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You have all dealt with the universally accepted Article 9 of the Uniform Commercial Code, which was adopted in the United States and many territories in 1972. Some subsequent changes were
enacted in UCA ¤70A-2a-101 et seq. (leases) and UCA ¤70A-8-101 et seq. (investment securities). In 1998, the National Conference of Commissioners on Uniform State Laws along with the
American Law Institute, approved a revised version of Article 9. The Utah Legislature passed Revised Article 9 in 2000, effective July 1, 2001. Although the revisions streamline methods
of perfecting security interests and where to file, as well as other clarifications, it does not alter the basic structure established for security interests. You must still file a
financing statement with the filing office.
We in the Division of Corporations and Commercial Code are charged with the responsibility of being the filing office for financing statements, which perfect certain security interests.
(UCA ¤70A-9a-501) Section 5 of the Revised Article 9 gives the requirements for that filing. Sections 9a-501 through -511 describe what to file and ¤¤ 9a-512 through -527 tell how to
file. The filing of the financing statement merely puts third parties on notice to inquire about the existence and details of a security interest. (Russell A. Hakes, The ABCs of UCC
(Revised) Article 9 Secured Transactions, (Amelia H. Boss ed., 2000), p. 34).
Financing statements have only 3 major parts, a debtor name, a secured party name and an indication of collateral, very simple. (UCA ¤70A-9a-502, but see also ¤70A-9a-516(b)). There are
other indications on a financing statement to clarify the filing, if necessary. (E.g., lessor/lessee designation). Subsequent filings may also be done to amend, continue or terminate the
filing. The filing office is compelled to accept the filing if it meets basic statutory requirements. Utah has an online filing system that captures those basic components of filing (see
www.utah.gov/commerce/ucc).
First - debtor name. (UCA ¤70A-9a-503). The debtor can be an individual or an organization. If the debtor is an individual, they must be listed with her or his whole legal
name and no less than a last name. Generally, names are listed as prefix (Mr., Mrs., etc.), first name, middle name or initial, last name, and suffix (Jr., Sr., III, etc.). If the debtor
is an organization, then the whole legal name must be entered along with organization type (corporation, limited liability company, limited partnership, non-registered entity, trust,
etc.), jurisdiction of organization, and "organizational ID"file number. The entity file number can be found on our web site under business name searches. A DBA or assumed name
is considered a separate name. (Be warned that the filing office will accept a filing that uses only a trade name, but that such a filing is defective under ¤70A-9a-503(3)). Both types of
debtor must also list an address. This is the first time debtors have been distinguished between individuals and organizations.
Second - Secured party or secured party representative. (UCA ¤70A-9a-503). The secured party must list the legal name of the individual or organization and the full address.
Each name must be listed independent of another. Alternatively, a single representative may be named for multiple secured parties.
Third - indication of collateral. (UCA ¤70A-9a-504).
In the statute, the terminology "indicates the collateral covered"is intended to buttress the idea that the financing statement is designed simply to provoke further inquiry. (Russell A. Hakes, The ABCs of UCC (Revised) Article 9 Secured Transactions, (Amelia H. Boss ed., 2000), p. 37). The statute very specifically states that only simple descriptions of collateral are needed. The security agreement creates the interest in the collateral and must independently completely identify the collateral. The collateral description in a security agreement must be much more specific than in a financing statement.
Once the financing statement is prepared, it is presented to the filing office, the Utah Division of Corporations and Commercial Code. The Division evaluates the filing on the statutory
requirements for filing only. The Division does not establish the legal sufficiency of the security interest. (UAC ¤R154-002-111.1). The Division reviews the statutory requirements,
whether the fee has been paid, and either accepts or rejects the filing. The Division only accepts filings on the national form. These forms are available in downloadable format on our
web site at www.commerce.utah.gov, by clicking the "Corporations"link.
Exactly how is a filing done under Revised Article 9? UCC-I's can be filed by completing the national form and submitting it along with the filing fee to our office. We have limited
resources in manpower and are diligently trying to keep current. Of great benefit to the filer is our new online filing system for UCC-I's and "In Lieu Of"filings (see
www.utah.gov/commerce/ucc). The system enables you to enter your data online, edit, and submit the completed financing statement. Once the filing is submitted, the filer will be able to
immediately print an official acknowledgement of the filing. Additionally, the online system is directly connected to our UCC database, so the filing immediately becomes searchable
online. A UCC-III can only be filed by completing the national form and submitting it along with the proper filing fee to our office. UCC-III's must each be distinct in the transactions,
i.e., the program only allows one type of change per filing. File a separate UCC-III to change each debtor/secured party name or address, or to continue or to terminate. The only
exception is that the collateral description may be amended along with another type of change. We plan to have online filing for UCC-III's shortly.
Correction statements were used in the early months of Revised Article 9 filing, but our interaction with other state filing offices revealed we were all using them improperly. Until the
problems are sorted out, corrections are done on a UCC-III and no charge is made. Staff uses this method in-house, but these changes will not show up separately on a search. Only the
correction will be shown. All filings are indexed according to file number and debtor name. We look forward to future enhancements allowing indexing in other fields such as secured party
or debtor city/state.
