UCC Filing Statute


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Filing

 

Subpart 1.

 

Filing Office; Contents and Effectiveness Of Financing Statement

 

    Section 36‑9‑501. Filing office.

    (a)   Except as otherwise provided in subsection (b), if the local law of this State governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is:

       (1)   the office designated for the filing or recording of a record of a mortgage on the related real property, if:

           (A)  the collateral is as‑extracted collateral or timber to be cut; or

           (B)  the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; or

       (2)   the office of the Secretary of State or any office duly authorized by the Secretary of State, in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.

    (b)   The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the Secretary of State.  The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures.

 

    Official Comment

    1.  Source.  Derived from former Section 9‑401.

 

    2.  Where to File.  Subsection (a) indicates where in a given State a financing statement is to be filed.  Former Article 9 afforded each State three alternative approaches, depending on the extent to which the State desires central filing (usually with the Secretary of State), local filing (usually with a county office), or both.  As Comment 1 to former Section 9‑401 observed, “The principal advantage of state‑wide filing is ease of access to the credit information which the files exist to provide.  Consider for example the national distributor who wishes to have current information about the credit standing of the thousands of persons he sells to on credit.  The more completely the files are centralized on a state‑wide basis, the easier and cheaper it becomes to procure credit information; the more the files are scattered in local filing units, the more burdensome and costly.”  Local filing increases the net costs of secured transactions also by increasing uncertainty and the number of required filings.  Any benefit that local filing may have had in the 1950’s is now insubstantial.  Accordingly, this Article dictates central filing for most situations, while retaining local filing for real‑estate‑related collateral and special filing provisions for transmitting utilities.

 

    3.  Minerals and Timber.  Under subsection (a)(1), a filing in the office where a record of a mortgage on the related real property would be filed will perfect a security interest in as‑extracted collateral.  Inasmuch as the security interest does not attach until extraction, the filing continues to be effective after extraction.  A different result occurs with respect to timber to be cut, however.  Unlike as‑extracted collateral, standing timber may be goods before it is cut.  See Section 9‑102 (defining “goods”).   Once cut, however, it is no longer timber to be cut, and the filing in the real‑property‑mortgage office ceases to be effective.  The timber then becomes ordinary goods, and filing in the office specified in subsection (a)(2) is necessary for perfection.  Note also that after the timber is cut the law of the debtor’s location, not the location of the timber, governs perfection under Section 9‑301.

 

    4.  Fixtures.  There are two ways in which a secured party may file a financing statement to perfect a security interest in goods that are or are to become fixtures.  It may file in the Article 9 records, as with most other goods.  See subsection (a)(2).  Or it may file the financing statement as a “fixture filing,” defined in Section 9‑102, in the office in which a record of a mortgage on the related real property would be filed.  See subsection(a)(1)(B).

 

    5.  Transmitting Utilities.  The usual filing rules do not apply well for a transmitting utility (defined in Section 9‑102).  Many pre‑UCC statutes provided special filing rules for railroads and in some cases for other public utilities, to avoid the requirements for filing with legal descriptions in every county in which such debtors had property.  Former Section 9‑401(5) recreated and broadened these provisions, and subsection (b) follows this approach.  The nature of the debtor will inform persons searching the record as to where to make a search.

 

    Section 36‑9‑501

    South Carolina Reporters Comment

    When South Carolina law governs the perfection of a security interest or agricultural lien by filing, Section 36‑9‑501 specifies the office within the state in which the financing statement must be filed.  The general rule under Subsection 36‑9‑501(a)(2) is that financing statements are filed in the Office of the Secretary of State.  Subsection (a)(1), however, provides that if the collateral is as‑extracted collateral or timber to be cut or if a financing statement is filed as a fixture filing; the proper office for filing is the office in which a mortgage on the related real property would be recorded.  Note that Section 36‑9‑501 changes prior law by providing for centralized, rather than local, filing for farm related collateral and consumer goods.  See former Section 36‑9‑401(a).

 

    Definitional Cross References

    “Agricultural lien”                     Section 36‑9‑102(a)(5)

    “As‑extracted collateral”             Section 36‑9‑102(a)(6)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Fixture filing”                          Section 36‑9‑102(a)(40)

    “Fixtures”                                 Section 36‑9‑102(a)(41)

    “Goods”                                    Section 36‑9‑102(a)(44)

    “Security interest”                      Section 36‑1‑201(37)

    “Transmitting utility”                  Section 36‑9‑102(a)(80)

 

    Cross References

    1. General choice of law rules for perfection of a security interest by filing. Sections 36‑9‑301 and 36‑9‑307.

    2. Choice of law rules for perfection of an agricultural lien by filing. Section 36‑9‑302.

    3. Choice of law for perfection of a security interest in as‑extracted collateral by filing. Section 36‑9‑301(4).

    4. Choice of law rule for perfection of a security interest in goods by a fixture filing. Sections 36‑9‑301(3)(A).

    5. Choice of law rule for perfection by filing of a security interest in timber to be cut. Section 36‑9‑301(3)(B).

    6. Collateral upon which a security interest may be perfected by filing. Sections 36‑9‑310 and 36‑9‑312(a).

 

    Section 36‑9‑502.    Contents of financing statement; record of mortgage as financing statement; time of filing financing statement.

    (a)   Subject to subsection (b), a financing statement is sufficient only if it:

       (1)    provides the name of the debtor;

       (2)    provides the name of the secured party or a representative of the secured party; and

       (3)    indicates the collateral covered by the financing statement.

    (b)   Except as otherwise provided in Section 36‑9‑501(b), to be sufficient, a financing statement that covers as‑extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy subsection (a) and also:

       (1)    indicate that it covers this type of collateral;

       (2)    indicate that it is to be filed for record in the real property records;

       (3)    provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage under the law of this State if the description were contained in a record of the mortgage of the real property; and

       (4)   if the debtor does not have an interest of record in the real property, provide the name of a record owner.

    (c)   A record of a mortgage is effective, from the date of recording, as a financing statement filed as a fixture filing or as a financing statement covering as‑extracted collateral or timber to be cut only if:

       (1)   the record indicates the goods or accounts that it covers;

       (2)   the goods are or are to become fixtures related to the real property described in the record or the collateral is related to the real property described in the record and is as‑extracted collateral or timber to be cut;

       (3)   the record satisfies the requirements for a financing statement in this Section other than an indication that it is to be filed in the real property records; and

       (4)   the record is duly recorded.

    (d)   A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.

 

    Official Comment

    1.  Source.  Former Section 9‑402(1), (5), (6).

 

    2.  “Notice Filing.”  This Section adopts the system of “notice filing.”  What is required to be filed is not, as under pre‑UCC chattel mortgage and conditional sales acts, the security agreement itself, but only a simple record providing a limited amount of information (financing statement).  The financing statement may be filed before the security interest attaches or thereafter.  See subsection (d).  See also Section 9‑308(a) (contemplating situations in which a financing statement is filed before a security interest attaches).

 

    The notice itself indicates merely that a person may have a security interest in the collateral indicated.  Further inquiry from the parties concerned will be necessary to disclose the complete state of affairs.  Section 9‑210 provides a statutory procedure under which the secured party, at the debtor’s request, may be required to make disclosure.  However, in many cases, information may be forthcoming without the need to resort to the formalities of that Section. 

 

    Notice filing has proved to be of great use in financing transactions involving inventory, accounts, and chattel paper, because it obviates the necessity of refiling on each of a series of transactions in a continuing arrangement under which the collateral changes from day to day.  However, even in the case of filings that do not necessarily involve a series of transactions (e.g., a loan secured by a single item of equipment), a financing statement is effective to encompass transactions under a security agreement not in existence and not contemplated at the time the notice was filed, if the indication of collateral in the financing statement is sufficient to cover the collateral concerned.  Similarly, a financing statement is effective to cover after‑acquired property of the type indicated and to perfect with respect to future advances under security agreements, regardless of whether after‑acquired property or future advances are mentioned in the financing statement and even if not in the contemplation of the parties at the time the financing statement was authorized to be filed.

 

    3.  Debtor’s Signature; Required Authorization.  Subsection (a) sets forth the simple formal requirements for an effective financing statement.  These requirements are:  (1) the debtor’s name; (2) the name of a secured party or representative of the secured party; and (3) an indication of the collateral.

 

    Whereas former Section 9‑402(1) required the debtor’s signature to appear on a financing statement, this Article contains no signature requirement.  The elimination of the signature requirement facilitates paperless filing.  (However, as PEB Commentary No. 15 indicates, a paperless financing statement was sufficient under former Article 9.)  Elimination of the signature requirement also makes the exceptions provided by former Section 9‑402(2) unnecessary.

 

    The fact that this Article does not require that an authenticating symbol be contained in the public record does not mean that all filings are authorized.  Rather, Section 9‑509(a) entitles a person to file an initial financing statement, an amendment that adds collateral, or an amendment that adds a debtor only if the debtor authorizes the filing, and Section 9‑509(d) entitles a person other than the debtor to file a termination statement only if the secured party of record authorizes the filing.  Of course, a filing has legal effect only to the extent it is authorized.  See Section 9‑510.

 

    Law other than this Article, including the law with respect to ratification of past acts, generally determines whether a person has the requisite authority to file a record under this Article.  See Section 1‑103.  However, under Section 9‑509(b), the debtor’s authentication of (or becoming bound by) a security agreement ipso facto constitutes the debtor’s authorization of the filing of a financing statement covering the collateral described in the security agreement.  The secured party need not obtain a separate authorization.

 

    Section 9‑625 provides a remedy for unauthorized filings.  Making an unauthorized filing also may give rise to civil or criminal liability under other law.  In addition, this Article contains provisions that assist in the discovery of unauthorized filings and the amelioration of their practical effect.  For example, Section 9‑518 provides a procedure whereby a person may add to the public record a statement to the effect that a financing statement indexed under the person’s name was wrongfully filed, and Section 9‑509(d) entitles any person to file a termination statement if the secured party of record fails to comply with its obligation to file or send one to the debtor, the debtor authorizes the filing, and the termination statement so indicates.  However, the filing office is neither obligated nor permitted to inquire into issues of authorization.  See Section 9‑520(a).

 

    4.  Certain Other Requirements.  Subsection (a) deletes other provisions of former Section 9‑402(1) because they seems unwise (real‑property description for financing statements covering crops), unnecessary (adequacy of copies of financing statements), or both (copy of security agreement as financing statement).  In addition, the filing office must reject a financing statement lacking certain other information formerly required as a condition of perfection (e.g., an address for the debtor or secured party).  See Sections 9‑516(b), 9‑520(a).  However, if the filing office accepts the record, it is effective nevertheless.  See Section 9‑520(c).

 

    5.  Real‑Property‑Related Filings.  Subsection (b) contains the requirements for financing statements filed as fixture filings and financing statements covering timber to be cut or minerals and minerals‑related accounts constituting as‑extracted collateral.  A description of the related real property must be sufficient to reasonably identify it.  See Section 9‑108.  This formulation rejects the view that the real property description must be by metes and bounds, or otherwise conforming to traditional real‑property practice in conveyancing, but, of course, the incorporation of such a description by reference to the recording data of a deed, mortgage or other instrument containing the description should suffice under the most stringent standards.  The proper test is that a description of real property must be sufficient so that the financing statement will fit into the real‑property search system and be found by a real‑property searcher.  Under the optional language in subsection (b)(3), the test of adequacy of the description is whether it would be adequate in a record of a mortgage of the real property.  As suggested in the Legislative Note, more detail may be required if there is a tract indexing system or a land registration system.

 

    If the debtor does not have an interest of record in the real property, a real‑property‑related financing statement must show the name of a record owner, and Section 9‑519(d) requires the financing statement to be indexed in the name of that owner.  This requirement also enables financing statements covering as‑extracted collateral or timber to be cut and financing statements filed as fixture filings to fit into the real‑property search system.

 

    6.  Record of Mortgage Effective as Financing Statement.  Subsection (c) explains when a record of a mortgage is effective as a financing statement filed as a fixture filing or to cover timber to be cut or as‑extracted collateral.  Use of the term “record of a mortgage” recognizes that in some systems the record actually filed is not the record pursuant to which a mortgage is created.  Moreover, “mortgage” is defined in Section 9‑102 as an “interest in real property,” not as the record that creates or evidences the mortgage or the record that is filed in the public recording systems.  A record creating a mortgage may also create a security interest with respect to fixtures (or other goods) in conformity with this Article.  A single agreement creating a mortgage on real property and a security interest in chattels is common and useful for certain purposes.  Under subsection (c), the recording of the record evidencing a mortgage (if it satisfies the requirements for a financing statement) constitutes the filing of a financing statement as to the fixtures (but not, of course, as to other goods).  Section 9‑515(g) makes the usual five‑year maximum life for financing statements inapplicable to mortgages that operate as fixture filings under Section 9‑502(c).  Such mortgages are effective for the duration of the real‑property recording.

 

    Of course, if a combined mortgage covers chattels that are not fixtures, a regular financing statement filing is necessary with respect to the chattels, and subsection (c) is inapplicable.  Likewise, a financing statement filed as a “fixture filing” is not effective to perfect a security interest in personal property other than fixtures.

 

    In some cases it may be difficult to determine whether goods are or will become fixtures.  Nothing in this Part prohibits the filing of a “precautionary” fixture filing, which would provide protection in the event goods are determined to be fixtures.  The fact of filing should not be a factor in the determining whether goods are fixtures.  Cf. Section 9‑505(b).

 

    Section 36‑9‑502

    South Carolina Reporters Comment

    Section 36‑9‑502 sets forth the requirements for a sufficient financing statement.  Subsection (a) states the requirements all financing statements must meet.  Subsection (b) sets forth additional requirements for fixture filings and financing statements covering as‑extracted collateral and timber to be cut.

    Subsection (a) provides that a financing statement is sufficient only if it provides the name of the debtor, provides the name of the secured party or representative of the secured party, and indicates the collateral covered.  Note that in contrast to former Section 36‑9‑402(1), current law does not condition the effectiveness of a financing statement upon its being signed by the debtor.  Subsection (a), however, must be read in conjunction with Section 36‑9‑516(b) and Section 36‑9‑520(a).  Under Section 36‑9‑520(a) a filing office is required to refuse to accept a financing statement for filing if the financing statement fails to meet the requirements of Section 36‑9‑516(b).  Therefore, a filing office must refuse to accept a financing statement that meets the requirements of Section 36‑9‑502(a) but fails to meet the requirements of Section 36‑9‑516(b).  If the filing office refuses to accept such a financing statement for filing, the financing statement will not be effective to perfect a security interest.  Nevertheless,  if the filing office accepts such a financing statement for filing, under Section 36‑9‑520(c) the financing statement is effective.  The priority of a security interest perfected by a filed financing statement that does not meet the requirements of Section 36‑9‑516(b) may be subordinated under Section 36‑9‑338.

 

    Definitional Cross References

    “Account”                                 Section 36‑9‑102(a)(2)

    “As‑extracted collateral”             Section 36‑9‑102(a)(6)

    “Collateral”                               Section 36‑9‑102(a)(12)

    “Debtor”                                   Section 36‑9‑102(a)(28)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Fixture filing”                          Section 36‑9‑102(a)(40)

    “Fixtures”                                 Section 36‑9‑102(a)(41)

    “Goods”                                    Section 36‑9‑102(a)(44)

    “Mortgage”                               Section 36‑9‑102(a)(55)

    “Secured party”                          Section 36‑9‑102(a)(72)

    “Security agreement                   Section 36‑9‑102(a)(73)

 

    Cross References

    1. Sufficiency of the name of the debtor. Section 36‑9‑503(a) ‑ (c).

    2. Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement. Section 36‑9‑503(d).

    3. Sufficiency of indication of type of collateral covered. Section 36‑9‑504.

    4. Effect of errors and omissions upon the sufficiency of a financing statement. Section 36‑9‑505.

    5. Duration of the effectiveness of a financing statement. Section 36‑9‑515.

    6. Grounds upon which a filing office is required to refuse to accept a financing statement for filing. Sections 36‑9‑516(b) and 36‑9‑520(a).

    7. Priority of security interests perfected by filing a financing statement which was effective under Section 36‑9‑502, but failed to meet the requirements of Section 36‑9‑516(b). Section 36‑9‑338.

    8. Form of a financing statement. Section 36‑9‑521.

 

    Section 36‑9‑503. Name of debtor and secured party.

    (a)   A financing statement sufficiently provides the name of the debtor:

       (1)   if the debtor is a registered organization, only if the financing statement provides the name of the debtor indicated on the public record of the debtor’s jurisdiction of organization which shows the debtor to have been organized;

       (2)   if the debtor is a decedent’s estate, only if the financing statement provides the name of the decedent and indicates that the debtor is an estate;

       (3)   if the debtor is a trust or a trustee acting with respect to property held in trust, only if the financing statement:

           (A)    provides the name specified for the trust in its organic documents or, if no name is specified, provides the name of the settlor and additional information sufficient to distinguish the debtor from other trusts having one or more of the same settlors; and

           (B)    indicates, in the debtor’s name or otherwise, that the debtor is a trust or is a trustee acting with respect to property held in trust; and

       (4)   in other cases:

           (A)  if the debtor has a name, only if it provides the individual or organizational name of the debtor; and

           (B)  if the debtor does not have a name, only if it provides the names of the partners, members, associates, or other persons comprising the debtor.

    (b)   A financing statement that provides the name of the debtor in accordance with subsection (a) is not rendered ineffective by the absence of:

       (1)   a trade name or other name of the debtor; or

       (2)   unless required under subsection (a)(4)(B), names of partners, members, associates, or other persons comprising the debtor.

    (c)   A financing statement that provides only the debtor’s trade name does not sufficiently provide the name of the debtor.

    (d)   Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement.

    (e)   A financing statement may provide the name of more than one debtor and the name of more than one secured party.

