Preparing for the New UCC Forms

February 6, 2013

By Paul Hodnefield, Esq.

On July 1, 2013, most states will begin accepting the new UCC forms adopted as part of the 2010 Amendments to UCC Article 9 (the “Amendments”). The new forms look similar to the forms that have been in nationwide use since 2001. However, there are some significant differences. This article provides an overview of the most important form changes, explains new procedures for completing the forms, and discusses how filing offices will handle the transition from old forms to new.

The new § 9-521 forms, which carry a revision date of 04/20/2011, were designed to implement the Amendments through non-substantive changes to layout and text labels. Anyone familiar with the existing forms will instantly recognize the new forms. However, there are many differences between them, some easily noticeable and others more subtle.

Changes to the § 9-521 forms have an impact even on those who file UCC records almost exclusively by electronic means. Most states and third-party service providers use the statutory forms as a template for the design of their electronic filing systems. Therefore, all filers should be familiar with the new form layouts and how the changes will impact record preparation.

2010 Amendments Form Layout Changes

The most obvious change is that the new forms no longer include fields for the SSN/FEIN or organization information in the debtor information sections. The debtor’s SSN/FEIN has never been required by the official text of Article 9 and the Amendments eliminated the organization information requirements from Section 9-516(b)(5). Therefore, it made sense to delete those fields. Filers will no longer need to provide the SSN/FEIN or organization information anywhere on the UCC record.

Another noticeable difference from the old forms is the location of checkboxes. Removing the debtor organization information fields freed up space on the UCC1 Financing Statement (“UCC1”). This allowed several checkboxes formerly located on the UCC1AD Financing Statement Addendum form (“UCC1AD”) to appear on the face of the UCC1 instead. Consequently, a secured party will no longer need to add the UCC1AD to make most checkbox indications.

One checkbox moved in the other direction. The indication that the UCC1 is to be filed in the real estate records is now located on the new UCC1AD form. This made sense because most county recording offices require an attached UCC1AD form anyway. Filers must make note of this new location and remember to check this box when making a fixture filing.

The checkbox layout is also slightly different on the new UCC3 Amendment form (“UCC3”). The “Assignment” checkbox now appears between the “Termination” and “Continuation” checkboxes. The goal of this reordering is to prevent inadvertent terminations by filers who intended to check the continuation box. That simple clerical error has cost secured parties millions of dollars over the past several years. The new UCC3 form layout will help reduce that risk.

The form name sections changed to accommodate long individual debtor names. The debtor name fields on the new UCC1 are the same size as on the old form. However, the UCC1AD and UCC3 forms have extended fields for individual debtor names. The longer fields ensure that the filer can accommodate long names that may be required for compliance with the new individual debtor name sufficiency rules set forth in § 9-503(a)(4).

Once the Amendments take effect, filers will need to follow a new procedure for providing long individual debtor names. If any part of an individual debtor name is too long to fit in the UCC1 name fields, the filer must provide the entire name on the UCC1AD form. The UCC1 name sections include a new check box to indicate that the name was too long and that the name is provided instead on the attached UCC1AD form.

As a result of this new process, there may be circumstances where no debtor name appears on the UCC1. Instead, the debtor name or names would appear only on attached UCC1AD forms. Filing offices generally will not refuse records submitted in this manner.

The UCC3AD Amendment Addendum form (“UCC3AD”) will also undergo a makeover. The form in use since 2001 consisted of little more than a blank page. Because the UCC3AD offered no advantage over other methods of providing information, filers often just attached exhibits to the UCC3 form rather than transfer the information to an essentially blank form.

The new UCC3AD form includes several changes that make it more useful to filers. Many county recording offices cannot link a UCC3 to the related UCC1 by file number. They require amendments to provide additional information, such as the debtor name, to ensure correct indexing in the real estate records. The new UCC3AD includes fields designed specifically for this additional information. Filers may find the UCC3AD form helpful for providing the additional information necessary to index the UCC3 in the county real estate records.

Filing Office Form Transition

Filers must be careful not to use the new forms until the 2010 Amendments take effect in the filing jurisdiction. The new forms do not provide the information required by most states to avoid rejection under current law. Moreover, the new forms have not been approved for use by most filing offices until the Amendments take effect. Consequently, most filing offices are likely to reject any record submitted on the new forms prior to the effective date.

Once the Amendments take effect, the issue becomes whether filing offices will continue to accept the old forms. The filing officers’ professional organization, the International Association of Commercial Administrators (“IACA”) has not taken a position on whether to accept the old forms after the effective date.

Discussions on the IACA listserv indicate that most states plan to accept the old forms for a limited period of time after the Amendments take effect. The “grace period” for accepting the old forms in those jurisdictions will range from 30 to 180 days. A few filing offices, however, may choose not to accept the old forms after the effective date.

A few state filing offices have already provided notice that they will accept the old forms for a short time after the Amendments take effect. Others are still undecided. Some may not offer any grace period. Unfortunately for filers, some filing offices may not make a final decision until after the IACA Annual Conference in May.

Due to the current uncertainty regarding filing office form rules, the best practice will be to use the new forms for any written UCC record that the filing office will receive on or after the effective date of the Amendments. Filers that want to use the old forms after that time should check with the filing office first to ensure they will not reject the records.

Conclusion

The effective date of the amendments is rapidly approaching. Those who file UCC records will not find the new forms substantially different. However, filers need to become familiar with the new layouts, field labels and procedures necessary to correctly create the records. Filers should also be prepared to use the new forms for all UCC records submitted after the effective date. That includes updating any forms embedded in document preparation systems to ensure compliance with the new filing office rules.

Samples of the forms in PDF format and other reference materials on the 2010 Amendments are available at http://csctransactionwatch.com/amendments/.

Paul Hodnefield is Associate General Counsel for Corporation Service Company and a frequent speaker/writer on UCC search and filing issues. Please feel free to contact him with questions or comments at phodnefi@cscinfo.com or 800-927-9801, ext. 62375.