As you may have noticed, I have not mentioned attachments. These have been a real challenge in filings since 1 July 2001. The national forms do not provide for attachments. If additional
space is needed for additional debtors or collateral description, there are addenda for each form. Because we no longer have the resources to image filings, only the information on the
form is recorded. The Division will not reject a filing simply because it came in with attachments, but the data entry staff will ignore the attachments and will enter the information on
the form exactly as it appears. In other words, if a filing is submitted on the national form and the collateral box says "see attached"and no other verbiage, that is what will
appear as the collateral description on the filing in the database. Nothing from the attachments will be captured. Our staff will only capture 250 characters in the collateral description
area per form and per addendum. Therefore, I encourage you to make a brief indication of collateral on the form and forego the lengthy descriptions many are used to providing. Better
still, the online filing system allows you unlimited characters in your collateral description, in 4,000 character increments. The full description entered into the data base will be
returned on a search request (i.e., up to 250 characters per form or addenda for paper filings and 4,000 characters per form or addenda for electronic filings).
UCC searches can be performed online, but have only a "snapshot"of the filing and its history. We anticipate full functionality of the online search capability, including an
online certified search, very soon. Currently, all certified searches must be done by completing the UCC-II form and submitting it to our office with the proper fee. There is more about
searches later on.
The Division has also prepared a list of FAQs regarding filing of UCC-I's, which can be found on the web site. It gives an overview of the difficulties the Division has noticed since the
advent of Revised Article 9 and will hopefully aid you in filing with our Division.
Rejection - (UCA ¤70A-9a-516).
There are few reasons to reject a filing. See our rules, or the statute on our web site. It is not our responsibility to make sure your information is correct, only that it meet statutory requirements. We do not check spelling, legal names, correct addresses or any such activity.
There are a few more significant changes that should be mentioned. Signatures are no longer required for filing. Debtors themselves, not just secured creditors, can file termination
statements. (UCA ¤70A-9a-513) Note that UCC-I records are only expunged one year after their scheduled lapse date, not when a termination statement is filed. Prior to lapse, the Division
will report both the UCC-I and the termination statement. Therefore, it is up to other creditors to verify with the secured party that the termination statement was authorized. Electronic
filings are official records. (UCA ¤70A-9a-519 and 9a-102(69); UAC ¤R154-002-110). Also, be aware that there is no longer any statutory reference to claiming purchase money lending
priority; hence, no check-off box on the form. The Division has partnered with Utah Interactive, Inc. to provide a wonderful and useful UCC filing wizard and search page. Revised Article
9 does not change the need for a financing statement, but it dramatically changes how that is done. (Notice that I do not address where to file, i.e., in which state, because the Division
does not determine whether it is the proper filing office. Be aware, however, that the rules determining where to file changed on 1 July 2001.)
Searches.
We search only what we are given: debtor names must be exact. The uncertified online search, however, allows some flexibility in that you can check several variations. Also, the online system allows you to search 24 hours a day, 7 days a week from the convenience of your home, office or any other location with Internet access. Since online filings are searchable immediately upon submission, we encourage that method of filing in order to have more complete searches. For paper financing statements delivered to the Division, we are running about one to two weeks behind in data entry. Therefore, certified searches cannot be completed until the in-house work catches up to them. The turnaround time for certified searches is directly tied to data entry to ensure a complete report. Non-certified searches are usually turned around in 24 hours.
Because we are using a data only filing system, there are no copies available. Images are not currently a part of our filing system. Again, it is imperative that the filer use the national
form and use the financing statement as a notice of a secured transaction rather than a repeat of the secured transaction. When used properly, the filing becomes a notice of the debtor,
secured party and an indication of collateral, i.e., those elements the statute requires. Some of the legacy data which was converted to the new system (those filings submitted prior to 1
July 2001) are truncated since that was how they were input in the old system. Also, some filings early in the new system are also truncated since there was a severe limit in the fields
(55 character names and 250 character collateral descriptions). The Division is happy to help a filer correct any of these filings at no charge. Please notify us by submitting a UCC-III
with a cover letter stating that it is a correction to a legacy filing. Search results will reveal the "alternative designation"fields, but not the box 10
"miscellaneous"information.
When submitting search requests, the statute requires that filers use the debtor's legal name (UCA ¤70A-9a-503) and the search will be done exactly as the name is submitted (UAC
¤R154-2-147). That is what the law intends. However, because of legacy data being indistinct and all of us trying to get used to a new way of doing this, the staff will do the search
exactly as they receive it, but will also usually (and unofficially) try variations based on experience with the data being searched. Online searches allow an exact name search as well as
"beginning with"searches. This allows some flexibility to the online searcher. The online search page is our main priority right now. We are trying to make it as complete a
search as possible.
We continue to add new functionality online to make UCC filing and searches much easier for you. Soon, you will be able to perform a certified search and file UCC-III's online.
"In times of change, learners inherit the earth while the learned find themselves beautifully equipped to work in a world that no longer exists."
- Eric Hoffer, red-neck philosopher.
The Division is madly trying to meet the needs this new legislation has intended, but it will be impossible without input from the users and filers. We are changing even today, so anyone
who is interested in helping us make useful decisions, I would love to hear from you. We were given very limited resources to implement this act, but anticipate some great strides in this
new year. In the meantime, please feel free to give some much needed advice on practical ways to continue to implement Revised Article 9. We are constantly changing and updating the
filing system for Utah. In fact, some things may change before this article goes to print. We encourage all our users to check the web site often and to give us feedback. There has been
great progress made, and I look forward to much more progress in the future.
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