Topic: Article 9 – Uniform Commercial Code
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We are double checking our compliance with the new UCC Article 9 rules that went into effect at the beginning of the month. In regards to filings that were in place before the July 1, 2013 changes, can we amend them as they expire or do we need to amend all of prior our filings now?
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A good general rule is to shoot for updating your UCC-1 Financing Statements within one year to reflect the recent Article 9 revisions as to naming individual and business debtors. Under the recent Article 9 revisions, valid financing statements filed in Illinois will remain in effect until they would have lapsed under the previous version…
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Do the new UCC Article 9 revisions (PA 97-1034, effective July 1, 2013) require that we match the mailing address for a debtor on a financing statement to the address of the debtor as shown on the debtor’s driver’s license?
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We do not believe that the latest Article 9 changes require you to use a debtor’s address as shown on the debtor’s driver’s license for purposes of listing the debtor’s mailing address on a UCC financing statement. UCC Section 9-502 contains the requirements for the contents of a financing statement, but it does not explicitly…
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After acquiring secured loans from another bank, which are secured by blanket liens, should we amend the financing statements to include our bank’s name?
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While the rules of priority often depends on the specific facts of each situation and the type of collateral covered by the financing statement, the general rule (with many exceptions) is that the first person to file financing statement or to perfect a security interest has first priority. 810 ILCS 5/9-322(a). Therefore, if the bank…
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Do we need to have borrowers sign new blanket security agreements every time there’s a new loan?
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We do not believe that it is necessary to file a new financing statement every time a debtor takes out a new loan, provided that the bank already has filed a financing statement that would cover the collateral for the loan. “A financing statement may be filed before a security agreement is made or a…
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We know that we now have to examine a business’s “public organic record” for the debtor’s name, but what do we do if there are multiple versions of a business’s names within its Articles of Incorporation?
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If a debtor’s public organic record shows more than one version of the business’s name, the bank has a few choices, and we cannot advise as to which method is the best solution. One option would be to request that the debtor file an amendment, as the most recent amendment to or restatement of a…
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If we have a blanket lien in place, but a borrower purchases new vehicles, do we need to amend the financing statements to reflect our liens on the vehicles?
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We believe that if a security agreement includes a collateral category that would include the vehicle, it would not be necessary to specifically list the vehicle in the security agreement. First, we note that vehicles covered by a certificate of title must be perfected under the Illinois Vehicle Code; they are not perfected by financing…
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Do we have only four months to amend our UCC-1s if a debtor changes their name?
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If a loan is secured by a “blanket” financing statement, and the borrower has changed its name, the bank must amend the financing statement with the new name within four months in order to retain perfection over any after-acquired property. 810 ILCS 5/9-507(c).
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If we filed a UCC financing statement with incorrect punctuation in the name of the debtor, do we need to file amendments?
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Legally, differences in the punctuation of an organization’s name in a UCC financing statement should not affect the validity of the financing statement (as explained below). However, we believe it is a best practice to include punctuation and to ensure that it matches a business’s name exactly (which would require examining the organization’s most recent…
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If a customer got married, adopted a new last name, and moved out of state, should we require the customer to sign new signature cards, loan agreements, and so on? Some loans and accounts are in the customer’s individual name, others are in the names of the customer’s businesses.
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While you will likely be able to enforce any existing agreements against the customer, we believe it would be a best practice to require the customer to sign new signature cards and any other agreements that she signed individually (including signature cards, safety deposit box agreements, loan agreements, individual guarantor agreements, and security agreements such…
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Can we use a demand deposit account (DDA) as collateral for a loan?
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First, we note that the Regulation Z disclosure you mentioned would not apply to a business loan. 12 CFR 1026.1(c)