 

    Official Comment

    1.  Source.  Subsections (a)(4)(A), (b), and (c) derive from former Section 9‑402(7); otherwise, new.

 

    2.  Debtor’s Name.  The requirement that a financing statement provide the debtor’s name is particularly important.  Financing statements are indexed under the name of the debtor, and those who wish to find financing statements search for them under the debtor’s name.  Subsection (a) explains what the debtor’s name is for purposes of a financing statement.  If the debtor is a “registered organization” (defined in Section 9‑102 so as to ordinarily include corporations, limited partnerships, and limited liability companies), then the debtor’s name is the name shown on the public records of the debtor’s “jurisdiction of organization” (also defined in Section 9‑102).  Subsections (a)(2) and (a)(3) contain special rules for decedent’s estates and common‑law trusts.  (Subsection (a)(1) applies to business trusts that are registered organizations.)

 

    Subsection (a)(4)(A) essentially follows the first sentence of former Section 9‑402(7).  Section 1‑201(28) defines the term “organization,” which appears in subsection (a)(4), very broadly, to include all legal and commercial entities as well as associations that lack the status of a legal entity.  Thus, the term includes corporations, partnerships of all kinds, business trusts, limited liability companies, unincorporated associations, personal trusts, governments, and estates.  If the organization has a name, that name is the correct name to put on a financing statement.  If the organization does not have a name, then the financing statement should name the individuals or other entities who comprise the organization.

 

    Together with subsections (b) and (c), subsection (a) reflects the view prevailing under former Article 9 that the actual individual or organizational name of the debtor on a financing statement is both necessary and sufficient, whether or not the financing statement provides trade or other names of the debtor and, if the debtor has a name, whether or not the financing statement provides the names of the partners, members, or associates who comprise the debtor.

 

    Note that, even if the name provided in an initial financing statement is correct, the filing office nevertheless must reject the financing statement if it does not identify an individual debtor’s last name (e.g., if it is not clear whether the debtor’s name is Perry Mason or Mason Perry).  See Section 9‑516(b)(3)(C).

 

    3.  Secured Party’s Name.  New subsection (d) makes clear that when the secured party is a representative, a financing statement is sufficient if it names the secured party, whether or not it indicates any representative capacity.  Similarly, a financing statement that names a representative of the secured party is sufficient, even if it does not indicate the representative capacity.

 

    Example:  Debtor creates a security interest in favor of Bank X, Bank Y, and Bank Z, but not to their representative, the collateral agent (Bank A).  The collateral agent is not itself a secured party.  See Section 9‑102.  Under Sections 9‑502(a) and 9‑503(d), however, a financing statement is effective if it names as secured party Bank A and not the actual secured parties, even if it omits Bank A’s representative capacity.

 

    Each person whose name is provided in an initial financing statement as the name of the secured party or representative of the secured party is a secured party of record.  See Section 9‑511.

 

    4.  Multiple Names.  Subsection (e) makes explicit what is implicit under former Article 9:  a financing statement may provide the name of more than one debtor and secured party.  See Section 1‑102(5)(a) (words in the singular include the plural).  With respect to records relating to more than one debtor, see Section 9‑520(d).  With respect to financing statements providing the name of more than one secured party, see Sections 9‑509(e) and 9‑510(b).

 

    Section 36‑9‑503

    South Carolina Reporters Comment

    Section 36‑9‑503 sets forth the standards for determining whether a financing statement sufficiently provides the name of the debtor.  Subsection (a)(1) provides that if a debtor is a registered corporation, such as a corporation, limited partnership, or limited liability company, the financing statement is sufficient only if it provides the name of the debtor indicated on the public record which establishes that debtor was organized.  Subsection (c) clarifies former law by expressly providing that a financing statement that provides only the debtor’s trade name is not sufficient.

 

    Definitional Cross References

    “Debtor”                                   Section 36‑9‑102(a)(28)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Organization”                          Section 36‑1‑201(28)

    “Registered organization”            Section 36‑9‑102(a)(70)

    “Secured party”                          Section 36‑9‑102(a)(72)

 

    Cross References

    When an error in the debtor’s name is not seriously misleading and does render the financing statement ineffective. Section 36‑9‑506(a) ‑ (c).

 

    Section 36‑9‑504.    Indication of collateral.

    A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:

    (1)   a description of the collateral pursuant to Section 36‑9‑108; or

    (2)   an indication that the financing statement covers all assets or all personal property.

 

    Official Comment

    1.  Source.  Former Section 9‑402(1).

 

    2.  Indication of Collateral.  To comply with Section 9‑502(a), a financing statement must “indicate” the collateral it covers.  This Section explains what suffices for an indication.

 

    Paragraph (1) provides that a “description” of the collateral (as the term is explained in Section 9‑108) suffices as an indication for purposes of the sufficiency of a financing statement.

 

    Debtors sometimes create a security interest in all, or substantially all, of their assets.  To accommodate this practice, paragraph (2) expands the class of sufficient collateral references to embrace “an indication that the financing statement covers all assets or all personal property.”  If the property in question belongs to the debtor and is personal property, any searcher will know that the property is covered by the financing statement.  Of course, regardless of its breadth, a financing statement has no effect with respect to property indicated but to which a security interest has not attached.  Note that a broad statement of this kind (e.g., “all debtor’s personal property”) would not be a sufficient “description” for purposes of a security agreement.  See Sections 9‑203(b)(3)(A), 9‑108.  It follows that a somewhat narrower description than “all assets,” e.g., “all assets other than automobiles,” is sufficient for purposes of this Section, even if it does not suffice for purposes of a security agreement.

 

    Section 36‑9‑504

    South Carolina Reporters Comment

    Section 36‑9‑504 provides the rules for determining whether a financing statement sufficiently indicates the collateral it covers.  A financing statement is sufficient if it provides a description of collateral pursuant to Section 36‑9‑108.  A financing statement is also sufficient if it provides that it covers all of the debtor’s assets or personal property.  Note that these “super generic” descriptions would not sufficiently describe collateral in a security agreement.  See Section 36‑9‑108(c) and 36‑9‑203(b)(3)(A). 

 

    Definitional Cross References

    “Collateral”                               Section 36‑9‑102(a)(12)

    “Financing statement”               Section 36‑9‑102(a)(39)

 

    Cross References

    Standards for determining the sufficiency of a description of collateral. Section 36‑9‑108.

 

    Section 36‑9‑505. Filing and compliance with other statutes and treaties for consignments, leases, other bailments, and other transactions.

    (a)   A consignor, lessor, or other bailor of goods, a licensor, or a buyer of a payment intangible or promissory note may file a financing statement, or may comply with a statute or treaty described in Section 36‑9‑311(a), using the terms ‘consignor’, ‘consignee’, ‘lessor’, ‘lessee’, ‘bailor’, ‘bailee’, ‘licensor’, ‘licensee’, ‘owner’, ‘registered owner’, ‘buyer’, ‘seller’, or words of similar import, instead of the terms ‘secured party’ and ‘debtor’.

    (b)   This part applies to the filing of a financing statement under subsection (a) and, as appropriate, to compliance that is equivalent to filing a financing statement under section 36‑9‑311(b), but the filing or compliance is not of itself a factor in determining whether the collateral secures an obligation.  If it is determined for another reason that the collateral secures an obligation, a security interest held by the consignor, lessor, bailor, licensor, owner, or buyer which attaches to the collateral is perfected by the filing or compliance.

 

    Official Comment

    1.  Source.  Former Section 9‑408.

 

    2.  Precautionary Filing.  Occasionally, doubts arise concerning whether a transaction creates a relationship to which this Article or its filing provisions apply.  For example, questions may arise over whether a “lease” of equipment in fact creates a security interest or whether the “sale” of payment intangibles in fact secures an obligation, thereby requiring action to perfect the security interest.  This Section, which derives from former Section 9‑408, affords the option of filing of a financing statement with appropriate changes of terminology but without affecting the substantive question of classification of the transaction.

 

    3.  Changes from Former Section 9‑408.  This Section expands the rule of Section 9‑408 to embrace more generally other bailments and transactions, as well as sales transactions, primarily sales of payment intangibles and promissory notes.  It provides the same benefits for compliance with a statute or treaty described in Section 9‑311(a) that former Section 9‑408 provided for filing, in connection with the use of terms such as “lessor,” consignor,” etc.  The references to “owner” and “registered owner” are intended to address, for example, the situation where a putative lessor is the registered owner of an automobile covered by a certificate of title and the transaction is determined to create a security interest.  Although this Section provides that the security interest is perfected, the relevant certificate‑of‑title statute may expressly provide to the contrary or may be ambiguous.  If so, it may be necessary or advisable to amend the certificate‑of‑title statute to ensure that perfection of the security interest will be achieved.

 

    As does Section 1‑201, former Article 9 referred to transactions, including leases and consignments, “intended as security.”  This misleading phrase created the erroneous impression that the parties to a transaction can dictate how the law will classify it (e.g., as a bailment or as a security interest) and thus affect the rights of third parties.  This Article deletes the phrase wherever it appears.  Subsection (b) expresses the principle more precisely by referring to a security interest that “secures an obligation.”

 

    4.  Consignments.  Although a “true” consignment is a bailment, the filing and priority provisions of former Article 9 applied to “true” consignments.  See former Sections 2‑326(3), 9‑114.  A consignment “intended as security” created a security interest that was in all respects subject to former Article 9.  This Article subsumes most true consignments under the rubric of “security interest.”  See Sections 9‑102 (definition of “consignment”), 9‑109(a)(4), 1‑201(37) (definition of “security interest”).  Nevertheless, it maintains the distinction between a (true) “consignment,” as to which only certain aspects of Article 9 apply, and a so‑called consignment that actually “secures an obligation,” to which Article 9 applies in full.  The revisions to this Section reflect the change in terminology.

 

    Section 36‑9‑505

    South Carolina Reporters Comment

    Section 36‑9‑505 accommodates the parties to a variety of transactions that may give rise to a security interest which must be perfected by filing.  For example, some transactions characterized as equipment leases may, in fact, be secured sales of the equipment.  In such a transaction Section 36‑9‑505 permits the lessor to file a financing statement using the terms lessor and lessee rather than secured party and debtor.  If the transaction is subsequently found to be a secured sale, subsection (b) provides that the financing statement will perfect the lessor’s security interest.

 

    Definitional Cross References

    “Consignee”                              Section 36‑9‑102(a)(19)

    “Consignor”                              Section 36‑9‑102(a)(21)

    “Debtor”                                   Section 36‑9‑102(a)(28)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Lessee”                                   Section 36‑2A‑103(1)(n)

    “Lessor”                                   Section 36‑2A‑103(1)(o)

    “Payment intangible”                   Section 36‑9‑102(a)(61)

    “Promissory note”                       Section 36‑9‑102(a)(65)

    “Secured party”                          Section 36‑9‑102(a)(72)

 

    Cross References

    1. Article 9 applies to consignments. Section 36‑9‑109(a)(4).

    2. Sales of payment intangibles and promissory notes are subject to Article 9. Section 36‑9‑109(a)(3).

    3. Security interests created by sales of payment intangibles and promissory notes are automatically perfected. Section 36‑9‑309(3) and (4).

    4. Perfection systems that preempt filing under Article 9. Section 36‑9‑311.

    5. Standards for determining whether a transaction is a “true lease” or creates a security interest. Section 36‑1‑201(37).

 

    Section 36‑9‑506. Effect of errors or omissions.

    (a)   A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.

    (b)   Except as otherwise provided in subsection (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 36‑9‑503(a) is seriously misleading.

    (c)   If a search of the records of the filing office under the debtor’s correct name, using the filing office’s standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 36‑9‑503(a), the name provided does not make the financing statement seriously misleading.

    (d)   For purposes of Section 36‑9‑508(b), the ‘debtor’s correct name’ in subsection (c) means the correct name of the new debtor.

 

    Official Comment

    1.  Source.  Former Section 9‑402(8).

 

    2.  Errors.  Like former Section 9‑402(8), subsection (a) is in line with the policy of this Article to simplify formal requisites and filing requirements.  It is designed to discourage the fanatical and impossibly refined reading of statutory requirements in which courts occasionally have indulged themselves.  Subsection (a) provides the standard applicable to indications of collateral.  Subsections (b) and (c), which are new, concern the effectiveness of financing statements in which the debtor’s name is incorrect.  Subsection (b) contains the general rule:  a financing statement that fails sufficiently to provide the debtor’s name in accordance with Section 9‑503(a) is seriously misleading as a matter of law.  Subsection (c) provides an exception:  If the financing statement nevertheless would be discovered in a search under the debtor’s correct name, using the filing office’s standard search logic, if any, then as a matter of law the incorrect name does not make the financing statement seriously misleading.  A financing statement that is seriously misleading under this Section is ineffective even if it is disclosed by (i) using a search logic other than that of the filing office to search the official records, or (ii) using the filing office’s standard search logic to search a data base other than that of the filing office.

 

    In addition to requiring the debtor’s name and an indication of the collateral, Section 9‑502(a) requires a financing statement to provide the name of the secured party or a representative of the secured party.  Inasmuch as searches are not conducted under the secured party’s name, and no filing is needed to continue the perfected status of security interest after it is assigned, an error in the name of the secured party or its representative will not be seriously misleading.  However, in an appropriate case, an error of this kind may give rise to an estoppel in favor of a particular holder of a conflicting claim to the collateral.  See Section 1‑103.

 

    3.  New Debtors.  Subsection (d) provides that, in determining the extent to which a financing statement naming an original debtor is effective against a new debtor, the sufficiency of the financing statement should be tested against the name of the new debtor.

 

    Section 36‑9‑506

    South Carolina Reporters Comment

    Subsection 36‑9‑506(a) provides that minor errors and omissions do not render a financing statement ineffective, unless the error or omission renders the financing statement seriously misleading.  Under subsections (b) and (c) a failure to provide the debtor’s name in accordance with Section 36‑9‑503 is seriously misleading unless a search under the debtor’s correct name using the filing officer’s standard search logic would disclose the financing statement.

 

    Definitional Cross References

    “Financing statement”               Section 36‑9‑102(a)(39)

 

    Cross References

    Sufficiency of the debtor’s name. Section 36‑9‑503.

 

    Section 36‑9‑507. Effect of certain events on effectiveness of financing statement.

    (a)   A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest or agricultural lien continues, even if the secured party knows of or consents to the disposition.

    (b)   Except as otherwise provided in subsection (c) and Section 36‑9‑508, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 36‑9‑506.

    (c)   If a debtor so changes its name that a filed financing statement becomes seriously misleading under Section 36‑9‑506:

       (1)   the financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the change; and

       (2)   the financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the change, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the change.

 

    Official Comment

    1.  Source.  Former Section 9‑402(7).

 

    2.  Scope of Section.  This Section deals with situations in which the information in a proper financing statement becomes inaccurate after the financing statement is filed.  Compare Section 9‑338, which deals with situations in which a financing statement contains a particular kind of information concerning the debtor (i.e., the information described in Section 9‑516(b)(5)) that is incorrect at the time it is filed.

 

    3.  Post‑Filing Disposition of Collateral.  Under subsection (a), a financing statement remains effective even if the collateral is sold or otherwise disposed of.  This subsection clarifies the third sentence of former Section 9‑402(7) by providing that a financing statement remains effective following the disposition of collateral only when the security interest or agricultural lien continues in that collateral.  This result is consistent with the conclusion of PEB Commentary No. 3.  Normally, a security interest does continue after disposition of the collateral.  See Section 9‑315(a).  Law other than this Article determines whether an agricultural lien survives disposition of the collateral.

 

    As a consequence of the disposition, the collateral may be owned by a person other than the debtor against whom the financing statement was filed.   Under subsection (a), the secured party remains perfected even if it does not correct the public record.   For this reason, any person seeking to determine whether a debtor owns collateral free of security interests must inquire as to the debtor’s source of title and, if circumstances seem to require it, search in the name of a former owner.  Subsection (a) addresses only the sufficiency of the information contained in the financing statement.  A disposition of collateral may result in loss of perfection for other reasons.  See Section 9‑316.

 

    Example:  Dee Corp. is an Illinois corporation.  It creates a security interest in its equipment in favor of Secured Party.  Secured Party files a proper financing statement in Illinois.  Dee Corp. sells an item of equipment to Bee Corp., a Pennsylvania corporation, subject to the security interest.  The security interest continues, see Section 9‑315(a), and remains perfected, see Section 9‑507(a), notwithstanding that the financing statement is filed under “D” (for Dee Corp.) and not under “B.”  However, because Bee Corp. is located in Pennsylvania and not Illinois, see Section 9‑307, unless Secured Party perfects under Pennsylvania law within one year after the transfer, its security interest will become unperfected and will be deemed to have been unperfected against purchasers of the collateral.  See Section 9‑316.

 

    4.  Other Post‑Filing Changes.  Subsection (b) provides that, as a general matter, post‑filing changes that render a financing statement inaccurate and seriously misleading have no effect on a financing statement.  The financing statement remains effective.  It is subject to two exceptions:  Section 9‑508 and Section 9‑507(c).  Section 9‑508 addresses the effectiveness of a financing statement filed against an original debtor when a new debtor becomes bound by the original debtor’s security agreement.  It is discussed in the Comments to that Section.  Section 9‑507(c) addresses a “pure” change of the debtor’s name, i.e., a change that does not implicate a new debtor.  It clarifies former Section 9‑402(7).  If a name change renders a filed financing statement seriously misleading, the financing statement is not effective as to collateral acquired more than four months after the change, unless before the expiration of the four months an amendment is filed that specifies the debtor’s new correct name (or provides an incorrect name that renders the financing statement not seriously misleading under Section 9‑506).  As under former Section 9‑402(7), the original financing statement would continue to be effective with respect to collateral acquired before the name change as well as collateral acquired within the four‑month period.

