We have a UCC-1 financing statement on file for collateral securing a loan we are renewing. The borrower now has a REAL ID driver’s license reflecting their full middle name, but our UCC-1 reflects only their middle initial. Do we need to amend the UCC-1 to match the name on the borrower’s new ID or is the UCC-1 valid until the date we are required to file a continuation for it?

We recommend amending a “blanket” financing statement (UCC-1) within four months of the issuance of a new driver’s license reflecting a different name than what appears on the UCC-1, as this is the length of time a financing statement remains effective as to after-acquired property once it becomes “seriously misleading.” Although a change from a middle initial to a full middle name may not necessarily render a UCC-1 “seriously misleading,” we believe that amending it within the four-month window would be a best practice.

Under the Illinois UCC, a financing statement sufficiently provides the name of a debtor if it reflects the name indicated on their most recently issued driver’s license. If the name provided becomes “seriously misleading,” the financing statement remains effective to perfect a security interest in collateral acquired by the debtor before and within four months after becoming seriously misleading. Unless the financing statement is amended, it will be ineffective as to all property the debtor acquires more than four months after becoming seriously misleading.

Generally, a financing statement that fails to provide a debtor’s name as it appears on their most recently issued unexpired driver’s license is considered seriously misleading. However, the Illinois UCC provides that such a financing statement is not considered seriously misleading if a search of the records of the filing office under the debtor’s correct name, using the filing office’s standard search logic, would disclose the relevant financing statement.

The administrative rules describing the Illinois Secretary of State’s standardized search logic for UCC filings indicate that “for first and middle names of individuals, initials are treated as the logical equivalent of all names that begin with such initials.” For example, we searched the Illinois Secretary of State’s website using a fictional debtor’s full middle name, and the results included filing statements for individuals with the corresponding middle initial.

Consequently, we believe a blanket financing statement listing a debtor’s middle initial likely would not be considered “seriously misleading” after the debtor obtains a new driver’s license listing their full middle name. Nevertheless, we recommend amending financing statements within four months of a name change on a driver’s license to ensure the financing statements remain effective as to after-acquired property.

For resources related to our guidance, please see:

Illinois UCC, 810 ILCS 5/9-503(a)(4) (“A financing statement sufficiently provides the name of the debtor: . . . subject to subsection (g), if the debtor is an individual to whom this State has issued a driver’s license that has not expired, only if the financing statement provides the name of the individual which is indicated on the driver’s license . . .”)

Illinois UCC, 810 ILCS 5/9-503(g) (“If this State has issued to an individual more than one driver’s license of a kind described in subsection (a)(4), the one that was issued most recently is the one to which subsection (a)(4) refers.”)

Illinois UCC, 810 ILCS 5/9-507(c) (“If the name that a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under Section 9-503(a) so that the financing statement becomes seriously misleading under Section 9-506:

(1) the financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the filed financing statement becomes seriously misleading; and

(2) the financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the filed financing statement becomes seriously misleading, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the filed financing statement becomes seriously misleading.”)

Illinois UCC, 810 ILCS 5/9-506(b) (“Except as otherwise provided in subsection (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a) is seriously misleading.”)

Illinois UCC, 810 ILCS 5/9-506(c) (“If a search of the records of the filing office under the debtor’s correct name, using the filing office’s standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a), the name provided does not make the financing statement seriously misleading.”)

State Bank of Arthur v. Miller (In re Miller), 2012 U.S. Dist. LEXIS 116275, *22–*23 (C.D.Ill. 2012) (“Appellee cites In re Berry in support of the argument that the name on a debtor’s birth certificate is the best evidence of a debtor’s correct name when legal documents contain conflicting names. . . . In contrast, there are three reasons why the driver’s license is a better reference for an individual’s name.”)

Illinois UCC Administrative Rules, 14 Ill. Adm. Code 180.18(b)(7) (“Search results are produced by the application of standardized search logic to the name presented to the filing officer. Human judgment does not play a role in determining the results of the search. The following rules apply to searches: . . . (7) For first and middle names of individuals, initials are treated as the logical equivalent of all names that begin with such initials, and first name and no middle name or initial is equated with all middle names and initials. For example, a search request for ‘John A. Smith’ would cause the search to retrieve all filings against all individual debtors with ‘John’ or the initial ‘J’ as the first name, ‘Smith’ as the last name, and with the initial ‘A’ or any name beginning with ‘A’ in the middle name field. If the search were for ‘John Smith’ (first and last names with no designation in the middle name field), the search would retrieve all filings against individual debtors with ‘John’ or the initial ‘J’ as the first name, ‘Smith’ as the last name and with any name or initial or no name or initial in the middle name field.”)

Illinois Secretary of State, UCC Search