This is the fourth and final installment of a series of articles which is
a reply to an email sent to me by John Kellogg asking for an
explanation of the proposed changes to Article 9 of the
Uniform Commercial Code.
There are many other proposed changes to Section 9.5 which is
intended to replace section 9.4. I chose to only deal with
what appears to be the four significant changes due to the
amount of space afforded this column in the newsletter.
What effect, if any, will these changes have on those who file financing
Unfortunately, the Uniform Commercial Code is anything but. Even if the
National Conference of Commissioners on Uniform State Laws
approve the changes, each state's legislature will then
have to review and adopt the changes. For this reason the
changes are not planned to go into effect until at least
the year 2002.
Six states have already said they will not adopt the proposed changes if
approved. Several states have made no decision on whether to
review the changes or not and only three states have gone
on record to say they will adopt the changes.
Keep in mind that in 1996 a National UCC Financing Statement was
adopted. To date only 29 states accept the national form without
additional penalty fees. Of the 29 who accept the national
UCC-1 financing statement only 20% accept the national
UCC-3 change statement. Ten states will accept the national
form but they charge an additional penalty fee and 4 states refuse
to accept it. Two states, Indiana and North Carolina will accept the
national form but only if it is attached to their state's financing form
In the states that accept the form and are dual filing states, the states
have left the county filing offices to establish their own
procedures. Many counties whose state accepts the national form refuse to
accept it and require that the state form be used for
What this means is that you will continue to have to check
with each state that you file financing statements with to
determine what their legislature has adopted for that
Try as they will, it appears that the Uniform Commercial Code will remain
John, I hope that I have answered your question in a manner that you can
We welcome your questions and comments regarding this series. Please address
them to David Balovich at email@example.com. If you have a question you would like information on or
discussed please send to the email address above.
I wish you well.