B/A DEF, Inc. which is adding a DBA name) will be indexed exactly as it is presented and will not show up by searching the legal name.
• Filing in the wrong jurisdiction:

The proper central office in respect to personal property is the state where the debtor is located not by the debtor’s mailing address. A debtor who is an individual is located where they reside and a debtor that is a registered entity is located in the state of organization.

• Some states require that you include specific language related to collateral or tax requirements and the National UCC Form does not ask you to include the information and can lead to rejection.
• The National UCC Form is accepted in all jurisdictions except the state of New York. Previous forms prior to the National UCC Form are mostly rejected.  Some states have created their own specific forms.
• If you don’t check the appropriate real estate boxes on fixture filings and legal descriptions attached the fixture filing could be indexed as a UCC Financing Statement related to personal property.

REASONS FOR REJECTION OF A UCC FILING

• The UCC Filing is not on the proper form.
• When filing an Amendment, the initial financing statement file number provided in 1a. is not correct, already lapsed or not legible.
• An Amendment adding a new party does not provide the new party’s name and/or mailing address.
• An Amendment adding a new debtor does not provide the new debtor’s name and/or mailing address.
• For a Continuation, it is not within the six month window prior to the lapse date to file.
• An Assignment does not provide the name and/or mailing address of the assignee.
• Trying to file a UCC-3 on an already lapsed Financing Statement.
• UCC Document being submitted is illegible leading to the possibility of not indexing the correct debtor or secured party name.

YOU CAN TRUST OUR KNOWLEDGE AND EXPERTISE TO GUIDE YOU THROUGH THE MAZE OF UCC FILING AND SEARCHING.

IMPORTANCE OF INCLUDING SIMILAR NAMES WHEN UCC SEARCHING

• Many states maintain Federal Tax Lien records with their UCC records. A search will include both UCCs and Federal Tax Liens that appear on the index.  Government agencies such as the IRS is not required to precisely identify the taxpayer on a Federal Tax Lien.  They can claim priority even if the lien lists a variation of the taxpayer’s legal name.  It is imperative to include name variations to be certain all Federal Liens are found.
• There are many situations where a security interest or lien could be indexed under a variation of the debtor name. Therefore it is crucial to search similar names to uncover all possible records.

SEARCHING PRIOR NAMES

• Current law requires the debtor name to appear exactly as it is listed on the “public record” for that state. It is also crucial to search all prior names (if any) on “public record” for that debtor to provide due diligence in uncovering all possible UCC records for that particular debtor to maintain perfection and Priority on collecting debt.
• Creditors need to exercise due diligence in monitoring debtors for changes in their name and address not only to maintain a security interest but evaluate your risks when extending credit. The following case demonstrates the consequences of failing to monitor a debtor’s name change.

GUGINO V. WELLS FARGO BANK NORTHWEST, N.A. (IN RE: LIFESTYLE HOME FURNISHINGS, LLC.

SEARCH TO REFLECT

• It is always a good practice to perform a Search to Reflect in the filing office once a UCC has posted to the index to ensure due diligence. If the UCC that was filed does not appear on the Search to reflect it could have been mis-indexed due to a typographical error and can be found and fixed so it will appear on the searchable UCC index.  If not caught and found it could put a secured party at risk.
• Another reason to perform a search to reflect after a UCC Filing has posted to the index in your filing office is to determine the Priority and Perfection of your filing. Another creditor could have a filed a UCC or other lien against that debtor after your UCC Filing or lien had posted so you know that your filing has higher priority to collect versus other creditors that hold a claim on the same collateral.

COMPREHENSIVE FIVE PART UCC DUE DILIGENCE SEARCH

• A Five Part Comprehensive UCC Search consists of searching public records at both the State and County levels. It consists of State Level UCC and Lien Searching, Federal and State tax liens, Judgments, Litigation and Bankruptcy.  Doing a comprehensive Five Part UCC Due Diligence Search can show any existing liens or other financial obligations that could affect their ability to repay the considered loan or determine if Priority can be obtained should the lender decide to fund the loan or deal.  It is also important to track UCC lapse dates and file Continuations within six months of the lapse date especially if the loan or financial obligation has not been satisfied to ensure the priority position and perfection of that filing.

