(July 2013) – Change can be scary, but it’s often a good thing. Effective July 1st, Ohio’s version of Article 9 of the Uniform Commercial Code (the “UCC”), the means by which a party perfects its interest in certain collateral of a debtor, was amended. This amendment is meant to ease a secured party’s filing, searching, and due diligence practices.
One important change enacted by the UCC amendment makes it easier for a secured party to ensure that the filing of a financing statement with respect to a debtor is not “seriously misleading,” resulting in its security interest being unperfected and the loss of its rights in the debtor’s collateral. Previously, small variations in a debtor’s name had made it difficult for a secured party to determine the proper name to call a debtor on a financing statement.
Individual debtor: With respect to an individual debtor, the UCC amendment provides that if a debtor has an Ohio driver’s license or identification card that has not expired, the secured party should list the debtor’s name on the financing statement exactly as it appears on the unexpired driver’s license or identification card. If the foregoing is inapplicable, the secured party may list the debtor’s legal name or surname and first personal name. Best practices dictate that a secured party is vigilant in checking a driver’s license or identification card for the expiration date and for a name change that has occurred as the result of a change in marital status.
Organizational debtor: With respect to a debtor that is a “registered organization,” the UCC amendment provides that a financing statement sufficiently lists the name of a debtor if it provides the name that is stated to be the registered organization’s name on the “public organic record” (the document most recently filed with or issued or enacted by the registered organization’s jurisdiction of organization, which states, amends, or restates the registered organization’s name, and that is available for public inspection). Best practices suggest that a secured party require the registered organization to provide a recent, certified copy of the debtor’s public organic record. Attorney Chrysanthe Vassiles can be reached at 330.456.8341 or [email protected].