Uniform Commercial Code Amendments Now In Effect
By Shannon Raye Martinez
SAALFELD GRIGGS PC
Oregon recently adopted the Uniform Commercial Code (“UCC”) Amendments to Revised Article 9. These amendments took effect on July 1, 2013, and will affect both new UCC filings and existing filings. It is important that the new rules are followed; otherwise you could risk losing your security interest. This article provides a brief overview of some of the changes and suggestions going forward to maintain compliance with Oregon law. This article does not address all of the changes, so it is important to review these revisions and establish systems for compliance with the new rules.
NAME OF DEBTOR – ORGANIZATION
Now you must use the name of the debtor shown on the “public organic records,” or in other words, the organizational documents. This is not necessarily the documents that have been filed with the Oregon Secretary of State. In addition, a certificate of good standing is not sufficient. Based on this new definition, if the debtor’s name is incorrect on the information filed with the Secretary of State, but is correct on the debtor’s organizational documents (such as the Bylaws), then you must use the name as stated on the organizational documents in order to perfect your security interest. It is now very important to obtain all organizational documents from the debtor, and also make sure you request any amendments on a periodic basis.
NAME OF DEBTOR – INDIVIDUAL
Oregon had the choice to adopt one of two alternatives to determine how to designate an individual debtor in UCC filings. Option A, known as the “only-if” alternative, requires that the filer use the debtor’s name exactly as it appears on the debtor’s valid driver license or state identification card. Although Option A was recommended by the Oregon Bankers Association, the Oregon legislature rejected this and opted for Option B instead. Option B, or the “safe harbor” alternative, is the minority approach and requires that a valid UCC filing contain any of the following: the name listed on the current, valid state driver license or ID card, the individual name, or the surname and first personal name of the debtor. You may wonder, “What is the individual name and how is that different from the surname and first personal name?” Unfortunately, that question remains unanswered. It appears it may refer to the name commonly used by the debtor, such as if they typically use their middle name and first initial. Since Oregon allows you to choose any of the three alternatives, this provides flexibility to the filer. However, the alternatives allowed by Oregon for designation of an individual debtor pose greater issues with regard to UCC searches than with filings.
Since Oregon has adopted the safe harbor alternative, it will now be necessary to do a UCC search under all possible names for the individual debtor to accurately determine if the debtor has any other UCC filings, liens and security interests against his or her property. The Oregon Secretary of State has indicated that it will not be necessary for Oregon to change the search logic they use for UCC searches. Instead, it is left to the person conducting the search to make sure they search all possible alternative names, for both an individual and corporate debtor.
Revised UCC forms will be available on the Oregon Secretary of State’s website for use beginning on the July 1st effective date. Those forms are located at http://www.filinginoregon.com/pages/ ucc/ucc_forms/index.html. On July 2, 2013, e-filing with the new forms will be available on the Secretary of State’s website. The Secretary of State’s office will continue to accept the old forms until August 1, 2013 only.