July 2013

Volume 14, Issue 7

Uniform Commercial Code (UCC) Article 9 Changes

Uniform Commercial Code (UCC) Article 9 governs any transaction (other than a finance lease)
that couples a debt with a creditors interest in a debtors personal property. The debtor can be
an individual or any business entity, ranging from a registered corporation to a single
proprietorship.
Article 9 was substantially revised in 1998. Since the adoption of those revisions, there have been
court case decisions dealing with the question of what name needs to be provided on a financing
statement for an individual debtor. The 2010 amendments, which have an effective date of July
1, 2013, provide increased certainty that the debtor name on the financing statement is the correct
name for purposes of UCC Article 9. The 2010 amendments also deal with perfection issues
arising on after-acquired property when a debtor moves to a new jurisdiction, along with technical
revisions.
The revised UCC Article 9 can be found here: http://www.michigan.gov/documents/article9_18815_7.pdf
Please Note: Michigan Credit Union League & Affiliates services are designed to provide accurate information with
regard to the subject matter covered, with the understanding that the League does not render legal services. For
specific legal advice, please consult with your credit unions attorney.

Q. 1. What is the Uniform Commercial Code?

A.

The Uniform Commercial Code (UCC) was first published in 1952 and consists of uniform
rules coordinating the sale of goods and other commercial transactions throughout the 50
states. The main purpose of the UCC was to provide consistency in state law because of
the prevalence of transactions that extend beyond one state. The UCC deals primarily with
transactions involving personal property (movable property).
The UCC is a model code, so it does not have legal effect in a state unless the UCC
provisions are enacted by the individual state legislatures as statutes. The rules for each
of the transactional areas covered by the UCC are divided into separate sections called an
"article. Michigan is one of the states that has adopted the 2010 amendments.

Q. 2. What were the significant changes that were made to UCC Article 9 related to the
name of the debtor on the financing statement?
A.

The first amendment, and what UCC considers to be the most important, is the revision to
section 440.9503, which provides greater clarity as to the name of an individual debtor to
be provided on a financing statement. The amendment now requires a filer to provide on
the financing statement, the name on the debtors drivers license, if the license has not
expired. If the debtor does not have a drivers license, the filer must either use the
individual name of the debtor or the surname and first personal name of the debtor.

With respect to trusts, the amendments indicated that the financing statement must provide
the name of the trust as identified in it the trusts organic records if it is specified. If the
organic record of the trust does not specify a name for the trust, the name of the settlor or
testator and sufficient additional information to distinguish a particular trust from others held
by the same settlor or testator.
Q. 3. What other changes were made to UCC Article 9 that will impact credit unions?
A.
The revisions to section 440.9316 added subsection (8) which protects a security interest
if a borrower moves to another state or sells to a debtor of another state. Article 9 currently
provides that perfection by filing continues for 4 months after a change in location by the
debtor. However, this temporary period applies only with respect to collateral owned by the
debtor at the time of change. If the borrower sells to a debtor of another state, previously
there was no perfection with respect to that new collateral unless and until the secured
party perfects pursuant to the law of the new jurisdiction. The amendments change this by
giving the filer a 4 month grace period for the secured party to perfect in the new jurisdiction.
Q.4.
A.

Is there no longer a correction statement with the amended rules?

There was an amendment in section 440.9518 to revise what was previously referred to
as a correction statement to now be referred to as an information statement. This
section authorizes a debtor to file a statement or claim that a financing statement filed
against it was in fact unauthorized. In addition to the name change, the amendments now
authorize the secured party of record to also file an information statement if the secured
party believes that an amendment to its financing statement was not authorized. The
comments associated with the amendments also make clear that the secured party has no
duty to file an information statement, even if it knows of the unauthorized filing.

Q. 5. Will these changes impact any costs for my credit union?

A.
No, there doesnt appear to be any fee changes associated with the Article 9 revisions.
This
link
provides
the
Michigan
Fees
related
to
UCC.
http://www.michigan.gov/sos/0,4670,7-127-1631_8851-22911--,00.html
Q. 6. In the UCC amendments, section 440.9521 references an amended form and format
for the UCC financing statement. On the State of Michigans website, it doesnt
appear the form has been revised. Will the State be updating the forms on their
website or are we permitted to use the current forms?
A.
According to the State, updates to the UCC Online wizard are scheduled to reflect the
new forms by July 1st. For paper submissions, the UCC Home Information web site is
scheduled to have the forms and FAQs updated by the first of July. The State also
indicated that they will continue to accept the current forms through July 31, 2013.
Q. 7. Where can we locate the UCC forms online?
A.
The State of Michigan UCC web address, which provides UCC forms and general
information related to the UCC codes is located here: http://michigan.gov/sos/0,1607,7127-1631_8851---,00.html