3JM Company Inc.

Published Articles by David Balovich

Published in: Creditworthy News
Date: 4/12/00

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 statements?

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 (huh)?

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 filing.

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 particular state.

Try as they will, it appears that the Uniform Commercial Code will remain non uniform.

John, I hope that I have answered your question in a manner that you can understand.

We welcome your questions and comments regarding this series. Please address them to David Balovich at daveat3jm@aol.com. If you have a question you would like information on or discussed please send to the email address above.

I wish you well.

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