3JM Company Inc.

Published Articles by David Balovich

Published in: Creditworthy News
Date: 3/16/00

This is the third of a series of columns in reply to an email received
from John Kellog asking about the proposed revisions to Article p of the Uniform Commercial Code.

The third proposed change is in the treatment of continuations, amendments and termination's. Under the proposed changes any change to the original financing statement would be known as an amendment and would become a permanent part of the original filing until it lapses.

The searcher would then be required to review all filings related to the original financing statement to determine if the financing statement is still valid as it was originally filed or has been altered or terminated.

Section 9.403 states that the filing is good for five years (although Arizona and Michigan amended the filing period to six years) until it lapses. Many states will remove the record of the filing upon receipt of a termination statement filed by the secured party. Under the proposed change the filing officer would be required to maintain the record until the five year expiration and then could remove it if a continuation filing was not received. The termination statement would simply be an amendment to the original filing.

The fourth proposed change would provide the debtor some rights in their filings.

For instance, the debtor would have the right to place a "statement of correction" that would be included with the records of the filing. This statement would be filed if the debtor believed the filing to be incorrect or wrongfully filed.

This would be similar to consumers rights under the FCRA.

The debtor would also have the right to file a termination of the filing if the secured party failed to do so after the secured party's debt was satisfied. It is presumed the debtor would simply have to provide the filing officer a document reporting the debt had been satisfied.

In the next and final installment in this series we will discuss what effect, if any, these changes will mean to the filer when adopted.

I wish you well

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