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Ucc & corporate due diligence resource guide for legal and financial professionals, 5 types of ucc3 change statements.

It’s an amendment filing to an original UCC1 financing statement that changes or adds information to the originally filed UCC1. It’s a filing tool secured parties use to manage their UCC portfolio to maintain their perfected security interests.

Importantly, • the timing of UCC3 recording execution • the accuracy of the data changes or additions • and choosing the correct amendment type can all be critical to maintaining a perfected security interest and the original UCC1 priority position.

Before discussing what a UCC3 is, its various types and how they are utilized, a quick review of UCC1s is in order. UCC1 financing statements are recorded filings which give notice to other creditors of a security interest in specific collateral used to secure debt. They are typically recorded to perfect the security interests of a secured party to prioritize their claim position in the event of a debtor default. UCC1s are subject to the effects of subsequently filed documents, whether those documents attach to the original filing, like a UCC3, or not, like a Federal tax lien.

Some of these subsequently filed documents can prime a perfected security interest, like Federal tax liens.

Others, like UCC3s if not executed according to statute, can cause a secured party to lose effectiveness of their lien, their UCC1, and all claims on any collateral should there be a default.

It’s that last piece that is vitally important about UCC3s: they can affect previously perfected security interests depending on when and where they are recorded, what they do, and how accurate the new data is.

What are the Different Types of UCC3s?

There are five different types of UCC3s.

• Continuations – extends the financing statement effectiveness for another five years;
• Party Amendments – adds or amends debtor or secured party information, such as changes to the legal name or the address
• Collateral Amendments – adds or removes collateral from the collateral description, or restates the collateral description completely
• Assignments – transfers “full” or “partial” rights in the filing from one secured party to another
• Terminations – extinguishes a financing statement prior to its five-year lapse date

Where and how are UCC3s recorded?

UCC3s are recorded in the same jurisdiction as the effective UCC1 it amends. A step by step process on how to execute a UCC3 filing can be found here .

What are some examples of the critical nature of each UCC3 type?

• Continuations – there is a 6 month window prior to the UCC1 5-year lapse date in which a Continuation must be recorded for it to be effective; Continuations are not effective if recorded after the lapse date and the UCC1 lapses and becomes ineffective
• Party Amendments – these amendments often coincide with name changes and/or address changes to business entity documents of the parties involved; these name changes and address changes typically require amendments to the original UCC1 identifying these changes within a specific time frame; address changes that involve a change of state have specific UCC3 filing protocols for secured parties to follow within specific time frames
• Collateral Amendments – partial releases are executed as a DELETE collateral descriptions, a critical aspect of this type of UCC3; a collateral restatement  is a replacement of a prior collateral description, not an addition to that prior description, so a secured party’s security interest in any collateral that is not fully restated in the UCC3 collateral amendment risks becoming unperfected
• Assignments – sometimes a new UCC1 is required instead of an assignment, depending, and failure to recognize what is required in a situation can result in a secured party’s lien becoming ineffective
• Terminations – other parties can terminate a UCC1 besides the secured party; also, RA9 requires no signatures to record terminations; a termination can be recorded by the debtor under certain circumstances; monitoring services are available which alert secured parties to when another party files a termination on one of their UCCs; contact the secured party to verify the effectiveness of a recorded termination.

Once a UCC1 is recorded and a security interest is perfected, a secured party’s focus shifts to maintaining that perfected security interest and managing the UCC1 going forward until it either lapses or is terminated.

UCC3s are a tool which secured parties use to manage that process.

Another important conversation about UCC3s are common mistakes that are made regarding them. Use the button below to download our Free Reference Guide: Top 3 Mistakes on UCC3 Change Statement .

