Published Articles by David Balovich
John Kellogg recently sent me the following email: Dave,
I just returned from my industry group meeting where the proposed revisions
to Article 9, specifically Article 9.5 were explained to us by an
attorney. I am more confused now then I was before her presentation. Is it
possible you could discuss this in one of your future columns in language
that I could understand? Thank you.
John, I will do my best to explain the major revisions as simply as
possible. However, I am not an attorney and this is not to be
considered legal advice. For legal advice consult an
attorney and if you do not have one, I would recommend
contacting Bob Bernstein at Bernsteinlaw.com or Glenn
Reismann at Glenn Reisman@ Corporate GE.com these gentlemen are very experienced
in creditor law.
Many of the Articles contained in the Uniform Commercial Code are being
reviewed for revision under the powers of the National Conference
of Commissioners on Uniform State Laws.
Article 9, Secured Transactions, is one of the articles currently being
revised. It appears a central issue to the revision of this
article revolves around the current Section 9.4 and its
replacement, the proposed Section 9.5.
There are four major changes in the proposed replacement.
First is the role of the filing offices. Under the present section, legal
issues and administrative details are left to the discretion of
the filing office. Some filing offices require that titles
be included with debtor and secured party signatures while
others do not. Some offices require that the person
signing the original financing statement also be the same person
signing amendments, continuations, etc., while others do not.
Under the proposed 9.5 revision, legal issues would be left to the
attorneys representing filers and any creditor, trustee or debtor
who challenges the filing and ultimately the courts. The
filing office would be responsible for the filing and
record keeping of the documents and this administrative
function would be standardized by statute.
One of the benefits to the filer is that any rejection of filing documents
would be based on a uniform statute rather then local filing
Presently, 9.403 says Presentation for filing of a financing statement and
tender of the filing fee or acceptance of the statement by the
filing officer constitutes filing.
This statement provides the filing office to reject a financing statement
for whatever reason they choose and without explanation. I have
personally had filings rejected and when I have challenged
the rejection been told that the filing should not have
been rejected but they could not tell me why it had
Under the proposed revision there would be only seven (7) reasons for a
filing office to reject a financing statement.
Another revision is that filings on personal property would be filed in
the state where the individual has their principal residence or
in the case of a corporation where the company
headquarters are located rather then where the property is
located. The exception would be in the case of real
property which would still be filed in the state where the property is
located. This revision would make it easier for someone searching for filings
to find all the outstanding filings against an entity.
In our next installment we will continue to discuss the remaining major
changes in the revision of Section 9.4.
I wish you well.
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