RA9, Continuation, And The Need For An Initial Filing Statement

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Question:

I noted on your Roadmap that you indicated a transaction subject to RA9, with security interested perfected under old A9, perfected by filing, in the correct state, with the correct filing, should be continued prior to the normal lapse date by an initial financing statement. I was under the impression that a correctly filed security interest subject to a UCC1 filing under old A9 that meets all the requirements of RA9 should be continued by virtue of a UCC-3 continuation within the window period prior to the normal lapse date, not by an initial filing statement. Please clarify the need for an initial filing statement. Up to this point, I had understood that the initial filing statement was the means to maintain your lien position at the same time you were "correcting" or bringing into compliance with RA9 a filing not meeting the requirements of RA9, but for which you had been perfected under prior A9.

Answer:

You are correct that no new filing is necessary if the original Article 9 UCC1 filing was made in the same office that is now the correct filing office under Revised Article 9 and the language of the original UCC1 accurately describes the collateral as required by Revised Article 9. However an in lieu initial filing is necessary if the filing office has changed or an amendment is necessary if the original UCC1 collateral description is not sufficient under Revised Article 9. The purpose of an in lieu initial filing statement is to place the information contained in the original filing that was made in another filing office in the records of the "correct" filing office under Revised Article 9 and provide notice of the security interest that was properly perfected under the old provision. If the filing is already in the records of the Revised Article 9 filing office, no additional filing is necessary unless the description of the collateral is not accurate or sufficient under the provisions of Revised Article 9.

First published on BankersOnline.com 7/15/02