8 thoughts on “ 5 Types of UCC3 Change Statements ”

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• Required Governmental Forms of Assignment

Delaware Required Governmental Forms of Assignment

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Delaware Required Governmental Forms of Assignment In Delaware, the state government has established certain guidelines and requirements for business entities and individuals to follow when assigning or transferring their rights, interests, or assets. These requirements aim to ensure proper documentation and transparency in the assignment process, safeguarding the rights of all parties involved. 1. Delaware Assignment Forms: — UCC-3 Form: Under the Uniform Commercial Code (UCC), this form is used to record the assignment or transfer of security interests in personal property, such as equipment, inventory, or accounts receivable. It must be filed with the Delaware Secretary of State to provide notice to interested parties and establish priority among competing claims. — Assignment of Lease: If a tenant wishes to transfer their leasehold interest to a new party, an Assignment of Lease form must be completed. This form outlines the details of the original lease, the assignor (tenant), the assignee (new tenant), and any associated terms or conditions. — Assignment of Intellectual Property: In cases where intellectual property rights, such as patents, trademarks, or copyrights, are being assigned or transferred, a specific Assignment of Intellectual Property form is necessary. It ensures that the assignor transfers all rights and interests to the assignee, granting them proper ownership and protection under Delaware's laws. 2. Filing and Compliance Requirements: a. The completed assignment forms must be accurately filled out, signed by all relevant parties, and submitted to the appropriate government authorities within the specified timeframe. b. The assigned property or interest should be adequately described and identified in the assignment forms to avoid ambiguity or disputes. c. All relevant fees and taxes associated with the assignment, as per Delaware's fee schedule and tax regulations, must be paid at the time of filing. d. Entities should ensure compliance with additional state and federal regulations concerning the assignment, such as providing any necessary notices to affected parties or obtaining necessary consents. 3. Professional Assistance: Given the legal complexities involved in assignments and transfers, individuals or businesses might benefit from seeking professional assistance to ensure compliance with Delaware's requirements. Experienced attorneys specializing in corporate law or intellectual property can help draft accurate assignment forms, review relevant contracts, and guide entities through the proper filing process. In summary, Delaware requires specific governmental forms for various types of assignments, such as UCC-3 Form for security interests, Assignment of Lease for leasehold interests, and Assignment of Intellectual Property for intellectual property rights. Compliance with filing requirements and accurate documentation are crucial for preserving the rights and interests of all parties involved. Seeking professional guidance in this process can help ensure a smooth and legally compliant assignment procedure.

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Form rating, form popularity, what is the assignment statute in delaware.

In every case in which any person makes a voluntary assignment of his or her estate, real or personal, or of any part thereof to any other person in trust for his or her creditors or some of them, the assignee, within 30 days after the execution thereof, shall file in the office of the Register in Chancery of the ...

What does assignment for the benefit of creditors mean?

Assignment for the benefit of the creditors (ABC)(also known as general assignment for the benefit of the creditors) is a voluntary alternative to formal bankruptcy proceedings that transfers all of the assets from a debtor to a trust for liquidating and distributing its assets.

What documents are required to form an LLC in Delaware?

There is no documentation required to form an LLC in Delaware. The only information required, whether you are a United States citizen or not, is: Name of the company (check a company name for free) Communications Contact (must be an individual)

What is an assignment for the benefit of creditors Delaware?

An ABC is a liquidation process governed by state law by which a company (referred to as the assignor or the debtor) assigns all of its assets to an assignee (typically, a professional firm specializing in ABCs) that will manage the liquidation process and distribute the assets' proceeds to the company's creditors in ...

What is a Certificate of Formation in Delaware?

The Certificate of Formation is the document you receive from the state of Delaware once your LLC is filed and approved by the Delaware Secretary of State, Division of Corporations. The Delaware LLC Certificate of Formation is akin to a birth certificate for your newly-created Delaware LLC.

What are the disadvantages of assignment for the benefit of creditors?

One obvious disadvantage to an ABC is the risk that creditors of the business may feel that they will be better served by liquidation under the Bankruptcy Code, band together and file an involuntary bankruptcy proceeding against the company, potentially voiding the ABC and any transactions that may have occurred or be ...

What is an assignment for the benefit of creditors clause?

An Assignment for the Benefit of Creditors (ABC) is a legal process through which a financially distressed business voluntarily transfers its assets to a third-party assignee for the purpose of liquidating those assets and distributing the proceeds to its creditors.

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