 

    Section 36‑9‑507

    South Carolina Reporters Comment

    Section 36‑9‑507 addresses the effect that certain post‑filing events have upon the continued effectiveness of a filed financing statement.  Subsection (a) provides that a financing statement remains effective to perfect a security interest that continues in collateral that a debtor has sold or otherwise disposed of.  With two exceptions, subsection (b) provides that a filed financing statement is not rendered ineffective because after the filing the information provided in the financing statement became seriously misleading.  The first exception arises when a debtor so changes its name that it filed financing statement becomes seriously misleading under Section 36‑9‑506.  In that situation the filed financing statement is not effective to perfect a security interest in collateral acquired more than four months after the name change.  The second exception can arise when a new debtor becomes bound by a security agreement entered into by the original debtor and the secured party has filed under the name of the original debtor.  Section 36‑9‑508(b) provides that if the difference between the names of original debtor and the new debtor causes the filed financing statement to be seriously misleading, that financing statement is not effective to perfect a security interest in collateral acquired by the new debtor more than four months after it became bound as a new debtor.

 

    Definitional Cross References

    “Agricultural lien”                     Section 36‑9‑102(a)(5)

    “Collateral”                               Section 36‑9‑102(a)(12)

    “Debtor”                                   Section 36‑9‑102(a)(28)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “New debtor”                                Section 36‑9‑102(a)(56)

    “Original debtor”                        Section 36‑9‑102(a)(60)

    “Security interest”                      Section 36‑1‑201(37)

 

    Cross References

      1.   A security interest or agricultural lien continues in collateral notwithstanding a sale or other disposition unless the secured party has authorized the disposition free of the security interest or agricultural lien. Section 36‑9‑315(a).

      2.   If the collateral is transferred to a person located in another jurisdiction a secured party who filed against the transferor in the jurisdiction where the transferor was located must file against the transferee in the jurisdiction where the transferee is located within one year of the transfer in order to retain a perfected security interest in the transferred collateral. Section 36‑9‑316(a)(3).  Note that a transferee who takes subject to a security interest under Section 36‑9‑315(a)(1) becomes a debtor.  See Section 36‑9‑315(a)(1) Section 36‑9‑102, Official Comment 2.a.  As a debtor, the transferee authorized the secured party to file an initial financing statement against the transferee. Section 36‑9‑509(c).

      3.   Buyer in ordinary course of business takes free of a perfected security interest created by the buyer’s seller. Section 36‑9‑320(a).

      4.   A licensee in ordinary course of business takes its rights in a nonexclusive license free of a security interest created by the licensor. Section 36‑9‑321(b).

      5.   A lessee in ordinary course of business takes free of a perfected security interest created by the lessor. Section 36‑9‑321(c).

      6.   Priority of security interests in transferred collateral. Section 36‑9‑325.

      7.   Rules for determining whether a change in the debtor’s name renders a filed financing statement seriously misleading. Section 36‑9‑506(b) and (c).

      8.   When a new debtor becomes bound by a security agreement entered into by an original debtor. Section 36‑9‑203(d) and (e).

      9.   When a filing against an original debtor perfects a security interest in collateral acquired by a new debtor. Section 36‑9‑508.

    10.   Priority of security interests created by a new debtor. Section 36‑9‑326.

 

    Section 36‑9‑508.    Effectiveness of financing statement if new debtor becomes bound by security agreement.

    (a)   Except as otherwise provided in this section, a filed financing statement naming an original debtor is effective to perfect a security interest in collateral in which a new debtor has or acquires rights to the extent that the financing statement would have been effective had the original debtor acquired rights in the collateral.

    (b)   If the difference between the name of the original debtor and that of the new debtor causes a filed financing statement that is effective under subsection (a) to be seriously misleading under Section 36‑9‑506:

       (1)   the financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under Section 36‑9‑203(d); and

       (2)   the financing statement is not effective to perfect a security interest in collateral acquired by the new debtor more than four months after the new debtor becomes bound under Section 36‑9‑203(d) unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time.

    (c)   This section does not apply to collateral as to which a filed financing statement remains effective against the new debtor under Section 36‑9‑507(a).

 

    Official Comment

    1.  Source.  New.

 

    2.  The Problem.  Section 9‑203(d) and (e) and this Section deal with situations where one party (the “new debtor”) becomes bound as debtor by a security agreement entered into by another person (the “original debtor”).  These situations often arise as a consequence of changes in business structure.  For example, the original debtor may be an individual debtor who operates a business as a sole proprietorship and then incorporates it.  Or, the original debtor may be a corporation that is merged into another corporation.  Under both former Article 9 and this Article, collateral that is transferred in the course of the incorporation or merger normally would remain subject to a perfected security interest.  See Sections 9‑315(a), 9‑507(a).  Former Article 9 was less clear with respect to whether an after‑acquired property clause in a security agreement signed by the original debtor would be effective to create a security interest in property acquired by the new corporation or the merger survivor and, if so, whether a financing statement filed against the original debtor would be effective to perfect the security interest.  This Section and Sections 9‑203(d) and (e) are a clarification.

 

    3.  How New Debtor Becomes Bound.  Normally, a security interest is unenforceable unless the debtor has authenticated a security agreement describing the collateral.  See Section 9‑203(b).  New Section 9‑203(e) creates an exception, under which a security agreement entered into by one person is effective with respect to the property of another.  This exception comes into play if a “new debtor” becomes bound as debtor by a security agreement entered into by another person (the “original debtor”).  (The quoted terms are defined in Section 9‑102.)  If a new debtor does become bound, then the security agreement entered into by the original debtor satisfies the security‑agreement requirement of Section 9‑203(b)(3) as to existing or after‑acquired property of the new debtor to the extent the property is described in the security agreement.  In that case, no other agreement is necessary to make a security interest enforceable in that property.  See Section 9‑203(e).

 

    Section 9‑203(d) explains when a new debtor becomes bound by an original debtor’s security agreement.  Under Section 9‑203(d)(1), a new debtor becomes bound as debtor if, by contract or operation of other law, the security agreement becomes effective to create a security interest in the new debtor’s property.  For example, if the applicable corporate law of mergers provides that when A Corp merges into B Corp, B Corp becomes a debtor under A Corp’s security agreement, then B Corp would become bound as debtor following such a merger.  Similarly, B Corp would become bound as debtor if B Corp contractually assumes A’s obligations under the security agreement.

 

    Under certain circumstances, a new debtor becomes bound for purposes of this Article even though it would not be bound under other law.  Under Section 9‑203(d)(2), a new debtor becomes bound when, by contract or operation of other law, it (i) becomes obligated not only for the secured obligation but also generally for the obligations of the original debtor and (ii) acquires or succeeds to substantially all the assets of the original debtor.  For example, some corporate laws provide that, when two corporations merge, the surviving corporation succeeds to the assets of its merger partner and “has all liabilities” of both corporations.  In the case where, for example, A Corp merges into B Corp (and A Corp ceases to exist), some people have questioned whether A Corp’s grant of a security interest in its existing and after‑acquired property becomes a “liability” of B Corp, such that B Corp’s existing and after‑acquired property becomes subject to a security interest in favor of A Corp’s lender.  Even if corporate law were to give a negative answer, under Section 9‑203(d)(2), B Corp would become bound for purposes of Section 9‑203(e) and this Section.  The “substantially all of the assets” requirement of Section 9‑203(d)(2) excludes sureties and other secondary obligors as well as persons who become obligated through veil piercing and other non‑successorship doctrines.  In most cases, it will exclude successors to the assets and liabilities of a division of a debtor.

 

    4.  When Financing Statement Effective Against New Debtor.  Subsection (a) provides that a filing against the original debtor is effective to perfect a security interest in collateral that a new debtor has at the time it becomes bound by the original debtor’s security agreement and collateral that it acquires before the expiration of four months after the new debtor becomes bound.  Under subsection (b), however, if the filing against the original debtor is seriously misleading as to the new debtor’s name, the filing is effective as to collateral acquired by the new debtor after the four‑month period only if a person files during the four‑month period an initial financing statement providing the name of the new debtor.  Compare Section 9‑507(c) (four‑month period of effectiveness with respect to collateral acquired by a debtor after the debtor changes its name).

 

    5.  Transferred Collateral.  This Section does not apply to collateral transferred by the original debtor to a new debtor.  Under those circumstances, the filing against the original debtor continues to be effective until it lapses.  See subsection (c); Section 9‑507(a).

 

    6.  Priority.  Section 9‑326 governs the priority contest between a secured creditor of the original debtor and a secured creditor of the new debtor.

 

    Section 36‑9‑508

    South Carolina Reporters Comment

    Section 36‑9‑508 applies in situations in which a “new debtor” becomes bound by a security agreement entered into by an “original debtor” and the secured party has filed under the name of the original debtor.  Subsection (a) provides the general rule that the filing against the original debtor is effective to perfect a security interest in collateral owned or acquired by the new debtor.

    Subsection (b) limits this general rule when the difference between the names of the original debtor and the new debtor cause the financing statement filed against the original debtor to be seriously misleading.  In that event, subsection (b)(2) provides that the financing statement filed against the original debtor is not effective to perfect a security interest in collateral that the new debtor acquired more than four months after becoming bound as a new debtor. 

    Section 36‑9‑508(b)(2) assumes that a secured party who filed against the original debtor can file an initial financing statement against the new debtor when the difference between the names of the original debtor and new debtor render the filing against the original debtor seriously misleading.  The authority to file against the new debtor rests on Section 36‑9‑509(b) that provides that by becoming a debtor under a security agreement a new debtor authorizes the filing of an initial financing statement. 

    Subsection (c) provides that Section 36‑9‑508 does not apply to a transferred collateral on which a security interest remains perfected under Section 36‑9‑507(a).  To illustrate, the interplay of Sections 36‑9‑507 and 36‑9‑508 consider the following example.

       On February 1, SP took a security interest in the current and after acquired inventory and equipment of ABC, Inc., a South Carolina corporation.  Also on February 1, SP filed a financing statement in the Secretary of State’s Office in South Carolina naming ABC, Inc. as the debtor and covering ABC, Inc.’s inventory and equipment.

       On March 1, ABC,. Inc. merged into XYZ, Inc. with XYZ, Inc. surviving the merger.  XYZ, Inc. is a South Carolina corporation.  As a part of the merger XYZ, Inc., acquired ABC, Inc.’s equipment.  As a result of the merger, XYZ, Inc. became a new debtor.  SP never filed against the XYZ, Inc.

       On November 1, XYZ, Inc. filed for relief under the Bankruptcy Code.  XYZ, Inc.’s only assets at that time were the equipment originally owned by ABC, Inc. and inventory that XYZ, Inc. had purchased during the months of September and October.

       Although SP can claim a security interest in the inventory, its security interest is unperfected.  The difference between ABC, Inc.’s name and XYZ, Inc.’s name rendered the filing against ABC, Inc. seriously misleading.  As a result under Section 36‑9‑508(b)(2) SP’s filing was not effective to perfect its security interest in the inventory which was acquired more than four months after the merger.

       SP’s security interest in the equipment, however, remained perfected.  Assuming that SP’s security interest continued in the equipment under Section 36‑9‑315(a) and 36‑9‑320(a),  Section 36‑9‑507(a) provides that the filing against ABC, Inc. remains effective.  Therefore, under Section 36‑9‑508(c), the provisions of Section 36‑9‑508 do not apply to the transferred equipment.  As a result, SP remains perfected in the equipment even though its filing against ABC, Inc. becomes seriously misleading.

 

    Definitional Cross References

    “Collateral”                               Section 36‑9‑102(a)(12)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “New debtor”                                Section 36‑9‑102(a)(56)

    “Original debtor”                        Section 36‑9‑102(a)(60)

 

    Cross References

    1. When a person becomes bound as a new debtor by a security agreement entered into by an original debtor. Section 36‑9‑203(d).

    2. Effect of becoming bound as a new debtor. Section 36‑9‑203(e).

    3. Priority of a security interest in collateral created by a new debtor and perfected by a financing statement filed against the original debtor which is effective solely under Section 36‑9‑508. Section 36‑9‑326.

    4. Rules for determining whether the difference between the names of the original debtor and the new debtor render the financing statement filed against the original debtor seriously misleading. Section 36‑9‑506(b) and (c).

    5. Authority of a secured party that filed against the original debtor to file against the new debtor when the filing against the original debtor becomes seriously misleading. Section 36‑9‑509(b)(1).

 

    Section 36‑9‑509.    Persons entitled to file a record.

    (a)   A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if:

       (1)   the debtor authorizes the filing in an authenticated record or pursuant to subsection (b) or (c); or

       (2)   the person holds an agricultural lien that has become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.

    (b)   By authenticating or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering:

       (1)   the collateral described in the security agreement; and

       (2)    property that becomes collateral under Section 36‑9‑315(a)(2), whether or not the security agreement expressly covers proceeds.

    (c)   By acquiring collateral in which a security interest or agricultural lien continues under Section 36‑9‑315(a)(1), a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under Section 36‑9‑315(a)(2).

    (d)   A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if:

       (1)   the secured party of record authorizes the filing; or

       (2)   the amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement as required by Section 36‑9‑513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.

    (e)   If there is more than one secured party of record for a financing statement, each secured party of record may authorize the filing of an amendment under subsection (d).

 

    Official Comment

    1.  Source.  New.

 

    2.  Scope and Approach of This Section.  This Section collects in one place most of the rules determining whether a record may be filed.  Section 9‑510 explains the extent to which a filed record is effective.  Under these Sections, the identity of the person who effects a filing is immaterial.  The filing scheme contemplated by this Part does not contemplate that the identity of a “filer” will be a part of the searchable records.  This is consistent with, and a necessary aspect of, eliminating signatures or other evidence of authorization from the system.  (Note that the 1972 amendments to this Article eliminated the requirement that a financing statement contain the signature of the secured party.)  As long as the appropriate person authorizes the filing, or, in the case of a termination statement, the debtor is entitled to the termination, it is insignificant whether the secured party or another person files any given record.  The question of authorization is one for the court, not the filing office.  However, a filing office may choose to employ authentication procedures in connection with electronic communications, e.g., to verify the identity of a filer who seeks to charge the filing fee.

 

    3.  Unauthorized Filings.  Records filed in the filing office do not require signatures for their effectiveness.  Subsection (a)(1) substitutes for the debtor’s signature on a financing statement the requirement that the debtor authorize in an authenticated record the filing of an initial financing statement or an amendment that adds collateral.  Also, under subsection (a)(1), if an amendment adds a debtor, the debtor who is added must authorize the amendment.  A person who files an unauthorized record in violation of subsection (a)(1) is liable under Section 9‑625 for actual and statutory damages.  Of course, a filed financing statement is ineffective to perfect a security interest if the filing is not authorized.  See Section 9‑510(a).  Law other than this Article, including the law with respect to ratification of past acts, generally determines whether a person has the requisite authority to file a record under this Section.  See Sections 1‑103, 9‑502, Comment 3.

 

    4.  Ipso Facto Authorization.  Under subsection (b), the authentication of a security agreement ipso facto constitutes the debtor’s authorization of the filing of a financing statement covering the collateral described in the security agreement.  The secured party need not obtain a separate authorization.  Similarly, a new debtor’s becoming bound by a security agreement ipso facto constitutes the new debtor’s authorization of the filing of a financing statement covering the collateral described in the security agreement by which the new debtor has become bound.  And, under subsection (c), the acquisition of collateral in which a security interest continues after disposition under Section 9‑315(a)(1) ipso facto constitutes an authorization to file an initial financing statement against the person who acquired the collateral.  The authorization to file an initial financing statement also constitutes an authorization to file a record covering actual proceeds of the original collateral, even if the security agreement is silent as to proceeds.

 

    Example 1:  Debtor authenticates a security agreement creating a security interest in Debtor’s inventory in favor of Secured Party.  Secured Party files a financing statement covering inventory and accounts.  The financing statement is authorized insofar as it covers inventory and unauthorized insofar as it covers accounts.  (Note, however, that the financing statement will be effective to perfect a security interest in accounts constituting proceeds of the inventory to the same extent as a financing statement covering only inventory.)

 

    Example 2:  Debtor authenticates a security agreement creating a security interest in Debtor’s inventory in favor of Secured Party.  Secured Party files a financing statement covering inventory.  Debtor sells some inventory, deposits the buyer’s payment into a deposit account, and withdraws the funds to purchase equipment.  As long as the equipment can be traced to the inventory, the security interest continues in the equipment.  See Section 9‑315(a)(2).  However, because the equipment was acquired with cash proceeds, the financing statement becomes ineffective to perfect the security interest in the equipment on the 21st day after the security interest attaches to the equipment unless Secured Party continues perfection beyond the 20‑day period by filing a financing statement against the equipment or amending the filed financing statement to cover equipment.  See Section 9‑315(d).  Debtor’s authentication of the security agreement authorizes the filing of an initial financing statement or amendment covering the equipment, which is “property that becomes collateral under Section 9‑315(a)(2).”  See Section 9‑509(b)(2).

 

    5.  Agricultural Liens.  Under subsection (a)(2), the holder of an agricultural lien may file a financing statement covering collateral subject to the lien without obtaining the debtor’s authorization.  Because the lien arises as matter of law, the debtor’s consent is not required.  A person who files an unauthorized record in violation of this subsection is liable under Section 9‑625(e) for a statutory penalty and damages. 

 

    6.  Amendments; Termination Statements Authorized by Debtor.  Most amendments may not be filed unless the secured party of record, as determined under Section 9‑511, authorizes the filing.  See subsection (d)(1).  However, under subsection (d)(2), the authorization of the secured party of record is not required for the filing of a termination statement if the secured party of record failed to send or file a termination statement as required by Section 9‑513, the debtor authorizes it to be filed, and the termination statement so indicates.

 

    7.  Multiple Secured Parties of Record.  Subsection (e) deals with multiple secured parties of record.  It permits each secured party of record to authorize the filing of amendments.  However, Section 9‑510(b) protects the rights and powers of one secured party of record from the effects of filings made by another secured party of record.  See Section 9‑510, Comment 3.

 

    8.  Successor to Secured Party of Record.  A person may succeed to the powers of the secured party of record by operation of other law, e.g., the law of corporate mergers.  In that case, the successor has the power to authorize filings within the meaning of this Section.

