Uniform Law Commission
111 N. Wabash Ave., Suite 1010, Chicago, IL 60602
Contact: Katie Robinson, ULC Communications Officer, email@example.com
For Immediate Release:
52 jurisdictions have enacted the 2010 Amendments to Article 9 of the UCC
June 15, 2015 – Important amendments to Article 9 of the Uniform Commercial Code (UCC) have now been enacted in 52 jurisdictions. Oklahoma was the most recent state to enact when HB 1773 was signed into law by Oklahoma Governor Mary Fallin on June 4, 2015. Only the U.S. Virgin Islands is without this important UCC update.
UCC Article 9 governs secured transactions in personal property (the granting of credit secured by personal property). Hundreds of millions of dollars of commercial and consumer credit are granted every year in secured transactions under UCC Article 9. The UCC9 rules apply, for example, when a manufacturer finances the acquisition of machinery, a retailer finances inventory, or a consumer finances home furnishings.
UCC9 provides rules that govern any transaction, other than a finance lease, that involves the granting of credit coupled with a creditor's interest in a debtor's personal property. If the debtor defaults, the creditor may possess and sell the property to satisfy the debt. The creditor's interest is called a security interest. Perfection of the creditor's security interest establishes the creditor's priority over other creditors. UCC9 specifies who has the first rights in the collateral when two or more competing creditors have legally enforceable interests in the collateral.
UCC9 was substantially revised in 1998 and adopted in all states. The 2010 Amendments to UCC9 modify the existing statute to respond to filing issues and address other matters that have arisen in practice following a decade of experience with the 1998 version of UCC9.
Of most importance, the 2010 Amendments provide greater guidance as to the name of an individual debtor to be provided on a financing statement. The amendments offer two alternatives to each state:
- Alternative A provides that, if the debtor holds a driver’s license issued by the state where the financing statement is filed, the debtor’s name as it appears on the driver’s license is the name required to be used on the financing statement. If the debtor does not have such a driver’s license, either the debtor’s actual name or the debtor’s surname and first personal name may be used on the financing statement.
- Alternative B provides that the debtor’s driver’s license name, the debtor’s actual name or the debtor’s surname and first personal name may be used on the financing statement.
The majority of states have enacted the 2010 Amendments with Alternative A. The amendments further improve the filing system for the filing of financing statements. More detailed guidance is provided for the debtor’s name on a financing statement when the debtor is a corporation, limited liability company or limited partnership or when the collateral is held in a statutory or common law trust or in a decedent’s estate. Some extraneous information currently provided on financing statements will no longer be required.
In addition, the amendments provide greater protection for an existing secured party having a security interest in after-acquired property when its debtor relocates to another state or merges with another entity.
The amendments to UCC Article 9 were drafted and approved by both the Uniform Law Commission and the American Law Institute in 2010. Further information on UCC Article 9 can be found at the ULC’s website at www.uniformlaws.org.
The Uniform Law Commission, now in its 124th year, provides states with non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law. The organization comprises more than 300 lawyers, judges, and law professors, appointed by the states as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, to research, draft and promote enactment of uniform state laws in areas of state law where uniformity is desirable and practical. Since its inception in 1892, the group has promulgated more than 200 acts, among them such bulwarks of state statutory law as the Uniform Commercial Code, the Uniform Probate Code, and the Uniform Partnership Act.