The Filing Office
Once a financing statement is sent to the filing office and the fee is paid, it is the responsibility of the filing office to index the statement. Ultimately, there are several responsibilities of the office, even if none of them appear very important. Some of those responsibilities include:
- Filing a received statement within two days.
- Responding to search requests within two days.
- Rejecting filing statements based on incomplete fields (not based on the quality or correctness of the statement). The incomplete fields include:
- Address of the secured party
- Address of the debtor
- Whether the debtor is an individual or an entity
- Assign each statement a number so any amendments can find the original statement easily.
If the filing office makes an error in any of these responsibilities, the error does not affect the effectiveness of the financing statement. However, certain errors about rejection (the statement should have been rejected but wasn’t and vice versa) could affect priority depending on the knowledge of a bonafide purchaser.
See 9-516; 9-519.
How to File
Authority
For a secured party to make the filing of a financing statement, they must be authorized by the debtor. Typically, authentication of the security agreement is enough to authorize the filing of the financing statement (“Ipso Facto” authorization). However, if the secured party wishes to file before authenticating the security agreement, they need to get the permission from the debtor by another authenticated document. If they fail to do so, the financing statement is ineffective until that permission is provided. When that permission is provided, the permission is applied retroactively to the time of filing the financing statement.
See 9-509.
While the authority for the initial filing of a financing statement requires the authority of the debtor, most of the amendments require the authorization of the secured party. This is true unless if the amendment adds collateral or a new debtor to the finance statement. 9-509(d).
Where
There are rules about which state to file, but there are also rules about which office to file with. If the collateral pertains to some real estate, then filing should be done with a “local” office that records real estate mortgages (one local office per county). However, most filing happen with some other “centralized” office, typically with the single Secretary of State office within the state.
See 9-501.
Length of Effectiveness
The effectiveness of a filing lasts for five years. At that point, if the secured party wishes to extend the effectiveness of the filing (and thus preserve their perfection in the collateral), they must file a continuation statement. The continuation statement does not need to be authenticated by the debtor, but it cannot be filed before six months until the expiration date. That is, once the financing statement has six months left to live, the secured party can file a continuation statement. The effect of this filing will extend the life of the financing statement for an additional five years (from the date of the original filing, not from the filing of the continuation statement).
If the filing statement expired, then the filing office will leave the statement within the indexed records for an additional year.
See 9-515.
Other Types of Filings
The continuation statement is simply an amendment to the financing statement. There are other amendments that could be made as well. First, a termination amendment. Second, other amendments designed to address a change address, add or release collateral, or assign the filing to another secured party.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
