Citations Affected:
IC 26-1-9.1.
Synopsis: UCC financing statements. Provides that a security interest,
instead of an unperfected security interest, is subordinate to the rights
of certain other persons with priority and to certain lien creditors.
Eliminates the requirement that the debtor authenticate financing
statements and amendments to financing statements. Requires a
secured party to furnish a copy of the initial financing statement to the
debtor not later than 30 days after the filing of the initial financing
statement. Provides that the burden of establishing compliance with the
requirement to furnish a copy of the initial financing statement falls on
the secured party. Establishes remedies for the failure of a secured
party to furnish a copy of the initial financing statement to a debtor.
Allows a debtor to recover an additional $500 from a secured party that
does not furnish a copy of the initial financing statement to a debtor.
Makes certain changes to conform to uniform law. Makes technical
corrections.
Effective: July 1, 2001.
January 16, 2001, read first time and referred to Committee on Judiciary.
A BILL FOR AN ACT to amend the Indiana Code concerning
commercial law.
SECTION 1.
IC 26-1-9.1-317
, AS ADDED BY P.L.57-2000,
SECTION 45, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]: Sec. 317. (a) An unperfected A security interest or
agricultural lien is subordinate to the rights of:
(1) a person entitled to priority under
IC 26-1-9.1-322
; and
(2) except as provided in subsection (e), a person that becomes
a lien creditor before the earlier of the time:
(A) the security interest or agricultural lien is perfected; or
(B) one (1) of the conditions specified in
IC 26-1-9.1-203
(b)(3) is met;
and a financing statement covering the collateral is filed.
(b) Except as otherwise provided in subsection (e), a buyer, other
than a secured party, of tangible chattel paper, documents, goods,
instruments, or a security certificate takes free of a security interest or
agricultural lien if the buyer gives value and receives delivery of the
collateral without knowledge of the security interest or agricultural lien
and before it is perfected.
promissory note, health-care-insurance receivable, or general
intangible, including a contract, permit, license, or franchise between
an account debtor and a debtor, is ineffective to the extent that the rule
of law, statute, or regulation:
(1) would impair the creation, attachment, or perfection of a
security interest; or
(2) provides that the assignment, transfer, creation, attachment, or
perfection of the security interest may give rise to a default,
breach, right of recoupment, claim, defense, termination, right of
termination, or remedy under the promissory note,
health-care-insurance receivable, or general intangible.
(d) To the extent that a term in a promissory note or in an agreement
between an account debtor and a debtor which relates to a
health-care-insurance receivable or general intangible or a rule of law,
statute, or regulation described in subsection (c) would be effective
under law other than
IC 26-1-9.1
but is ineffective under subsection (a)
or (c), the assignment, transfer, creation, attachment, or perfection of
a security interest in the promissory note, health-care-insurance
receivable, or general intangible:
(1) is not enforceable against the person obligated on the
promissory note or the account debtor;
(2) does not impose a duty or obligation on the person obligated
on the promissory note or the account debtor;
(3) does not require the person obligated on the promissory note
or the account debtor to recognize the security interest, pay or
render performance to the secured party, or accept payment or
performance from the secured party;
(4) does not entitle the secured party to use or assign the debtor's
rights under the promissory note, health-care-insurance
receivable, or general intangible, including any related
information or materials furnished to the debtor in the transaction
giving rise to the promissory note, health-care-insurance
receivable, or general intangible;
(5) does not entitle the secured party to use, assign, possess, or
have access to any trade secrets or confidential information of the
person obligated on the promissory note or the account debtor;
and
(6) does not entitle the secured party to enforce the security
interest in the promissory note, health-care-insurance receivable,
or general intangible.
(e) This section prevails over any inconsistent provision in statute,
administrative rule, or regulation.
described in
IC 26-1-9.1-706.
Not later than thirty (30) days after
the date the initial financing statement is filed, the secured party
that files the initial financing statement shall furnish a copy of the
initial financing statement to the debtor. The secured party has the
burden of establishing compliance with this subsection. The failure
of the secured party to comply with this subsection does not affect
the sufficiency of the initial financing statement. A person who fails
to comply with this subsection is subject to
IC 26-1-9.1-625.
SECTION 4.
