Topic: Uniform Commercial Code
-
If a debtor changes the name on their driver’s license, do we lose our lien priority?
—
by
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).
-
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?
—
by
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…
-
Can we allow clients to request stop payments through an online system or do we need to obtain a hard copy of the form?
—
by
Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. We do not believe that your organization needs hard copies of stop payment orders…
-
We had a check payable to a trustee deposited into a personal checking account. Is that permitted? We reviewed UCC Section 3-307, but this instructs us to also consult Illinois law.
—
by
A definitive answer to your question would require a review of the trust instrument, which could authorize the trustee to deposit trust funds into a personal account (though it is not common for a trust to specifically authorize this practice). It is possible that the trustee’s actions are appropriate, depending on the circumstances, but there…
-
After a customer deposited a check in an account at our bank, the payor bank called to say that the check was forged. Which bank is liable for the loss?
—
by
We do not believe that a bank that paid a forged check could hold the bank in which the check was deposited liable for its losses. In other words, the bank in which a forged check was deposited generally is not liable for the forgery. In general, a bank on which a check is drawn…
-
Can we charge a returned check fee to consumers and commercial accounts, and is there a maximum fee?
—
by
Under the Uniform Commercial Code, returned check fees may not exceed $4.50 for “a commercial checking account or other similar commercial account.” 810 ILCS 5/3-806. As to consumer accounts, we are not aware of any limitations on returned check fees that would apply to banks. Under Illinois law, there are very few limitations on fees…
-
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?
—
by
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…
-
Do we need to have borrowers sign new blanket security agreements every time there’s a new loan?
—
by
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…
-
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?
—
by
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…
-
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?
—
by
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…