 

    Section 36‑9‑509

    South Carolina Reporters Comment

    The current statute changes the requirements for an effective financing statement by eliminating the requirement that the debtor sign the financing statement.  See Section 36‑9‑502(a) and former Section 36‑9‑402(a).  The requirement that the debtor sign a financing statement operated to protect debtors from unauthorized filings.  To provide debtors some protection against unauthorized filings under the current law, Section 36‑9‑509(a)(1) provides that a person may file an initial financing statement only if the debtor authorized the filing.

    Under Section 36‑9‑509 there are three methods for establishing authority to file an initial financing statement.  First, under subsection (a)(1) the debtor may authorize the filing in an authenticated record.  Second, under subsection (b) a debtor who authenticates a security agreement or becomes bound as a new debtor, authorizes the filing of an initial financing statement covering the collateral described in the security agreement and any proceeds.  Third, under subsection (c) a person who becomes a debtor by acquiring collateral subject to a security interest under Section 36‑9‑315(a) authorizes the secured party to file against the collateral and any proceeds.

    Amendments that add a debtor or add collateral are generally subject to the same authentication requirements as initial financing statements.

    Subsection (d) addresses the authority to file amendments other than those which add collateral or a debtor.  Generally, a person may file such amendments only if the secured party of record authorizes the filing.   If a secured party of record fails to honor its obligation with respect to a termination statement, subsection (d)(2) authorizes the debtor to file the termination statement.

    Subsection (a)(2) provides a special rule for filing a financing statement to perfect on agricultural liens that does not require contractual consent of the debtor.

 

    Definitional Cross References

    “Agricultural lien”                     Section 36‑9‑102(a)(5)

    “Authenticate”                          Section 36‑9‑102(a)(7)

    “Collateral”                               Section 36‑9‑102(a)(12)

    “Debtor”                                   Section 36‑9‑102(a)(28)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Record”                                  Section 36‑9‑102(a)(69)

    “Secured party of record”               Section 36‑9‑511

    “Security agreement”                  Section 36‑9‑102(a)(73)

    “Termination statement”            Section 36‑9‑102(a)(79)

 

    Cross References

    1.    Requirements for an effective security agreement. Section 36‑9‑203(b).

    2. When a security interest continues in transferred collateral. Section 36‑9‑315(a)(1).

    3.    Requirements for status of secured party of record. Section 36‑9‑511.

    4. Secured party’s obligations with respect to termination statements. Section 36‑9‑513.

 

    Section 36‑9‑510.    Effectiveness of filed record.

    (a)   A filed record is effective only to the extent that it was filed by a person that may file it under Section 36‑9‑509.

    (b)   A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.

    (c)   A continuation statement that is not filed within the six‑month period prescribed by Section 36‑9‑515(d) is ineffective.

 

    Official Comment

    1.  Source.  New.

 

    2.  Ineffectiveness of Unauthorized or Overbroad Filings.  Subsection (a) provides that a filed financing statement is effective only to the extent it was filed by a person entitled to file it.

 

    Example 1:  Debtor authorizes the filing of a financing statement covering inventory.  Under Section 9‑509, the secured party may file a financing statement covering only inventory; it may not file a financing statement covering other collateral.  The secured party files a financing statement covering inventory and equipment.  This Section provides that the financing statement is effective only to the extent the secured party may file it.  Thus, the financing statement is effective to perfect a security interest in inventory but ineffective to perfect a security interest in equipment.

 

    3.  Multiple Secured Parties of Record.  Section 9‑509(e) permits any secured party of record to authorize the filing of most amendments.  Subsection (b) of this Section prevents a filing authorized by one secured party of record from affecting the rights and powers of another secured party of record without the latter’s consent.

 

    Example 2:  Debtor creates a security interest in favor of A and B.  The filed financing statement names A and B as the secured parties.  An amendment deleting some collateral covered by the financing statement is filed pursuant to B’s authorization.  Although B’s security interest in the deleted collateral becomes unperfected, A’s security interest remains perfected in all the collateral.

 

    Example 3:  Debtor creates a security interest in favor of A and B.  The financing statement names A and B as the secured parties.  A termination statement is filed pursuant to B’s authorization.  Although the effectiveness of the financing statement terminates with respect to B’s security interest, A’s rights are unaffected.  That is, the financing statement continues to be effective to perfect A’s security interest.

 

    4.  Continuation Statements.  A continuation statement may be filed only within the six months immediately before lapse.  See Section 9‑515(d).  The filing office is obligated to reject a continuation statement that is filed outside the six‑month period.  See Sections 9‑520(a), 9‑516(b)(7).  Subsection (c) provides that if the filing office fails to reject a continuation statement that is not filed in a timely manner, the continuation statement is ineffective nevertheless.

 

    Section 36‑9‑510

    South Carolina Reporters Comment

    Subsection 36‑9‑510(a) provides that a filed record is effective only if the person who made the filing was authorized to do so.  Subsection (c) provides that untimely continuation statements are ineffective.

 

    Definitional Cross References

    “Continuation statement”            Section 36‑9‑102(a)(27)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Record”                                  Section 36‑9‑102(a)(69)

    “Secured party of record”               Section 36‑9‑511

 

    Cross References

    1. Conditions for establishing authority to file an initial financing statement or an amendment.  Section 36‑9‑509.

    2.    Requirements for obtaining status as secured party of record. Section 36‑9‑511.

    3.    Requirements for and effect of filing a continuation statement. Section 36‑9‑513(d) and (e).

    4. The filing office is neither obligated nor permitted to inquire into the issue of whether a person presenting a record for filing is authorized to do so. Section 36‑9‑502, Official Comment 2.

    5. Debtor’s right to obtain and file a termination statement rendering an unauthorized financing statement ineffective. Section 36‑9‑513.

    6. Debtor’s right to recover actual damages from a person who filed an unauthorized financing statement. Section 36‑9‑625(b).

    7. Debtor’s right to recover statutory damages from person who filed an unauthorized financing statement. Section 36‑9‑625(e)(3).

 

    Section 36‑9‑511.    Secured party of record.

    (a)   A secured party of record with respect to a financing statement is a person whose name is provided as the name of the secured party or a representative of the secured party in an initial financing statement that has been filed.  If an initial financing statement is filed under Section 36‑9‑514(a), the assignee named in the initial financing statement is the secured party of record with respect to the financing statement.

    (b)   If an amendment of a financing statement which provides the name of a person as a secured party or a representative of a secured party is filed, the person named in the amendment is a secured party of record.  If an amendment is filed under Section 36‑9‑514(b), the assignee named in the amendment is a secured party of record.

    (c)   A person remains a secured party of record until the filing of an amendment of the financing statement which deletes the person.

 

    Official Comment

    1.  Source.  New.

 

    2.  Secured Party of Record.  This new Section explains how the secured party of record is to be determined.  If SP‑1 is named as the secured party in an initial financing statement, it is the secured party of record.  Similarly, if an initial financing statement reflects a total assignment from SP‑0 to SP‑1, then SP‑1 is the secured party of record.  See subsection (a).  If, subsequently, an amendment is filed assigning SP‑1’s status to SP‑2, then SP‑2 becomes the secured party of record in place of SP‑1.  The same result obtains if a subsequent amendment deletes the reference to SP‑1 and substitutes therefore a reference to SP‑2.  If, however, a subsequent amendment adds SP‑2 as a secured party but does not purport to remove SP‑1 as a secured party, then SP‑2 and SP‑1 each is a secured party of record.  See subsection (b).  An amendment purporting to remove the only secured party of record without providing a successor is ineffective.  See Section 9‑512(e).  At any point in time, all effective records that comprise a financing statement must be examined to determine the person or persons that have the status of secured party of record.

 

    3.  Successor to Secured Party of Record.  Application of other law may result in a person succeeding to the powers of a secured party of record.  For example, if the secured party of record (A) merges into another corporation (B) and the other corporation (B) survives, other law may provide that B has all of A’s powers.  In that case, B is authorized to take all actions under this Part that A would have been authorized to take.  Similarly, acts taken by a person who is authorized under generally applicable principles of agency to act on behalf of the secured party of record are effective under this Part.

 

    Section 36‑9‑511

    South Carolina Reporters Comment

    Section 36‑9‑511 provides the rules for determining the secured party of record. Identifying the secured party of record is significant because the secured party of record can authorize the amendments to a filed financing statement and is obligated to file or provide termination statements.

 

    Definitional Cross References

    “Financing statement”            Section 36‑9‑102(a)(39)

    “Secured party”                      Section 36‑9‑102(a)(72)

 

    Cross References

    1. Secured party of record’s authority to authorize the filing of amendments to a financing statement other than amendments which add collateral or a debtor. Section 36‑9‑509(d)(1).

    2. Secured party of record’s obligations with respect to termination statements. Section 36‑9‑513.

    3.    Assignment of powers of secured party of record. Section 36‑9‑514.

 

    Section 36‑9‑512.    Amendment of financing statement.

    (a)   Subject to Section 36‑9‑509, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to subsection (e), otherwise amend the information provided in, a financing statement by filing an amendment that:

       (1)    identifies, by its file number, the initial financing statement to which the amendment relates; and

       (2)   if the amendment relates to an initial financing statement filed or recorded in a filing office described in Section 36‑9‑501(a)(1), provides the date and time that the initial financing statement was filed or recorded and the information specified in Section 36‑9‑502(b).

    (b)   Except as otherwise provided in Section 36‑9‑515, the filing of an amendment does not extend the period of effectiveness of the financing statement.

    (c)   A financing statement that is amended by an amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment.

    (d)   A financing statement that is amended by an amendment that adds a debtor is effective as to the added debtor only from the date of the filing of the amendment.

    (e)   An amendment is ineffective to the extent it:

       (1)    purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing statement; or

       (2)    purports to delete all secured parties of record and fails to provide the name of a new secured party of record.

 

    Official Comment

    1.  Source.  Former 9‑402(4).

 

    2.  Changes to Financing Statements.  This Section addresses changes to financing statements, including addition and deletion of collateral.  Although termination statements, assignments, and continuation statements are types of amendment, this Article follows former Article 9 and contains separate Sections containing additional provisions applicable to particular types of amendments.  See Section 9‑513 (termination statements); 9‑514 (assignments); 9‑515 (continuation statements).  One should not infer from this separate treatment that this Article requires a separate amendment to accomplish each change.  Rather, a single amendment would be legally sufficient to, e.g., add collateral and continue the effectiveness of the financing statement.

 

    3.  Amendments.  An  amendment under this Article may identify only the information contained in a financing statement that is to be changed; alternatively, it may take the form of an amended and restated financing statement.  The latter would state, for example, that the financing statement “is amended and restated to read as follows: . . .”  References in this Part to an “amended financing statement” are to a financing statement as amended by an amendment using either technique.

 

    This Section revises former Section 9‑402(4) to permit secured parties of record to make changes in the public record without the need to obtain the debtor’s signature.  However, the filing of an amendment that adds collateral or adds a debtor must be authorized by the debtor or it will not be effective.  See Sections 9‑509(a), 9‑510(a).

 

    4.  Amendment Adding Debtor.  An amendment that adds a debtor is effective, provided that the added debtor authorizes the filing.  See Section 9‑509(a).  However, filing an amendment adding a debtor to a previously filed financing statement affords no advantage over filing an initial financing statement against that debtor and may be disadvantageous.  With respect to the added debtor, for purposes of determining the priority of the security interest, the time of filing is the time of the filing of the amendment, not the time of the filing of the initial financing statement.  See subsection (d).  However, the effectiveness of the financing statement lapses with respect to added debtor at the time it lapses with respect to the original debtor.  See subsection (b).

 

    5.  Deletion of All Debtors or Secured Parties of Record.  Subsection (e) assures that there will be a debtor and secured party of record for every financing statement.

 

    Example:  A filed financing statement names A and B as secured parties of record and covers inventory and equipment.  An amendment deletes equipment and purports to delete A and B as secured parties of record without adding a substitute secured party.  The amendment is ineffective to the extent it purports to delete the secured parties of record but effective with respect to the deletion of collateral.  As a consequence, the financing statement, as amended, covers only inventory, but A and B remain as secured parties of record.

 

    Section 36‑9‑512

    South Carolina Reporters Comment

    Section 36‑9‑512 provides the manner and effect of amending financing statements.  Subsection (a)(1) provides the basic rule that the amendment must refer to the initial financing statement by its file number.  To be effective, however, an amendment must be authorized under Section 36‑9‑509.  Amendments constituting termination statements, assignments, or continuation statements must satisfy additional statutory requirements.

 

    Definitional Cross References

    “Collateral”                               Section 36‑9‑102(a)(12)

    “Debtor”                                   Section 36‑9‑102(a)(28)

    “File number”                               Section 36‑9‑102(a)(36)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Secured party of record”               Section 36‑9‑511

 

    Cross References

    1.    Authorization to file amendments to financing statements. Section 36‑9‑509.

    2. An unauthorized amendment is ineffective. Section 36‑9‑510(a).

    3.    Termination statements. Section 36‑9‑513.

    4.    Assignments. Section 36‑9‑514.

    5.    Continuation statements. Section 36‑9‑515(c) ‑ (e).

    6.    Requirement that filing office assign a file number to an initial financing statement. Sections 36‑9‑519(a) and 36‑9‑102(a)(36).

 

    Section 36‑9‑513.    Termination statement.

    (a)   A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if  the financing statement covers consumer goods and:

       (1)   there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or

       (2)   the debtor did not authorize the filing of the initial financing statement.

    (b)   To comply with subsection (a), a secured party shall cause the secured party of record to file the termination statement:

       (1)   within one month after there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or

       (2)   if earlier, within twenty days after the secured party receives an authenticated demand from a debtor.

    (c)   In cases not governed by subsection (a), within twenty days after a secured party receives an authenticated demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if:

       (1)    except in the case of a financing statement covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value;

       (2)   the financing statement covers accounts or chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation;

       (3)   the financing statement covers goods that were the subject of a consignment to the debtor but are not iN the debtor’s possession; or

       (4)   the debtor did not authorize the filing of the initial financing statement.

    (d)   Except as otherwise provided in Section 36‑9‑510, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective.  Except as otherwise provided in Section 36‑9‑510, for purposes of Sections 36‑9‑519(g), 36‑9‑522(a), and 36‑9‑523(c), the filing with the filing office of a termination statement relating to a financing statement that indicates that the debtor is a transmitting utility also causes the effectiveness of the financing statement to lapse.

 

    Official Comment

    1.  Source.  Former Section 9‑404.

 

    2.  Duty to File or Send.  This Section specifies when a secured party must cause the secured party of record to file or send to the debtor a termination statement for a financing statement.  Because most financing statements expire in five years unless a continuation statement is filed (Section 9‑515), no compulsion is placed on the secured party to file a termination statement unless demanded by the debtor, except in the case of consumer goods.  Because many consumers will not realize the importance to them of clearing the public record, an affirmative duty is put on the secured party in that case.  But many purchase‑money security interests in consumer goods will not be filed, except for motor vehicles.  See Section 9‑309(1).  Under Section 9‑311(b), compliance with a certificate‑of‑title statute is “equivalent to the filing of a financing statement under this article.”  Thus, this Section applies to a certificate of title unless the Section is superseded by a certificate‑of‑title statute that contains a specific rule addressing a secured party’s duty to cause a notation of a security interest to be removed from a certificate of title.  In the context of a certificate of title, however, the secured party could comply with this Section by causing the removal itself or providing the debtor with documentation sufficient to enable the debtor to effect the removal.

 

    Subsections (a) and (b) apply to a financing statement covering consumer goods.  Subsection (c) applies to other financing statements.  Subsection (a) and (c) each makes explicit what was implicit under former Article 9:  If the debtor did not authorize the filing of a financing statement in the first place, the secured party of record should file or send a termination statement.  The liability imposed upon a secured party that fails to comply with subsection (a) or (c) is identical to that imposed for the filing of an unauthorized financing statement or amendment.  See Section 9‑625(e).

 

    3.  “Bogus” Filings.  A secured party’s duty to send a termination statement arises when the secured party “receives” an authenticated demand from the debtor.  In the case of an unauthorized financing statement, the person named as debtor in the financing statement may have no relationship with the named secured party and no reason to know the secured party’s address.  Inasmuch as the address in the financing statement is “held out by [the person named as secured party in the financing statement] as the place for receipt of such communications [i.e., communications relating to security interests],” the putative secured party is deemed to have “received” a notification delivered to that address.  See Section 1‑201(26).   If a termination statement is not forthcoming, the person named as debtor itself may authorize the filing of a termination statement, which will be effective if it indicates that the person authorized it to be filed.  See Sections 9‑509(d)(2), 9‑510(c).

 

    4.  Buyers of Receivables.  Applied literally, former Section 9‑404(1) would have required many buyers of receivables to file a termination statement immediately upon filing a financing statement because “there is no outstanding secured obligation and no commitment to make advances, incur obligations, or otherwise give value.”  Subsections (c)(1) and (2) remedy this problem.  While the security interest of a buyer of accounts or chattel paper (B‑1) is perfected, the debtor is not deemed to retain an interest in the sold receivables and thus could transfer no interest in them to another buyer (B‑2) or to a lien creditor (LC).  However, for purposes of determining the rights of the debtor’s creditors and certain purchasers of accounts or chattel paper from the debtor, while B‑1’s security interest is unperfected, the debtor‑seller is deemed to have rights in the sold receivables, and a competing security interest or judicial lien may attach to those rights.  See Sections 9‑318, 9‑109, Comment 5.  Suppose that B‑1’s security interest in certain accounts and chattel paper is perfected by filing, but the effectiveness of the financing statement lapses.  Both before and after lapse, B‑1 collects some of the receivables.  After lapse, LC acquires a lien on the accounts and chattel paper.  B‑1’s unperfected security interest in the accounts and chattel paper is subordinate to LC’s rights.  See Section 9‑317(a)(2).  But collections on accounts and chattel paper are not “accounts” or “chattel paper.”  Even if B‑1’s security interest in the accounts and chattel paper is or becomes unperfected, neither the debtor nor LC acquires rights to the collections that B‑1 collects (and owns) before LC acquires a lien.

