New York became the latest state to enact the 2010 Amendments to UCC Article 9 (the “Amendments”). The governor signed Assembly Bill 9933 on December 17, 2014 and the new law took effect immediately. The bill also included Revised Articles 1 and 7.
The new law adopted the Alternative A “Only If” rule for sufficiency of individual names. The debtor’s driver’s license or non-driver photo identification card serve as the sufficient source of the debtor name for purposes of § 9-503(a)(4). The second-tier safe harbor in § 9-503(a)(5) applies if the debtor lacks a qualifying driver’s license or identification card.
The new law retained the requirement that a financing statement provide the type and jurisdiction for an organization debtor name. UCC records must continue to provide this information when they provide an organization debtor name or the filing office must reject the record.
The new law also retained a non-uniform version of 9-521, which provides that a filing office must accept a written form approved by the New York Department of State (“DOS”). The DOS, however, has not approved the new 04/20/2011 revision forms because they lack fields for the organization information. However, the currently-approved forms do not contain check boxes for the new indications required by § 9-503(a)(2) and (3) for estate and trust related records.
The same issue exists for electronic UCC filings in New York. The DOS electronic UCC filing system has not been updated to allow for the new estate and trust indications. This is similar to the situation that temporarily occurred in many other states after they enacted the Amendments.
Filers should continue to use the old forms and electronic filing system for most UCC filing transactions in New York. However, secured parties may want to file trust and estate related financing statements as written records and provide the new indications in the collateral field, the addendum miscellaneous field or on an attached exhibit.
Finally, the legislation omitted transition rules, which has raised questions regarding filed financing statements that do not comply with the new debtor name rules. By its terms the AB 9933 only applies to transactions entered into on or after the effective date. Consequently, a pre-effective-date financing statement should remain effective under the former law, at least until it must be continued or otherwise amended. Nevertheless, some industry sources claim that secured parties must amend non-compliant records within 4 months (by 4/17/2015) to remain perfected in after-acquired collateral because the new law caused a change in the debtor name for purposes of § 9-507(c). Therefore, secured parties may want to consult with legal counsel to determine the best course of action with respect to pre-effective-date records.
Additional resources on the 2010 Amendments to UCC Article 9 are available at http://csctransactionwatch.com/amendments/. To speak with a CSC UCC specialist, please fill out our UCC Web Services form.
If you have questions or need more information, please contact Paul Hodnefield, Associate General Counsel, at firstname.lastname@example.org or 800-927-9801, ext. 62375.