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Published Articles by David Balovich

Title: The Financing Statement (UCC-1), Part 2
Published in: Creditworthy News
Date: 8/16/01

 
Where to File

One of the most significant changes introduced by revised Article 9 is the state and places within the state where financing statements (UCC-1) must be filed. These changes will centralize almost all financing statements. As a result it should be much easier for a secured creditor to perfect its security interest, especially in transactions involving debtors with multi-state operations.

One significant change is the elimination of the need to file a financing statement in a local office (county, township, city) for collateral that is not related to real estate. Fixtures, uncut timber and extracted collateral will still require local filing. Extracted collateral covers oil, gas, and minerals where the security agreement attaches upon extraction and accounts where the sale occurs at the well or mine head. Cut timber is classified as goods under the revised Code and only requires filing at the state level.

Consumer goods, farm equipment, inventory, equipment and intangibles will only require state or centralized filing. The jurisdiction for filing is determined by the state where the debtor resides for proprietorships and partnerships. In the case of corporations and limited liability companies it is the state where the entity was organized.  Thus, the majority of filings under the revised Code will occur in states such as Delaware and Nevada. Under the old Code filing was determined by where the collateral was located. Thus, it becomes important for the secured creditor to determine where the organization was organized to insure proper filing. Also many states now require the organizations I.D. number to perfect. This differs from the tax I.D. number in that it is the number assigned by the corporationís office when the organization is incorporated.

Types of Collateral

In addition to all of the collateral covered under the old Code, revised Article 9 includes collateral not previously covered. Under the new Code the following may be perfected as collateral by filing a financing statement: consensual liens on commercial tort claims, health care receivables, agricultural liens, promissory notes, and instruments.

However, it is important to understand that that even though perfection is achieved by filing the financing statement in instruments it does not give the secured creditor a priority over another creditor who possesses the instrument.

I wish you well.

THE INFORMATION CONTAINED IN THE ABOVE ARTICLE IS PRESENTED FOR INFORMATION

ONLY AND IS NOT PROVIDED AS LEGAL ADVICE. LEGAL ADVICE SHOULD BE OBTAINED FROM

COMPETENT, LICENSED ATTORNEYS PREFERABLY BOARD CERTIFIED IN CREDITORS RIGHTS

OR APPLICABLE LAW.


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