 

    5.  Effect of Filing.  Subsection (d) states the effect of filing a termination statement:  the related financing statement ceases to be effective.  If one of several secured parties of record files a termination statement, subsection (d) applies only with respect to the rights of the person who authorized the filing of the termination statement.  See Section 9‑510(b).  The financing statement remains effective with respect to the rights of the others.  However, even if a financing statement is terminated (and thus no longer is effective) with respect to all secured parties of record, the financing statement, including the termination statement, will remain of record until at least one year after it lapses with respect to all secured parties of record.  See Section 9‑519(g).

 

    Section 36‑9‑513

    South Carolina Reporters Comment

    Section 36‑9‑513 addresses the obligations of secured parties and secured parties of record with respect to termination statements.  Subsection (a) applies when a filed financing statement covers consumer goods.  Under that provision a secured party is required to cause the secured party of record to file a termination statement when there is no obligation or commitment to make an advance secured by collateral covered in the financing statement or when the debtor did not authorize the filing of the financing statement.  Subsection (b) requires a secured party to perform its obligation under subsection (a) within one month after the debtor’s obligation is satisfied or, if earlier, within 20 days after receipt of an authenticated demand from the debtor.

    Subsection (c) applies when a filed financing statement covers collateral other than consumer goods.  A secured party can meet its obligation under subsection (c) by causing the secured party of record either to file or send to the debtor a termination statement.  The secured party must act within 20 days after receipt of an authenticated demand from the debtor.

    The right of a debtor to demand a termination statement depends, in part, upon the nature of the underlying transaction.  As a general rule, subsection (c)(1) provides that a secured party must honor a debtor’s demand if there is no obligation or commitment to make an advance secured by collateral described in the financing statement.  Subsection (c)(2) applies to sales of accounts and chattel paper and entitles the debtor to a termination statement when the obligation of the account debtor has been discharged.  Section (c)(3) applies to consignments and entitles the debtor to a termination statement when the goods covered by the financing statement are no longer in the debtor’s possession.  Subsection (c)(4) provides that in any transaction in which the debtor did not authorize the filing of a financing statement, the debtor is entitled to a termination statement.

    Subsection (d) provides upon filing a termination statement, the financing statement to which it relates ceases to be effective.

 

    Definitional Cross References

    “Account”                                 Section 36‑9‑102(a)(2)

    “Account debtor”                        Section 36‑9‑102(a)(3)

    “Authenticate”                          Section 36‑9‑102(a)(7)

    “Chattel paper”                         Section 36‑9‑102(a)(11)

    “Collateral”                               Section 36‑9‑102(a)(12)

    “Consignment”                           Section 36‑9‑102(a)(20)

    “Filing office”                               Section 36‑9‑102(a)(37)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Goods”                                    Section 36‑9‑102(a)(44)

    “Secured party”                          Section 36‑9‑102(a)(72)

    “Secured party of record”               Section 36‑9‑511

    “Termination statement”            Section 36‑9‑102(a)(79)

    “Transmitting utility”                  Section 36‑9‑102(a)(80)

    “Value”                                    Section 36‑1‑201(44)

 

    Cross References  

    1. Authority to file an initial financing statement. Section 36‑9‑509(a)(1).

    2. Debtor’s right to file a termination statement when the secured party of record fails to file or send a termination statement. Section 36‑9‑509(d)(2).

    3. Form for termination statement. Section 36‑9‑521.

    4. Debtor’s right to recover actual damages for a failure to file or send a termination statement. Section 36‑9‑625(b).

    5. Debtor’s right to recover statutory damages for a failure to file or send a termination statement. Section 36‑9‑625(e)(4).

 

    Section 36‑9‑514.    Assignment of powers of secured party of record.

    (a)   Except as otherwise provided in subsection (c), an initial financing statement may reflect an assignment of all of the secured party’s power to authorize an amendment to the financing statement by providing the name and mailing address of the assignee as the name and address of the secured party.

    (b)   Except as otherwise provided in subsection (c), a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which:

       (1)    identifies, by its file number, the initial financing statement to which it relates;

       (2)    provides the name of the assignor; and

       (3)    provides the name and mailing address of the assignee.

    (c)   An assignment of record of a security interest in a fixture covered by a record of a mortgage which is effective as a financing statement filed as a fixture filing under Section 36‑9‑502(c) may be made only by an assignment of record of the mortgage in the manner provided by law of this State other than the Uniform Commercial Code.

 

    Official Comment

    1.  Source.  Former Section 9‑405.

 

    2.  Assignments.  This Section provides a permissive device whereby a secured party of record may effectuate an assignment of its power to affect a financing statement.  It may also be useful for a secured party who has assigned all or part of its security interest or agricultural lien and wishes to have the fact noted of record, so that inquiries concerning the transaction would be addressed to the assignee.  See Section 9‑502, Comment 2.  Upon the filing of an assignment, the assignee becomes the “secured party of record” and may authorize the filing of a continuation statement, termination statement, or other amendment.  Note that under Section 9‑310(c) no filing of an assignment is required as a condition of continuing the perfected status of the security interest against creditors and transferees of the original debtor.  However, if an assignment is not filed, the assignor remains the secured party of record, with the power (even if not the right) to authorize the filing of effective amendments.  See Sections 9‑511(c), 9‑509(d).

 

    Where a record of a mortgage is effective as a financing statement filed as a fixture filing (Section 9‑502(c)), then an assignment of record of the security interest may be made only in the manner in which an assignment of record of the mortgage may be made under local real‑property law.

 

    3.  Comparison to Prior Law.  Most of the changes reflected in this Section are for clarification or to embrace medium‑neutral drafting.  As a general matter, this Section preserves the opportunity given by former Section 9‑405 to assign a security interest of record in one of two different ways.  Under subsection (a), a secured party may assign all of its power to affect a financing statement by naming an assignee in the initial financing statement.  The secured party of record may accomplish the same result under subsection (b) by making a subsequent filing.  Subsection (b) also may be used for an assignment of only some of the secured party of record’s power to affect a financing statement, e.g., the power to affect the financing statement as it relates to particular items of collateral or as it relates to an undivided interest in a security interest in all the collateral.  An initial financing statement may not be used to change the secured party of record under these circumstances.  However, an amendment adding the assignee as a secured party of record may be used.

 

    Section 36‑9‑514

    South Carolina Reporters Comment

    Section 36‑9‑514 provides the procedures under which a secured party of record can assign its power to authorize the amendment of a financing statement.  Subsection (a) provides the procedures for effecting the assignment in the initial financing statement.  Subsection (b) provides the procedure assigning the secured party of record’s interest by an amendment to the financing statement.  Subsection (c) provides that when a secured party has recorded a mortgage to perfect a security interest in fixtures,  the validity of an assignment of the secured party’s interest is governed by real property law.

    A secured party that has filed a financing statement to perfect a security interest can assign the perfected security interest to a third party without complying with Section 36‑9‑514.  Under Section 36‑9‑310(c) no filing is necessary to continue the perfection of the assigned security interest against creditors and transferees of the debtor.  When an assignment of a perfected security interest is made without complying with Section 36‑9‑514, however, the assignee is not empowered to amend the financing statement.

 

    Definitional Cross References

    “Filing office”                               Section 36‑9‑102(a)(37)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Fixture filing”                          Section 36‑9‑102(a)(40)

    “Mortgage”                               Section 36‑9‑102(a)(55)

    “Secured party”                          Section 36‑9‑102(a)(72)

 

    Cross References

    1. Only a secured party of record is authorized to file an amendment to a financing statement other than an amendment which adds a debtor or collateral. Section 36‑9‑509(d)(1).

    2. A secured party of record has the obligation to file or send termination statements. Section 36‑9‑513.

    3. Form of financing statement including an assignment of the secured party’s interest. Section 36‑9‑521.

    4. Form for an amendment to a financing statement assigned the secured party’s interest. Section 36‑9‑521.

    5. If a secured party assigns a perfected security interest, no filing is necessary to continue the perfected status of the security interest against creditors of or transferees from the debtor.  Section 36‑9‑310(c).

 

    Section 36‑9‑515.    Duration and effectiveness of financing statement; effect of lapsed financing statement.

    (a)   Except as otherwise provided in subsections (b), (e), (f), and (g), a filed financing statement is effective for a period of five years after the date of filing.

    (b)   Except as otherwise provided in subsections (e), (f), and (g), an initial financing statement filed in connection with a public‑finance transaction or manufactured‑home transaction is effective for a period of thirty years after the date of filing if it indicates that it is filed in connection with a public‑finance transaction or manufactured‑home transaction.

    (c)   The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless before the lapse a continuation statement is filed pursuant to subsection (d).  Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement becomes unperfected, unless the security interest is perfected otherwise.  If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the collateral for value.

    (d)   A continuation statement may be filed only within six months before the expiration of the five‑year period specified in subsection (a) or the thirty‑year period specified in subsection (b), whichever is applicable.

    (e)   Except as otherwise provided in Section 36‑9‑510, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five years commencing on the day on which the financing statement would have become ineffective in the absence of the filing.  Upon the expiration of the five‑year period, the financing statement lapses in the same manner as provided in subsection (c), unless, before the lapse, another continuation statement is filed pursuant to subsection (d).  Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.

    (f)    If a debtor is a transmitting utility and a filed financing statement so indicates, the financing statement is effective until a termination statement is filed.

    (g)   A record of a mortgage that is effective as a financing statement filed as a fixture filing under Section 36‑9‑502(c) remains effective as a financing statement filed as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property.

 

    Official Comment

    1.  Source.  Former Section 9‑403(2), (3), (6).

 

    2.  Period of Financing Statement’s Effectiveness.  Subsection (a) states the general rule:  a financing statement is effective for a five‑year period unless its effectiveness is continued under this Section or terminated under Section 9‑513.  Subsection (b) provides that if the financing statement relates to a public‑finance transaction or a manufactured‑home transaction and so indicates, the financing statement is effective for 30 years.  These financings typically extend well beyond the standard, five‑year period.  Under subsection (f), a financing statement filed against a transmitting utility remains effective indefinitely, until a termination statement is filed.  Likewise, under subsection (g), a mortgage effective as a fixture filing remains effective until its effectiveness terminates under real‑property law.

 

    3.  Lapse.  When the period of effectiveness under subsection (a) or (b) expires, the effectiveness of the financing statement lapses.  The last sentence of subsection (c) addresses the effect of lapse.  The deemed retroactive unperfection applies only with respect to purchasers for value; unlike former Section 9‑403(2), it does not apply with respect to lien creditors.

 

    Example 1:  SP‑1 and SP‑2 both hold security interests in the same collateral.  Both security interests are perfected by filing.  SP‑1 filed first and has priority under Section 9‑322(a)(1).  The effectiveness of SP‑1’s filing lapses.  As long as SP‑2’s security interest remains perfected thereafter, SP‑2 is entitled to priority over SP‑1’s security interest, which is deemed never to have been perfected as against a purchaser for value (SP‑2).  See Section 9‑322(a)(2).

 

    Example 2:  SP holds a security interest perfected by filing.  On July 1, LC acquires a judicial lien on the collateral.  Two weeks later, the effectiveness of the financing statement lapses.  Although the security interest becomes unperfected upon lapse, it was perfected when LC acquired its lien.  Accordingly, notwithstanding the lapse, the perfected security interest has priority over the rights of LC, who is not a purchaser.  See Section 9‑317(a)(2).

 

    4.  Effect of Debtor’s Bankruptcy.  Under former Section 9‑403(2), lapse was tolled if the debtor entered bankruptcy or another insolvency proceeding.  Nevertheless, being unaware that insolvency proceedings had been commenced, filing offices routinely removed records from the files as if lapse had not been tolled.  Subsection (c) deletes the former tolling provision and thereby imposes a new burden on the secured party:  to be sure that a financing statement does not lapse during the debtor’s bankruptcy.  The secured party can prevent lapse by filing a continuation statement, even without first obtaining relief from the automatic stay.  See Bankruptcy Code Section 362(b)(3).  Of course, if the debtor enters bankruptcy before lapse, the provisions of this Article with respect to lapse would be of no effect to the extent that federal bankruptcy law dictates a contrary result (e.g., to the extent that the Bankruptcy Code determines rights as of the date of the filing of the bankruptcy petition).

 

    5.  Continuation Statements.  Subsection (d) explains when a continuation statement may be filed.  A continuation statement filed at a time other than that prescribed by subsection (d) is ineffective, see Section 9‑510(c), and the filing office may not accept it.  See Sections 9‑520(a), 9‑516(b).  Subsection (e) specifies the effect of a continuation statement and provides for successive continuation statements.

 

    Section 36‑9‑515

    South Carolina Reporters Comment

    Section 36‑9‑515 addresses issues concerning the duration of the effectiveness of a filed financing statement.  As a general rule, subsection (a) provides that a financing statement remains effective for five years from the date of filing.  This rule, however, is subject to a number of exceptions.  Under subsection (b) an initial financing statement filed in a public‑financing transactions or a manufactured‑home transaction is effective for 30 years.  Moreover, in a manufactured‑home transaction a secured party would typically perfect under the certificate of title statute in which case that statute rather than Article 9 would control the duration of the perfected status of the security interest.  See Section 36‑9‑311(c).  Under subsection (f) if a debtor is a transmitting utility, a filed financing statement remains effective until a termination statement is filed.  Under subsection (g) a mortgage recorded in lieu of a fixture filing remains effective until the mortgage is released or satisfied of record.

    Subsection (c) provides that the effectiveness of a filed financing statement lapses upon the expiration of its period of effectiveness unless a continuation statement is properly filed.  Upon the lapse of its financing statement a secured party’s security interest or agricultural lien becomes unperfected.  Moreover, a security interest or agricultural lien that becomes unperfected upon lapse, is deemed to have never been perfected against a purchaser of the collateral for value.

    Under subsections (d) and (e) a secured party can avoid lapse by filing a continuation statement.  The continuation statement must be filed within the final six months of the effective period of the financing statement.  The continuation statement will extend the effectiveness of the financing statement for five years.  Succeeding continuation statements may be filed.

    Section 36‑9‑515 does not include a provision comparable to former Section 36‑9‑403(2) that tolled the lapse of a financing statement when a debtor entered a bankruptcy or insolvency proceeding.

 

    Definitional Cross References

    “Agricultural lien”                        Section 36‑9‑102(a)(5)

    “Collateral”                                  Section 36‑9‑102(a)(12)

    “Continuation statement”               Section 36‑9‑102(a)(27)

    “Financing statement”                   Section 36‑9‑102(a)(39)

    “Fixture filing”                              Section 36‑9‑102(a)(40)

    “Manufactured‑home transaction”        Sections 36‑9‑102(a)(54)

    “Mortgage”                                  Section 36‑9‑102(a)(55)

    “Public‑finance transaction”             Section 36‑9‑102(a)(67)

    “Purchaser”                                     Section 36‑1‑201(33)

    “Termination statement”               Section 36‑9‑102(a)(79)

    “Transmitting utility”                     Section 36‑9‑102(a)(80)

    “Value”                                       Section 36‑1‑201(44)

 

    Cross References

    1. A continuation statement not filed within the six‑month period proscribed by Section 36‑9‑515(d) is ineffective. Section 36‑9‑510(c).

    2. A “manufactured home” as defined in Section 36‑9‑102(a)(53) would qualify as either a “house trailer” under Section 56‑19‑10(10), S.C. Code Ann. (Supp. 1999) or as a “mobile home” under Section 56‑19‑10(30), S.C. Code Ann. (Supp. 1999).  In either case, a security interest would be perfected under the Certificate of Title Statute.  See Section 56‑19‑620, S.C. Code Ann. (1976).  As a result, under Section 36‑9‑311(c) the Certificate of Title Statute rather than Section 36‑9‑515(b) would control the duration of the perfection of a security interest in a manufactured home.  The Certificate of Title Statute does not limit the duration of a perfected security interest.

 

    Section 36‑9‑516. What constitutes filing; effectiveness of filing.

    (a)   Except as otherwise provided in subsection (b), communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing.

    (b)   Filing does not occur with respect to a record that a filing office refuses to accept because:

       (1)   the record is not communicated by a method or medium of communication authorized by the filing office;

       (2)   an amount equal to or greater than the applicable filing fee is not tendered;

       (3)   the filing office is unable to index the record because:

           (A)  in the case of an initial financing statement, the record does not provide a name for the debtor;

           (B)  in the case of an amendment or correction statement, the record:

               (  i)    does not identify the initial financing statement as required by Section 36‑9‑512 or 36‑9‑518, as applicable; or

               ( ii)    identifies an initial financing statement whose effectiveness has lapsed under Section 36‑9‑515;

           (C)  in the case of an initial financing statement that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual which was not previously provided in the financing statement to which the record relates, the record does not identify the debtor’s last name; or

           (D)  in the case of a record filed or recorded in the filing office described in Section 36‑9‑501(a)(1), the record does not provide a sufficient description of the real property to which it relates;

       (4)   in the case of an initial financing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record;

       (5)   in the case of an initial financing statement or an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not:

           (A)    provide a mailing address for the debtor;

           (B)    indicate whether the debtor is an individual or an organization; or

           (C)  if the financing statement indicates that the debtor is an organization, provide:

               (  i)  a type of organization for the debtor;

               ( ii)  a jurisdiction of organization for the debtor; or

               (iii)    an organizational identification number for the debtor or indicate that the debtor has none;

       (6)   in the case of an assignment reflected in an initial financing statement under Section 36‑9‑514(a) or an amendment filed under Section 36‑9‑514(b), the record does not provide a name and mailing address for the assignee; or

       (7)   in the case of a continuation statement, the record is not filed within the six‑month period prescribed by Section 36‑9‑515(d).

    (c)   For purposes of subsection (b):

       (1)   a record does not provide information if the filing office is unable to read or decipher the information; and

       (2)   a record that does not indicate that it is an amendment or identify an initial financing statement to which it relates, as required by Section 36‑9‑512, 36‑9‑514, or 36‑9‑518, is an initial financing statement.

    (d)   A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set forth in subsection (b), is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files.

 

    Official Comment

    1.  Source.  Subsection (a): former Section 9‑403(1); the remainder is new.

 

    2.  What Constitutes Filing.  Subsection (a) deals generically with what constitutes filing of a record, including an initial financing statement and amendments of all kinds (e.g., assignments, termination statements, and continuation statements).  It follows former Section 9‑403(1), under which either acceptance of a record by the filing office or presentation of the record and tender of the filing fee constitutes filing.

 

    3.  Effectiveness of Rejected Record.  Subsection (b) provides an exclusive list of grounds upon which the filing office may reject a record.  See Section 9‑520(a).  Although some of these grounds would also be grounds for rendering a filed record ineffective (e.g., an initial financing statement does not provide a name for the debtor), many others would not be (e.g., an initial financing statement does not provide a mailing address for the debtor or secured party of record).  Neither this Section nor Section 9‑520 requires or authorizes the filing office to determine, or even consider, the accuracy of information provided in a record.  For example, the State A filing office may not reject under subsection (b)(5)(C) an initial financing statement indicating that the debtor is a State A corporation and providing a three‑digit organizational identification number, even if all State A organizational identification numbers contain at least five digits and two letters.

 

    A financing statement or other record that is communicated to the filing office but which the filing office refuses to accept provides no public notice, regardless of the reason for the rejection.  However, this Section distinguishes between records that the filing office rightfully rejects and those that it wrongfully rejects.  A filer is able to prevent a rightful rejection by complying with the requirements of subsection (b).  No purpose is served by giving effect to records that justifiably never find their way into the system, and subsection (b) so provides.

 

    Subsection (d) deals with the filing office’s unjustified refusal to accept a record.  Here, the filer is in no position to prevent the rejection and as a general matter should not be prejudiced by it.  Although wrongfully rejected records generally are effective, subsection (d) contains a special rule to protect a third‑party purchaser of the collateral (e.g., a buyer or competing secured party) who gives value in reliance upon the apparent absence of the record from the files.  As against a person who searches the public record and reasonably relies on what the public record shows, subsection (d) imposes upon the filer the risk that a record failed to make its way into the filing system because of the filing office’s wrongful rejection of it.  (Compare Section 9‑517, under which a mis‑indexed financing statement is fully effective.)  This risk is likely to be small, particularly when a record is presented electronically, and the filer can guard against this risk by conducting a post‑filing search of the records.  Moreover, Section 9‑520(b) requires the filing office to give prompt notice of its refusal to accept a record for filing.

 

    4.  Method or Medium of Communication.  Rejection pursuant to subsection (b)(1) for failure to communicate a record properly should be understood to mean noncompliance with procedures relating to security, authentication, or other communication‑related requirements that the filing office may impose.  Subsection (b)(1) does not authorize a filing office to impose additional substantive requirements.  See Section 9‑520, Comment 2.

 

    5.  Address for Secured Party of Record.  Under subsection (b)(4) and Section 9‑520(a), the lack of a mailing address for the secured party of record requires the filing office to reject an initial financing statement.  The failure to include an address for the secured party of record no longer renders a financing statement ineffective.  See Section 9‑502(a).  The function of the address is not to identify the secured party of record but rather to provide an address to which others can send required notifications, e.g., of a purchase‑money security interest in inventory or of the disposition of collateral.  Inasmuch as the address shown on a filed financing statement is an “address that is reasonable under the circumstances,” a person required to send a notification to the secured party may satisfy the requirement by sending a notification to that address, even if the address is or becomes incorrect.  See Section 9‑102 (definition of “send”).  Similarly, because the address is “held out by [the secured party] as the place for receipt of such communications [i.e., communications relating to security interests],” the secured party is deemed to have received a notification delivered to that address.  See Section 1‑201(26).

 

    6.  Uncertainty Concerning Individual Debtor’s Last Name.  Subsection (b)(3)(C) requires the filing office to reject an initial financing statement or amendment adding an individual debtor if the office cannot index the record because it does not identify the debtor’s last name (e.g., it is unclear whether the debtor’s name is Elton John or John Elton).

 

    7.  Inability of Filing Office to Read or Decipher Information.  Under subsection (c)(1), if the filing office cannot read or decipher information, the information is not provided by a record for purposes of subsection (b).

 

    8.  Classification of Records.  For purposes of subsection (b), a record that does not indicate it is an amendment or identify an initial financing statement to which it relates is deemed to be an initial financing statement.  See subsection (c)(2).

 

    9.  Effectiveness of Rejectable But Unrejected Record.  Section 9‑520(a) requires the filing office to refuse to accept an initial financing statement for a reason set forth in subsection (b).  However, if the filing office accepts such a financing statement nevertheless, the financing statement generally is effective if it complies with the requirements of Section 9‑502(a) and (b).  See Section 9‑520(c).  Similarly, an otherwise effective financing statement generally remains so even though the information in the financing statement becomes incorrect.  See Section 9‑507(b).  (Note that if the information required by subsection (b)(5) is incorrect when the financing statement is filed, Section 9‑338 applies.)

 

    Section 36‑9‑516

    South Carolina Reporters Comment

    Section 36‑9‑516(b) sets forth the requirements an initial financing statement or other record must meet in order to be accepted for filing.  Section 36‑9‑520(a) provides that a filing office must refuse to accept for filing a record that fails to meet those requirements.  Section 36‑9‑520(a) further provides that the filing office can refuse to accept a record for filing only for the reasons listed in Section 36‑9‑516(b).

    The requirements of Section 36‑9‑516(b) are more demanding than the requirements for a sufficient financing statement under Section 36‑9‑502(a).  If a filing office accepts and files a financing statement which is sufficient under Section 36‑9‑502(a) but fails to meet the requirements of Section 36‑9‑516(b), Section 36‑9‑520(c) provides that the filing is effective.

    Section 36‑9‑516(d) applies when a filing office wrongfully refuses to accept a sufficient financing statement or other record for filing for a reason other than one listed in subsection (b).  Under subsection (d) the financing statement or other record is effective as a filed record except against a purchaser which gave value in reasonable reliance upon the absence of a filed record.

 

    Definitional Cross References

    “Collateral”                             Section 36‑9‑102(a)(12)

    “Continuation statement”          Section 36‑9‑102(a)(27)

    “Debtor”                                 Section 36‑9‑102(a)(28)

    “Filing office”                            Section 36‑9‑102(a)(37)

    “Financing statement”            Section 36‑9‑102(a)(39)

    “Jurisdiction of organization”    Section 36‑9‑102(a)(50)

    “Organization”                        Section 36‑1‑201(28)

    “Purchaser”                              Section 36‑1‑201(33)

    “Record”                                Section 36‑9‑102(a)(69)

    “Secured party of record”           Section 36‑9‑511

    “Value”                                  Section 36‑9‑201(44)

 

    Cross References

    1.    Requirements for a sufficient financing statement. Section 36‑9‑502(a) and (b).

    2. A filing office is required to refuse to file a record that fails to meet the requirements of Section 36‑9‑516(b). Section 36‑9‑520(a).

    3. A filing office is required to accept for filing a sufficient record which meets the requirements of Section 36‑9‑516(b). Section 36‑9‑520(a).

    4. Limitations on priority afforded to a security interest perfected by a financing statement which failed to meet the requirements of Section 36‑9‑516(b) but was accepted for filing. Sections 36‑9‑520(c) and 36‑9‑338.

 

    Section 36‑9‑517. Effect of indexing errors.

    The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.

 

    Official Comment

    1.  Source.  New.

 

    2.  Effectiveness of Mis‑Indexed Records.  This Section provides that the filing office’s error in mis‑indexing a record does not render ineffective an otherwise effective record.  As did former Section 9‑401, this Section imposes the risk of filing‑office error on those who search the files rather than on those who file.

 

    Section 36‑9‑517

    South Carolina Reporters Comment

    Section 36‑9‑517 places the risk of indexing error by the filing office upon the person searching the files.

 

    Definitional Cross References

    “Filing office”                               Section 36‑9‑102(a)(37)

    “Record”                                  Section 36‑9‑102(a)(69)

 

    Cross References

    Obligation of filing office to index filed records. Section 36‑9‑519(a)(4), (c), (d), and (e).

 

    Section 36‑9‑518. Claim concerning inaccurate or wrongfully filed record.

    (a)   A person may file in the filing office a correction statement with respect to a record indexed there under the person’s name if the person believes that the record is inaccurate or was wrongfully filed.

    (b)   A correction statement must:

       (1)    identify the record to which it relates by:

           (A)  the file number assigned to the initial financing statement to which the record relates; and

           (B)  if the correction statement relates to a record filed or recorded in a filing office described in Section 36‑9‑501(a)(1), the date and time that the initial financing statement was filed or recorded and the information specified in Section 36‑9‑502(b);

       (2)    indicate that it is a correction statement; and

       (3)    provide the basis for the person’s belief that the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure any inaccuracy or provide the basis for the person’s belief that the record was wrongfully filed.

    (c)   The filing of a correction statement does not affect the effectiveness of an initial financing statement or other filed record.

 

    Official Comment

    1.  Source.  New.

 

    2.  Correction Statements.  Former Article 9 did not afford a nonjudicial means for a debtor to correct a financing statement or other record that was inaccurate or wrongfully filed.  Subsection (a) affords the debtor the right to file a correction statement.  Among other requirements, the correction statement must provide the basis for the debtor’s belief that the public record should be corrected.  See subsection (b).  These provisions, which resemble the analogous remedy in the Fair Credit Reporting Act, 15 U.S.C. ‘ 1681i, afford an aggrieved person the opportunity to state its position on the public record.  They do not permit an aggrieved person to change the legal effect of the public record.  Thus, although a filed correction statement becomes part of the “financing statement,” as defined in Section 9‑102, the filing does not affect the effectiveness of the initial financing statement or any other filed record.  See subsection (c).

 

    This Section does not displace other provisions of this Article that impose liability for making unauthorized filings or failing to file or send a termination statement (see Section 9‑625(e)), nor does it displace any available judicial remedies.

 

    3.  Resort to Other Law.  This Article cannot provide a satisfactory or complete solution to problems caused by misuse of the public records.  The problem of “bogus” filings is not limited to the UCC filing system but extends to the real‑property records, as well.  A summary judicial procedure for correcting the public record and criminal penalties for those who misuse the filing and recording systems are likely to be more effective and put less strain on the filing system than provisions authorizing or requiring action by filing and recording offices.

 

    Section 36‑9‑518

    South Carolina Reporters Comment

    Under Section 36‑9‑518 a person who believes that a record indexed under the person’s name is inaccurate or was wrongfully filed can file a correction statement.  A correction statement sets forth the basis for the person’s belief that the filed record is inaccurate or improperly filed.  The filing of a correction statement does not affect the effectiveness of an initial financing statement or other filed record.

 

    Definitional Cross References

    “Correction statement”               Section 36‑9‑518(b)

    “File number”                               Section 36‑9‑102(a)(36)

    “Filing office”                               Section 36‑9‑102(a)(37)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Person”                                   Section 36‑1‑201(30)

    “Record”                                  Section 36‑9‑102(a)(69)

 

    Cross References

    Grounds on which filing office is required to refuse to accept a record for filing. Section 36‑9‑516(b).

    Debtor’s right to recover damages for an unauthorized filing or the refusal to send or file a termination statement. Section 36‑9‑625(b), (c)(3), and (4).

 

Subpart 2.

 

Duties and Operation of Filing Office

 

    Section 36‑9‑519.    Numbering, maintaining, and indexing records; communicating information provided in records.

    (a)   For each record filed in a filing office, the filing office shall:

       (1)   assign a unique number to the filed record;

       (2)   create a record that bears the number assigned to the filed record and the date and time of filing;

       (3)    maintain the filed record for public inspection; and

       (4)   index the filed record in accordance with subsections (c), (d), and (e).

    (b)   A file number assigned after January 1, 2002, must include a digit that:

       (1)   is mathematically derived from or related to the other digits of the file number; and

       (2)   aids the filing office in determining whether a number communicated as the file number includes a single‑digit or transpositional error.

    (c)   Except as otherwise provided in subsections (d) and (e), the filing office shall:

       (1)   index an initial financing statement according to the name of the debtor and index all filed records relating to the initial financing statement in a manner that associates with one another an initial financing statement and all filed records relating to the initial financing statement; and

       (2)   index a record that provides a name of a debtor which was not previously provided in the financing statement to which the record relates also according to the name that was not previously provided.

    (d)   If a financing statement is filed as a fixture filing or covers as‑extracted collateral or timber to be cut, it must be filed for record and the filing office shall index it:

       (1)   under the names of the debtor and of each owner of record shown on the financing statement as if they were the mortgagors under a mortgage of the real property described; and

       (2)   to the extent that the law of this State provides for indexing of records of mortgages under the name of the mortgagee, under the name of the secured party as if the secured party were the mortgagee thereunder, or, if indexing is by description, as if the financing statement were a record of a mortgage of the real property described.

    (e)   If a financing statement is filed as a fixture filing or covers as‑extracted collateral or timber to be cut, the filing office shall index an assignment filed under Section 36‑9‑514(a) or an amendment filed under Section 36‑9‑514(b):

       (1)   under the name of the assignor as grantor; and

       (2)   to the extent that the law of this State provides for indexing a record of the assignment of a mortgage under the name of the assignee.

    (f)    The filing office shall maintain a capability:

       (1)   to retrieve a record by the name of the debtor and:

           (A)  if the filing office is described in Section 36‑9‑501(a)(1), by the file number assigned to the initial financing statement to which the record relates and the date and time that the record was filed or recorded; or

           (B)  if the filing office is described in Section 36‑9‑501(a)(2), by the file number assigned to the initial financing statement to which the record relates; and

       (2)   to associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement.

    (g)   The filing office may not remove a debtor’s name from the index until one year after the effectiveness of a financing statement naming the debtor lapses under Section 36‑9‑515 with respect to all secured parties of record.

    (h)   The filing office shall perform the acts required by subsections (a) through (e) at the time and in the manner prescribed by filing‑office rule, but not later than two business days after the filing office receives the record in question.

    (i)     Subsections (b) and (h) do not apply to a filing office described in Section 36‑9‑501(a)(1).

 

    Official Comment

    1.  Source. Former Sections 9‑403(4), (7), 9‑405(2).

 

    2.  Filing Office’s Duties.  Subsections (a) through (e) set forth the duties of the filing office with respect to filed records.  Subsection (h), which is new, imposes a minimum standard of performance for those duties.  Prompt indexing is crucial to the effectiveness of any filing system.  An accepted but un‑indexed record affords no public notice.  Subsection (f) requires the filing office to maintain appropriate storage and retrieval facilities, and subsection (g) contains minimum requirements for the retention of records.

 

    3.  File Number.  Subsection (a)(1) requires the filing office to assign a unique number to each filed record.  That number is the “file number” only if the record is an initial financing statement.  See Section 9‑102.

 

    4.  Time of Filing.  Subsection (a)(2) and Section 9‑523 refer to the “date and time” of filing.  The statutory text does not contain any instructions to a filing office as to how the time of filing is to be determined.  The method of determining or assigning a time of filing is an appropriate matter for filing‑office rules to address.

 

    5.  Related Records.  Subsections (c) and (f) are designed to ensure that an initial financing statement and all filed records relating to it are associated with one another, indexed under the name of the debtor, and retrieved together.  To comply with subsection (f), a filing office (other than a real‑property recording office in a State that enacts subsection (f), Alternative B) must be capable of retrieving records in each of two ways:  by the name of the debtor and by the file number of the initial financing statement to which the record relates.

 

    6.  Prohibition on Deleting Names from Index.  This Article contemplates that the filing office will not delete the name of a debtor from the index until at least one year passes after the effectiveness of the financing statement lapses as to all secured parties of record.  See subsection (g).  This rule applies even if the filing office accepts an amendment purporting to delete or modify the name of a debtor or terminate the effectiveness of the financing statement.  If an amendment provides a modified name for a debtor, the amended name should be added to the index, see subsection (c)(2), but the pre‑amendment name should remain in the index.

 

    Compared to former Article 9, the rule in subsection (g) increases the amount of information available to those who search the public records.  The rule also contemplates that searchers–not the filing office–will determine the significance and effectiveness of filed records.

 

    Section 36‑9‑519

    South Carolina Reporters Comment

    Section 36‑9‑519 defines the duties of a filing office with respect to each record filed in the filing office.  Subsection (a) sets forth the basic duties to assign a unique number to each filed record, to create a record that provides the time of filing for each numbered record, to maintain the filed record for public inspection, and to index the filed record.  Subsections (c) ‑ (e) set forth the requirements for indexing.  Subsection (f) sets forth the required retrieval capacity of the filing office.

    Subsection (h) requires the Secretary of State’s office to number, index, and make a filed record available for public inspection not later than two business days after the office receives the record.  A delay in performing these duties, however, may be excused under Section 36‑9‑524.  Under subsection (i) the two business day requirement does not apply to a real property related filing filed locally in a Register of Deeds office.

    Subsection (g) precludes the filing office from removing a debtor’s name from the index until one year after the effectiveness of a financing statement filed against the debtor has lapsed.

 

    Definitional Cross References

    “As‑extracted collateral”             Section 36‑9‑102(a)(6)

    “Debtor”                                   Section 36‑9‑102(a)(28)

    “File number”                               Section 36‑9‑102(a)(36)

    “Filing office”                               Section 36‑9‑102(a)(37)

    “Filing office rule”                        Section 36‑9‑102(a)(38)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Fixture filing”                          Section 36‑9‑102(a)(40)

    “Mortgage”                               Section 36‑9‑102(a)(55)

    “Record”                                  Section 36‑9‑102(a)(69)

 

    Cross References

    1. Name of the debtor. Section 36‑9‑503.

    2. Duration of effectiveness of a filed financing statement. Section 36‑9‑515.

    3. Grounds for excusing a delay by a filing office. Section 36‑9‑524.

    4. The Secretary of State is required to adopt filing‑office rules to implement Article 9. Section 36‑9‑526.

 

    Section 36‑9‑520.    Acceptance and refusal to accept record.

    (a)   A filing office shall refuse to accept a record for filing for a reason set forth in Section 36‑9‑516(b) and may refuse to accept a record for filing only for a reason set forth in Section 36‑9‑516(b).

    (b)   If a filing office refuses to accept a record for filing, it shall communicate to the person that presented the record the fact of and reason for the refusal and the date and time the record would have been filed had the filing office accepted it.  The communication must be made at the time and in the manner prescribed by filing‑office rule but, in the case of a filing office described in Section 36‑9‑501(a)(2), in no event more than two business days after the filing office receives the record.

    (c)   A filed financing statement satisfying Section 36‑9‑502(a) and (b) is effective, even if the filing office is required to refuse to accept it for filing under subsection (a).  However, Section 36‑9‑338 applies to a filed financing statement providing information described in Section 36‑9‑516(b)(5) which is incorrect at the time the financing statement is filed.

    (d)   If a record communicated to a filing office provides information that relates to more than one debtor, this part applies as to each debtor separately.

 

    Official Comment

    1.  Source.  New.

 

    2.  Refusal to Accept Record for Filing.  In some States, filing offices considered themselves obligated by former Article 9 to review the form and content of a financing statement and to refuse to accept those that they determine are legally insufficient.  Some filing offices imposed requirements for or conditions to filing that do not appear in the statute.  Under this Section, the filing office is not expected to make legal judgments and is not permitted to impose additional conditions or requirements.

 

    Subsection (a) both prescribes and limits the bases upon which the filing office must and may reject records by reference to the reasons set forth in Section 9‑516(b).  For the most part, the bases for rejection are limited to those that prevent the filing office from dealing with a record that it receives–because some of the requisite information (e.g., the debtor’s name) is missing or cannot be deciphered, because the record is not communicated by a method (e.g., it is MIME‑ rather than UU‑encoded) or medium (e.g., it is written rather than electronic) that the filing office accepts, or because the filer fails to tender an amount equal to or greater than the filing fee.

 

    3.  Consequences of Accepting Rejectable Record.  Section 9‑516(b) includes among the reasons for rejecting an initial financing statement the failure to give certain information that is not required as a condition of effectiveness.  In conjunction with Section 9‑516(b)(5), this Section requires the filing office to refuse to accept a financing statement that is legally sufficient to perfect a security interest under Section 9‑502 but does not contain a mailing address for the debtor, does not disclose whether the debtor is an individual or an organization (e.g., a partnership or corporation) or, if the debtor is an organization, does not give certain specified information concerning the organization.  The information required by Section 9‑516(b)(5) assists searchers in weeding out “false positives,” i.e., records that a search reveals but which do not pertain to the debtor in question.  It assists filers by helping to ensure that the debtor’s name is correct and that the financing statement is filed in the proper jurisdiction.

 

    If the filing office accepts a financing statement that does not give this information at all, the filing is fully effective.  Section 9‑520(c).  The financing statement also generally is effective if the information is given but is incorrect; however, Section 9‑338 affords protection to buyers and holders of perfected security interests who gives value in reasonable reliance upon the incorrect information.

 

    4.  Filing Office’s Duties with Respect to Rejected Record.  Subsection (b) requires the filing office to communicate the fact of rejection and the reason therefore within a fixed period of time.  Inasmuch as a rightfully rejected record is ineffective and a wrongfully rejected record is not fully effective, prompt communication concerning any rejection is important.

 

    5.  Partial Effectiveness of Record.  Under subsection (d), the provisions of this Part apply to each debtor separately.  Thus, a filing office may reject an initial financing statement or other record as to one named debtor but accept it as to the other.

 

    Example:  An initial financing statement is communicated to the filing office.  The financing statement names two debtors, John Smith and Jane Smith.  It contains all of the information described in Section 9‑516(b)(5) with respect to John but lacks some of the information with respect to Jane.  The filing office must accept the financing statement with respect to John, reject it with respect to Jane, and notify the filer of the rejection.

 

    Section 36‑9‑520

    South Carolina Reporters Comment

    Subsection (a) requires a filing office to refuse to accept for filing any record that does not meet the requirements of Section 36‑9‑516(b).  Subsection (a) further establishes that a failure to meet the requirements of Section 36‑9‑516 (b) is the only basis on which a filing office may properly refuse to accept a record for filing.

    If a filing office refuses to accept a record for filing, subsection (b) requires the filing office to communicate the fact of and the reason for its refusal to the person who presented the record.  The communication must also note the date and time the record would have been filed if it had been accepted.  Filing office rules to be adopted by the Secretary of State will define the time and manner of the communication.  Nevertheless, subsection (b) requires the Secretary of State’s Office to make the communication within two business days after it receives the record.  A delay in communicating, however, may be excused under Section 36‑9‑524.

    Subsection (c) provides that if a filing office accepts and files a record that is sufficient under Section 9‑502(a) and (b) but fails to meet the requirements of Section 36‑9‑516(b), the filing is effective.  Section 36‑9‑338, however, may limit the priority of a security interest perfected in this manner.

 

    Definitional Cross References

    “Communicate”                           Section 36‑9‑102(a)(18)

    “Debtor”                                   Section 36‑9‑102(a)(28)

    “Filing office”                               Section 36‑9‑102(a)(37)

    “Filing office rule”                        Section 36‑9‑102(a)(38)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Person”                                   Section 36‑9‑201(30)

    “Record”                                  Section 36‑9‑102(a)(69)

 

    Cross References

    1.    Requirements for a sufficient financing statement. Section 36‑9‑502(a) and (b).

    2. Grounds on which a filing office is required to refuse to accept a record for filing. Section 36‑9‑516(b).

    3. Adoption of filing‑office rules. Section 36‑9‑526.

    4. Excuse of delay by filing office in communicating fact of and basis for refusing to accept a record for filing. Section 36‑9‑524.

    5. Effect of a record that a filing office improperly refuses to accept for filing. Section 36‑9‑516(d).

    6. Limitation upon priority of a security interest perfected by a filing that contains incorrect information required under Section 36‑9‑516(b)(5). Section 36‑9‑338.

 

    Section 36‑9‑521.    Uniform form of written financing statement and amendment.

       (a) A filing office that accepts written records may not refuse to accept a written initial financing statement in the following form and format except for a reason set forth in Section 36‑9‑516(b):


 

UCC FINANCING STATEMENT

Follow instructions (front and back) CAREFULLY

 

A.   NAME & PHONE OF CONTACT AT FILER (optional)

B.    SEND ACKNOWLEDGEMENT TO: (name and address)

 

 

 

 

 

 

 

 

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

 

1.  DEBTOR’S EXACT FULL LEGAL NAME:  insert only one debtor’s name 1(a) or 1(b) ‑ do not abbreviate or combine names.

 

1a ORGANIZATION’S NAME

 

OR

 

 

 

 

1b. INDIVIDUAL’S LAST NAME

 

 

FIRST NAME

MIDDLE NAME

SUFFIX

 

1c.  MAILING ADDRESS

 

 

CITY

STATE   POSTAL CODE

COUNTY

 

1d.  TAX ID#: SSN OR EIN

 

 

Additional Info Re Organization Debtor

 

 

1e.  TYPE OF

ORGANIZATION

1f. JURISDICTION OF ORGANIZATION

1g.  ORGANIZATIONAL ID

 if any

 

 

                              NONE

 

 


 

2.  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME: insert only one debtor’s name 2 (a) or 2(b) ‑ do not abbreviate or combine names

 

2a ORGANIZATION’S NAME

 

OR

 

 

 

 

2b. INDIVIDUAL’S LAST NAME

 

 

FIRST NAME

MIDDLE NAME

SUFFIX

 

2c.  MAILING ADDRESS

 

 

CITY

STATE   POSTAL CODE

COUNTY

 

2d.  TAX ID#: SSN OR EIN

 

 

Additional Info Re Organization Debtor

 

 

2e.  TYPE OF

ORGANIZATION

2f. JURISDICTION OF ORGANIZATION

2g. ORGANIZATIONAL ID, if any

 

 

                              NONE

 

 

3.  SECURED PARTY’S NAME (or NAME of TOTAL ASSIGNEE or ASSIGNOR S/P) ‑ insert only one secured party name 3(a) or 3(b)

 

2a ORGANIZATION’S NAME

 

OR

 

 

 

 

2b. INDIVIDUAL’S LAST NAME

 

 

FIRST NAME

MIDDLE NAME

SUFFIX

 

2c.  MAILING ADDRESS

 

 

CITY

STATE   POSTAL CODE

COUNTY

 

 

 

4.  This FINANCING STATEMENT covers the following collateral:

 

 

5.  ALTERNATIVE DESIGNATION (if applicable)          LESSEE/LESSOR     CONSIGNEE/CONSIGNOR       BAILEE/BAILOR       SELLOR/BUYER       AG. LIEN    NON‑UCC FILING

 

6.  This FINANCING STATEMENT IS TO BE FILED  (for record) (or recorded) in the REAL ESTATE RECORDS.  Attach Addendum (if applicable)

 

7..  Check to request SEARCH REPORT(S)  on Debtors  ADDITIONAL FEE        Optional               All Debtors         Debtor 1

 Debtor 2

8.  OPTIONAL FILER REFERENCE DATA

 

 

 

 

9.  NAME OF FIRST DEBTOR (1(a) or 1(b) ON RELATED FINANCING STATEMENT

 

9a.  ORGANIZATION’S NAME

 

OR

 

 

9b.  INDIVIDUAL’S LAST NAME

FIRST NAME

 

 

MIDDLE NAME, SUFFIX

10.  MISCELLANEOUS

 

 

 

 

 

 

 

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

 

 

11.  ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME:    Insert only one name: 11(a) or 11(b)  do not abbreviate or combine names

 

11a ORGANIZATION’S NAME

 

OR

 

 

 

 

11b. INDIVIDUAL’S LAST NAME

 

 

FIRST NAME

MIDDLE NAME

SUFFIX

 

11c.  MAILING ADDRESS

 

 

CITY

STATE   POSTAL CODE

COUNTY

 

11d.  TAX ID#: SSN OR EIN

 

 

Additional Info Re Organization Debtor

 

 

11e.  TYPE OF

ORGANIZATION

11f. JURISDICTION OF ORGANIZATION

11g. ORGANIZATIONAL ID, if any

 

 

                              NONE

 


 

 

12a ORGANIZATION’S NAME

 

OR

 

 

 

 

12b. INDIVIDUAL’S LAST NAME

 

 

FIRST NAME

MIDDLE NAME

SUFFIX

 

12c.  MAILING ADDRESS

 

 

CITY

STATE   POSTAL CODE

COUNTY

 

 

 

13.  This FINANCING STATEMENT covers & timber to be cut or  & as extracted collateral, or is filed as a & fixture filing

 

14.  Description of real estate

 

 

 

 

15.  Name and address of a RECORD OWNER of above‑described real estate ((if Debtor does not have a record interest):

 

16.  Additional collateral description

 

17.  Check only if applicable and check only one box.

Debtor is a & Trust or & Trustee acting with respect to property held in a trust of & Decendent’s Estate

 

18.  Check only if applicable and check only one box

 

&  Debtor is a TRANSMITTING UTILITY

&  Filed in connection with a Manufactured Home

Transaction ‑ effective 30 years

&  Filed in connection with a Public Finance Transaction ‑ effective 30 years

 


 

       (b) A filing office that accepts written records may not refuse to accept a written record in the following form and format except for a reason set forth in Section 36‑9‑516(b):

 

 

A.   NAME & PHONE OF CONTACT AT FILER (optional)

B.    SEND ACKNOWLEDGEMENT TO: (name and address)

 

 

 

 

 

 

 

 

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

 

 

1a  INITIAL FINANCING STATEMENT FILE #

 

1b.  This FINANCING STATEMENT AMENDMENT is to be filed (for record) (or recorded) in the

& REAL ESTATE RECORDS.

2.  &  TERMINATION:  Effectiveness of the Financing Statement identified above is terminated with respect to security of the Secured Party authorizing the Termination Statement.

3.  &  CONTINUATION:  Effectiveness of the Financing Statement identified above with respect to security interest(s) of the Secured Party authorizing this Continuation Statement is continued for the additional period provided by applicable law.

4.  &  ASSIGNMENT (full or partial):  Give names of assignee in Item 7a or 7B and address of assignee in Item 7c, and also give name of assignor in Item 9.

5.  AMENDMENT (PARTY INFORMATION):  This Amendment affects & Debtor or & Secured Party or record.  Check only one of these two boxes.

       Also check one of the following three boxes and provide appropriate information in Iitems 6 and/or 7.

 

       & Change name and/or address.  Give current record name in Item 6a or 6b; also give new name (if name change) in Item 7a or 7b and/or new address (if address change in Item 7c.

 

       & DELETE name.  Give record name to be deleted in Item 6a or 6b.

 

       &  ADD name:  Complete Item 7a or 7b and also Item 7c; also complete IItems 7d‑7g (if applicable)

 

 

6.  CURRENT RECORD INFORMATION

 

12a ORGANIZATION’S NAME

 

OR

 

 

 

 

12b. INDIVIDUAL’S LAST NAME

 

 

FIRST NAME

MIDDLE NAME

SUFFIX

 

 

7.  CHANGED (NEW) OR ADDED INFORMATION:

 

7a ORGANIZATION’S NAME

 

OR

 

 

 

 

7b. INDIVIDUAL’S LAST NAME

 

 

FIRST NAME

MIDDLE NAME

SUFFIX

 

7c.  MAILING ADDRESS

 

 

CITY

STATE   POSTAL CODE

COUNTY

 

7d.  TAX ID#: SSN OR EIN

 

 

Additional Info Re Organization Debtor

 

 

7e.  TYPE OF

ORGANIZATION

7f. JURISDICTION OF ORGANIZATION

7g. ORGANIZATIONAL ID, if any

 

 

 

                              NONE

 

 

8.  AMENDED (COLLATERAL CHANGE)  check only one box.

 

       Describe collateral  &  deleted or &  added or give  & restated collateral description, or describe collateral &  assigned.

 

 

 

9.  NAME OF SECURED PARTY of RECORD AUTHORIZING THIS AMENDMENT (name of assignor, if this is an Assignment).  If this is an Amendment authorized by a Debtor which adds collateral or adds the authorizing Debtor, or if this is a Termination authorized by a Debtor, check here & and enter name of DEBTOR authorizing this Amendment.

 

9a ORGANIZATION’S NAME

 

OR

 

 

 

 

9b. INDIVIDUAL’S LAST NAME

 

 

FIRST NAME

MIDDLE NAME

SUFFIX

 

 

10.  OPTIONAL FILER REFERENCE DATA

 

 

 

UCC FINANCING STATEMENT AMENDMENT ADDENDUM

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

 

11  INITIAL FINANCING STATEMENT FILE # (same as Item 1a on Amendment form)

 

12.,  NAME of PARTY AUTHORIZING THIS AMENDMENT (same as Item 9 on Amendment form)

 

12a ORGANIZATION’S NAME

 

OR

 

 

 

 

12b. INDIVIDUAL’S LAST NAME

 

 

FIRST NAME

MIDDLE NAME

SUFFIX

 

 

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

 

 

13. Use this space for additional information.

 


 

    Official Comment

    1.  Source.  New.

 

    2.  “Safe Harbor” Written Forms.  Although Section 9‑520 limits the bases upon which the filing office can refuse to accept records, this Section provides sample written forms that must be accepted in every filing office in the country, as long as the filing office’s rules permit it to accept written communications.  By completing one of the forms in this Section, a secured party can be certain that the filing office is obligated to accept it.

 

    The forms in this Section are based upon national financing statement forms that were in use under former Article 9.  Those forms were developed over an extended period and reflect the comments and suggestions of filing officers, secured parties and their counsel, and service companies.  The formatting of those forms and of the ones in this Section has been designed to reduce error by both filers and filing offices.

 

    A filing office that accepts written communications may not reject, on grounds of form or format, a filing using these forms.  Although filers are not required to use the forms, they are encouraged and can be expected to do so, inasmuch as the forms are well designed and avoid the risk of rejection on the basis of form or format.  As their use expands, the forms will rapidly become familiar to both filers and filing‑office personnel.  Filing offices may and should encourage the use of these forms by declaring them to be the “standard” (but not exclusive) forms for each jurisdiction, albeit without in any way suggesting that alternative forms are unacceptable.

 

    The multi‑purpose form in subsection (b) covers changes with respect to the debtor, the secured party, the collateral, and the status of the financing statement (termination and continuation).  A single form may be used for several different types of amendments at once (e.g., both to change a debtor’s name and continue the effectiveness of the financing statement).

 

    Section 36‑9‑521

    South Carolina Reporters Comment

    Section 36‑9‑521 sets forth forms that a filing office is required to accept provided that the office accepts written records and the forms include the information required under Section 36‑9‑516(b).

 

    Section 36‑9‑522.    Maintenance and destruction of records.

    (a)   The filing office shall maintain a record of the information provided in a filed financing statement for at least one year after the effectiveness of the financing statement has lapsed under Section 36‑9‑515 with respect to all secured parties of record.  The record must be retrievable by using the name of the debtor and:

       (1)   if the record was filed or recorded in the filing office described in Section 36‑9‑501(a)(1), by using the file number assigned to the initial financing statement to which the record relates and the date and time that the record was filed or recorded; or

       (2)   if the record was filed in the filing office described in Section 36‑9‑501(a)(2), by using the file number assigned to the initial financing statement to which the record relates.

    (b)   Except to the extent that a statute governing disposition of public records provides otherwise, the filing office immediately may destroy any written record evidencing a financing statement.  However, if the filing office destroys a written record, it shall maintain another record of the financing statement which complies with subsection (a).

 

    Official Comment

    1.  Source.  Former Section 9‑403(3), revised substantially.

 

    2.  Maintenance of Records.  Section 9‑523 requires the filing office to provide information concerning certain lapsed financing statements.  Accordingly, subsection (a) requires the filing office to maintain a record of the information in a financing statement for at least one year after lapse.  During that time, the filing office may not delete any information with respect to a filed financing statement; it may only add information.  This approach relieves the filing office from any duty to determine whether to substitute or delete information upon receipt of an amendment.  It also assures searchers that they will receive all information with respect to financing statements filed against a debtor and thereby be able themselves to determine the state of the public record.

 

    The filing office may maintain this information in any medium.  Subsection (b) permits the filing office immediately to destroy written records evidencing a financing statement, provided that the filing office maintains another record of the information contained in the financing statement as required by subsection (a).

 

    Section 36‑9‑522

    South Carolina Reporters Comment

    Subsection (a) provides that a filing office shall maintain a record of the information on a filed financing statement for at least one year after the financing has lapsed.  Subject to statutes governing the disposition of public records, subsection (b) permits a filing office to destroy written records evidencing a financing statement if the filing office maintains another record which meets the requirements of subsection (a).

 

    Definitional Cross References

    “Debtor”                                 Section 36‑9‑102(a)(28)

    “Filing office”                            Section 36‑9‑102(a)(37)

    “Financing statement”            Section 36‑9‑102(a)(39)

    “Record”                                Section 36‑9‑102(a)(69)

    “Secured party”                      Section 36‑9‑102(a)(72)

 

    Cross References

    1. Duration and effectiveness of a financing statement. Section 36‑9‑515.

    2. Prohibition upon a filing office removing a debtor’s name from an index until one year after the effectiveness of a financing statement naming the debtor has lapsed. Section 36‑9‑519(2).

    3. Provisions of South Carolina Code relating to the destruction of public records. Sections 30‑1‑30, 30‑1‑110, 30‑1‑120, 30‑1‑130, S.C. Code Ann (1976 and Supp. 1999).

 

    Section 36‑9‑523.    Information from filing office; sale or license of records.

    (a)   If a person that files a written record requests an acknowledgment of the filing, the filing office shall send to the person an image of the record showing the number assigned to the record pursuant to Section 36‑9‑519(a)(1) and the date and time of the filing of the record.  However, if the person furnishes a copy of the record to the filing office, the filing office may instead:

       (1)   note upon the copy the number assigned to the record pursuant to Section 36‑9‑519(a)(1) and the date and time of the filing of the record; and

       (2)   send the copy to the person.

    (b)   If a person files a record other than a written record, the filing office shall communicate to the person an acknowledgment that provides:

       (1)   the information in the record;

       (2)   the number assigned to the record pursuant to Section 36‑9‑519(a)(1); and

       (3)   the date and time of the filing of the record.

    (c)   The Secretary of State’s office shall communicate or otherwise make available in a record the following information to any person that requests it:

       (1)    whether there is on file on a date and time specified by the filing office, but not a date earlier than three business days before the filing office receives the request, any financing statement that:

           (A)    designates a particular debtor or, if the request so states, designates a particular debtor at the address specified in the request;

           (B)  has not lapsed under Section 36‑9‑515 with respect to all secured parties of record; and

           (C)  if the request so states, has lapsed under Section 36‑9‑515 and a record of which is maintained by the filing office under Section 36‑9‑522(a);

       (2)   the date and time of filing of each financing statement; and

       (3)   the information provided in each financing statement.

    (d)   In complying with its duty under subsection (c), the filing office may communicate information in any medium.  However, if requested, the filing office shall communicate information by issuing its written certificate or a record that can be admitted into evidence in the courts of this State without extrinsic evidence of its authenticity.

    (e)   The Secretary of State’s office described in Section 36‑9‑501(a)(2) shall perform the acts required by subsections (a) through (d) at the time and in the manner prescribed by filing‑office rule, but not later than two business days after the filing office receives the request.

    (f)    At least weekly, the filing office described in Section 36‑9‑501(a)(2) shall offer to sell or license to the public on a nonexclusive basis, in bulk, copies of all records filed in it under this part, in every medium from time to time available to the filing office.

 

    Official Comment

    1.  Source.  Former Section 9‑407; subsections (d) and (e) are new.

 

    2.  Filing Office’s Duty to Provide Information.  Former Section 9‑407, dealing with obtaining information from the filing office, was bracketed to suggest to legislatures that its enactment was optional.  Experience has shown that the method by which interested persons can obtain information concerning the public records should be uniform.  Accordingly, the analogous provisions of this Article are not in brackets.

 

    Most of the other changes from former Section 9‑407 are for clarification, to embrace medium‑neutral drafting, or to impose standards of performance on the filing office.

 

    3.  Acknowledgments of Filing.  Subsections (a) and (b) require the filing office to acknowledge the filing of a record.  Under subsection (a), the filing office is required to acknowledge the filing of a written record only upon request of the filer.  Subsection (b) requires the filing office to acknowledge the filing of a non‑written record even in the absence of a request from the filer.

 

    4.  Response to Search Request.  Subsection (c)(3) requires the filing office to provide “the information contained in each financing statement” to a person who requests it.  This requirement can be satisfied by providing copies, images, or reports.  The requirement does not in any manner inhibit the filing office from also offering to provide less than all of the information (presumably for a lower fee) to a person who asks for less.  Thus, subsection (c) accommodates the practice of providing only the type of record (e.g., initial financing statement, continuation statement), number assigned to the record, date and time of filing, and names and addresses of the debtor and secured party when a requesting person asks for no more (i.e., when the person does not ask for copies of financing statements).  In contrast, the filing office’s obligation under subsection (b) to provide an acknowledgment containing “the information contained in the record” is not defined by a customer’s request.  Thus unless the filer stipulates otherwise, to comply with subsection (b) the filing office’s acknowledgment must contain all of the information in a record.

 

    Subsection (c) assures that a minimum amount of information about filed records will be available to the public.  It does not preclude a filing office from offering additional services.

 

    5.  Lapsed and Terminated Financing Statements.  This Section reflects the policy that terminated financing statements will remain part of the filing office’s data base.  The filing office may remove from the data base only lapsed financing statements, and then only when at least a year has passed after lapse.  See Section 9‑519(g).  Subsection (c)(1)(C) requires a filing office to conduct a search and report as to lapsed financing statements that have not been removed from the data base, when requested.

 

    6.  Search by Debtor’s Address.  Subsection (c)(1)(A) contemplates that, by making a single request, a searcher will receive the results of a search of the entire public record maintained by any given filing office.  Addition of the bracketed language in subsection (c)(1)(A) would permit a search report limited to financing statements showing a particular address for the debtor, but only if the search request is so limited.  With or without the bracketed language, this subsection does not permit the filing office to compel a searcher to limit a request by address.

 

    7.  Medium of Communication; Certificates.  Former Article 9 provided that the filing office respond to a request for information by providing a certificate.  The principle of medium‑neutrality would suggest that the statute not require a written certificate.  Subsection (d) follows this principle by permitting the filing office to respond by communicating “in any medium.”  By permitting communication “in any medium,” subsection (d) is not inconsistent with a system in which persons other than filing office staff conduct searches of the filing office’s (computer) records.

 

    Some searchers find it necessary to introduce the results of their search into evidence.  Because official written certificates might be introduced into evidence more easily than official communications in another medium, subsection (d) affords States the option of requiring the filing office to issue written certificates upon request.  The alternative bracketed language in subsection (d) recognizes that some States may prefer to permit the filing office to respond in another medium, as long as the response can be admitted into evidence in the courts of that State without extrinsic evidence of its authenticity.

 

    8.  Performance Standard.  The utility of the filing system depends on the ability of searchers to get current information quickly.  Accordingly, subsection (e) requires that the filing office respond to a request for information no later than two business days after it receives the request.  The information contained in the response must be current as of a date no earlier than three business days before the filing office receives the request.  See subsection (c)(1).  The failure of the filing office to comply with performance standards, such as subsection (e), has no effect on the private rights of persons affected by the filing of records.

 

    9.  Sales of Records in Bulk.  Subsection (f), which is new, mandates that the appropriate official or the filing office sell or license the filing records to the public in bulk, on a nonexclusive basis, in every medium available to the filing office.  The details of implementation are left to filing‑office rules.

 

    Section 36‑9‑523

    South Carolina Reporters Comment

    Section 36‑9‑523 sets forth the obligations of a filing office to acknowledge filings and respond to requests for information.  Under subsection (a) a person who files a written record must request an acknowledgment.  In contrast under subsection (b), the filing office is required to acknowledge the filing of a record submitted electronically.  In either case, the acknowledgment must show the number assigned to the filing and the date and time of the filing.

    Subsection (c) addresses the obligation of the filing office to respond  to requests for information.  Under this provision a person may request information on whether there are any financing statements filed against a named debtor or a debtor at a particular address on a date and time specified by the filing office.  The date specified, however, cannot be earlier than three days before the filing office receives the request.  If requested, the filing office must provide information on financing statements that have lapsed but are still on record as well as on financing statements that are effective.  Subsection (c) does not require the filing office to provide a copy or image of filed financing statements.  Under subsections (c)(2) and (3) the filing office meets its obligation by providing the date and time each financing statement was filed and the information in each financing statement.

    Subsection (d) provides that the filing office can communicate information by any medium.  But if so requested, the filing office is required to communicate information by issuing a written certificate or a record that can be admitted into evidence without extrinsic evidence of authenticity.

    Subsection (e) requires the office of the Secretary of State to respond to requests for acknowledgments and for information in the manner and time prescribed in filing‑office rules, but not later than two business days after it receives the requests.  South Carolina has adopted an inconsistent version of subsection (e) that does not require the Registers of Deeds to Act within a specified time.

    Subsection (f) requires the Secretary of State’s office on a weekly basis to offer to sell or license in bulk copies of all records.

 

    Definitional Cross References

    “Debtor”                                   Section 36‑9‑102(a)(28)

    “Filing office”                               Section 36‑9‑102(a)(37)

    “Filing‑office rule”                        Section 36‑9‑102(a)(88)

    “Financing statement”               Section 36‑9‑102(a)(39)

    “Person”                                   Section 36‑1‑201(30)

    “Record”                                  Section 36‑9‑102(a)(69)

 

    Cross References

    1. Filing office’s obligation to number records accepted for filing. Section 36‑9‑519(a)(1).

    2. Filing office’s obligation to maintain a record of the information provided in a filed financing statement for at least one year after the financing statement lapses. Section 36‑9‑522(a).

 

    Section 36‑9‑524. Delay by filing office.

    Delay by the filing office beyond a time limit prescribed by this part is excused if:

    (1)   the delay is caused by interruption of communication or computer facilities, war, emergency conditions, failure of equipment, or other circumstances beyond control of the filing office; and

    (2)   the filing office exercises reasonable diligence under the circumstances.

 

    Official Comment

    Source.  New; derived from Section 4‑109.

 

    Section 36‑9‑524

    South Carolina Reporters Comment

    Section 36‑9‑524 excuses a failure of a filing office to act within the time limits provided in Part 5 if the delay resulted from certain causes beyond the control of the filing office and the filing office acted with reasonable diligence under the circumstances.

 

    Definitional Cross References

    “Filing office”                               Section 36‑9‑102(a)(37)

 

    Cross References

    1. Time within which a filing office must number, make available for inspection, and index a filed record. Section 36‑9‑519(h).

    2. Time within which a filing office must communicate the fact of and reason for refusing to accept a record for filing. Section 36‑9‑520(b).

    3. Time within which a filing office must acknowledge filings and respond to requests for information. Section 36‑9‑523(e).

 

    Section 36‑9‑525. Fees.

    (a)   Except as otherwise provided in subsection (e), the fee for filing and indexing a record under this part, other than an initial financing statement of the kind described in subsection (b), is the amount specified in subsection (c), if applicable, plus:

       (1)   eight dollars if the record is communicated in writing and consists of one or two pages;

       (2)   ten dollars if the record is communicated in writing and consists of more than two pages; and

       (3)   ten dollars if the record is communicated by another medium authorized by filing‑office rule.

    (b)   Except as otherwise provided in subsection (e), the fee for filing and indexing an initial financing statement of the following kind is the amount specified in subsection (c), if applicable, plus:

       (1)    twenty dollars if the financing statement indicates that it is filed in connection with a public‑finance transaction;

       (2)    twenty dollars if the financing statement indicates that it is filed in connection with a manufactured‑home transaction.

    (c)   Except as otherwise provided in subsection (e), if a record is communicated in writing, the fee for each name more than two required to be indexed is two dollars.

    (d)   The fee for responding to a request for information from the filing office, including for issuing a certificate showing whether there is on file any financing statement naming a particular debtor, is:

       (1)   five dollars if the request is communicated in writing; and

       (2)   five dollars if the request is communicated by another medium authorized by filing‑office rule.

    (e)   This section does not require a fee with respect to a record of a mortgage which is effective as a financing statement filed as a fixture filing or as a financing statement covering as‑extracted collateral or timber to be cut under Section 36‑9‑502(c).  However, the recording and satisfaction fees that otherwise would be applicable to the record of the mortgage apply.

 

    Official Comment

    1.  Source.  Various Sections of former Part 4.

 

    2.  Fees.  This Section contains all fee requirements for filing, indexing, and responding to requests for information.  Uniformity in the fee structure (but not necessarily in the amount of fees) makes this Article easier for secured parties to use and reduces the likelihood that a filed record will be rejected for failure to pay at least the correct amount of the fee.  See Section 9‑516(b)(2).

 

    The costs of processing electronic records are less than those with respect to written records.  Accordingly, this Section mandates a lower fee as an incentive to file electronically and imposes the additional charge (if any) for multiple debtors only with respect to written records.  When written records are used, this Article encourages the use of the uniform forms in Section 9‑521.  The fee for filing these forms should be no greater than the fee for other written records.

 

    To make the relevant information included in a filed record more accessible once the record is found, this Section mandates a higher fee for longer written records than for shorter ones.  Finally, recognizing that financing statements naming more than one debtor are most often filed against a husband and wife, any additional charge for multiple debtors applies to records filed with respect to more than two debtors, rather than with respect to more than one.

 

    Section 36‑9‑525

    South Carolina Reporters Comment

    Section 36‑9‑525 sets forth the fees for filing financing statements and other records and for responding to requests for information.  The second paragraph of Official Comment 2 does not accurately describe South Carolina’s fee structure.  Section 36‑9‑525(a)(3) does not impose lower fees for filings made in a medium other than writing.

 

    Definitional Cross References

    “As‑extracted collateral”                 Section 36‑9‑102(a)(6)

    “Communicate”                               Section 36‑9‑102(a)(18)

    “Debtor”                                      Section 36‑9‑102(a)(28)

    “Filing office”                                   Section 36‑9‑102(a)(37)

    “Filing‑office rule”                            Section 36‑9‑102(a)(38)

    “Financing statement”                   Section 36‑9‑102(a)(39)

    “Fixture filing”                              Section 36‑9‑102(a)(40)

    “Manufactured‑home transactions”    Section 36‑9‑102(a)(54)

    “Mortgage”                                  Section 36‑9‑102(a)(55)

    “Public‑finance transactions”               Section 36‑9‑102(a)(67)

    “Record”                                     Section 36‑9‑102(a)(69)

 

    Cross References

    Filing office is required to refuse to accept a record for filing if an amount equal to or greater than the applicable filing fee is not tendered. Section 36‑9‑516(b)(2).

 

    Section 36‑9‑526.    Filing‑office rules.

    (a)   The Secretary of State shall adopt and publish rules to implement this chapter.  The filing‑office rules must be:

       (1)    consistent with this chapter; and

       (2)    adopted and published in accordance with the Administrative Procedures Act.

    (b)   To keep the filing‑office rules and practices of the filing office in harmony with the rules and practices of filing offices in other jurisdictions that enact substantially this part, and to keep the technology used by the filing office compatible with the technology used by filing offices in other jurisdictions that enact substantially this part, the Secretary of State, so far as is consistent with the purposes, policies, and provisions of this chapter, in adopting, amending, and repealing filing‑office rules, shall:

       (1)    consult with filing offices in other jurisdictions that enact substantially this part; and

       (2)    consult the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators or any successor organization; and

       (3)   take into consideration the rules and practices of, and the technology used by, filing offices in other jurisdictions that enact substantially this part.

 

    Official Comment

    1.  Source.  New; subsection (b) derives in part from the Uniform Consumer Credit Code (1974).

 

    2.  Rules Required.  Operating a filing office is a complicated business, requiring many more rules and procedures than this Article can usefully provide.  Subsection (a) requires the adoption of rules to carry out the provisions of Article 9.  The filing‑office rules must be consistent with the provisions of the statute and adopted in accordance with local procedures.  The publication requirement informs secured parties about filing‑office practices, aids secured parties in evaluating filing‑related risks and costs, and promotes regularity of application within the filing office.

 

    3.  Importance of Uniformity.  In today’s national economy, uniformity of the policies and practices of the filing offices will reduce the costs of secured transactions substantially.  The International Association of Corporate Administrators (IACA), referred to in subsection (b), is an organization whose membership includes filing officers from every State.  These individuals are responsible for the proper functioning of the Article 9 filing system and have worked diligently to develop model filing‑office rules, with a view toward efficiency and uniformity.

 

    Although uniformity is an important desideratum, subsection (a) affords considerable flexibility in the adoption of filing‑office rules.  Each State may adopt a version of subsection (a) that reflects the desired relationship between the statewide filing office described in Section 9‑501(a)(2) and the local filing offices described in Section 9‑501(a)(1) and that takes into account the practices of its filing offices.  Subsection (a) need not designate a single official or agency to adopt rules applicable to all filing offices, and the rules applicable to the statewide filing office need not be identical to those applicable to the local filing office.  For example, subsection (a) might provide for the statewide filing office to adopt filing‑office rules, and, if not prohibited by other law, the filing office might adopt one set of rules for itself and another for local offices.  Or, subsection (a) might designate one official or agency to adopt rules for the statewide filing office and another to adopt rules for local filing offices.

 

    Section 36‑9‑526

    South Carolina Reporters Comment

    Section 36‑9‑526 requires the Secretary of State to adopt and publish filing‑office rules. 

 

    Definitional Cross References

    “Filing‑office rule”                        Section 36‑9‑102(a)(38)

 

    Cross References

    The South Carolina Filing‑Office Rules are published in 30‑9‑10, et seq. S.C. Code Ann.

 

 

 

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Columbia, SC  29211
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