IC 26-1-9.1-506
, AS ADDED BY P.L.57-2000,
SECTION 45, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]: Sec. 506. (a) A financing statement substantially
satisfying the requirements of
IC 26-1-9.1-501
through
IC 26-1-9.1-527
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 to be authenticated by the debtor or fails sufficiently
to provide the name of the debtor in accordance with
IC 26-1-9.1-503
(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 to sufficiently provide
the name of the debtor in accordance with
IC 26-1-9.1-503
(a), the
name provided does not make the financing statement seriously
misleading.
(d) For purposes of
IC 26-1-9.1-508
(b), the "debtor's correct name"
in subsection (c) means the correct name of the new debtor.
SECTION 5.
IC 26-1-9.1-509
, AS ADDED BY P.L.57-2000,
SECTION 45, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]: Sec. 509. (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) either:
(A) the debtor authorizes the filing in an authenticated record
or under subsection (b) or (c); or
(B) (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. and
(2) the initial financing statement, amendment that adds collateral
covered by a financing statement, or amendment that adds a
debtor to a financing statement, is authenticated by the debtors
covered by the financing statement.
(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
IC 26-1-9.1-315
(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
IC 26-1-9.1-315
(a)(1), a debtor authorizes the
filing of an initial financing statement, and an amendment, covering the
collateral and property that becomes collateral under
IC 26-1-9.1-315(a)(1).
IC 26-9.1-315
(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
IC 26-1-9.1-513
(a)
or
IC 26-1-9.1-513
(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 (1) secured party of record for a
financing statement, each secured party of record may authorize the
filing of an amendment under subsection (d).
SECTION 6.
IC 26-1-9.1-625
, AS ADDED BY P.L.57-2000,
SECTION 45, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]: Sec. 625. (a) If it is established that a secured party is
not proceeding in accordance with
IC 26-1-9.1
, a court may order or
restrain collection, enforcement, or disposition of collateral on
appropriate terms and conditions.
(b) Subject to subsections (c), (d), and (f), a person is liable for
damages in the amount of any loss caused by a failure to comply with
IC 26-1-9.1.
Loss caused by a failure to comply may include loss
resulting from the debtor's inability to obtain, or increased costs of,
alternative financing.
(c) Except as otherwise provided in
IC 26-1-9.1-628
:
(1) a person that, at the time of the failure, was a debtor, was an
obligor, or held a security interest in or other lien on the collateral
may recover damages under subsection (b) for its loss; and
(2) if the collateral is consumer goods, a person that was a debtor
or a secondary obligor at the time a secured party failed to comply
with
IC 26-1-9.1-601
through
IC 26-1-9.1-628
may recover for
that failure in any event an amount not less than the credit service
charge plus ten percent (10%) of the principal amount of the
obligation or the time-price differential plus ten percent (10%) of
the cash price.
(d) A debtor whose deficiency is eliminated under
IC 26-1-9.1-626
may recover damages for the loss of any surplus. However, a debtor or
secondary obligor whose deficiency is eliminated or reduced under
IC 26-1-9.1-626
may not otherwise recover under subsection (b) for
noncompliance with the provisions of
IC 26-1-9.1-601
through
IC 26-1-9.1-628
relating to collection, enforcement, disposition, or
acceptance.
(e) In addition to any damages recoverable under subsection (b), the
debtor, consumer obligor, or person named as a debtor in a filed record,
as applicable, may recover five hundred dollars ($500) in each case
from a person that:
(1) fails to comply with
IC 26-1-9.1-208
;
(2) fails to comply with
IC 26-1-9.1-209
;
(3) files a record that the person is not entitled to file under
IC 26-1-9.1-509
(a);
(4) fails to cause the secured party of record to file or send a
termination statement as required by
IC 26-1-9.1-513
(a) or
IC 26-1-9.1-513
(c);
(5) fails to comply with
IC 26-1-9.1-616
(b)(1) and whose failure
is part of a pattern or consistent with a practice, of
noncompliance; or
(6) fails to comply with
IC 26-1-9.1-616
(b)(2); or
(7) fails to comply with
IC 26-1-9.1-502
(f).
(f) A debtor or consumer obligor may recover damages under
subsection (b) and, in addition, five hundred dollars ($500) in each
case from a person that, without reasonable cause, fails to comply with
a request under
IC 26-1-9.1-210.
A recipient of a request under
IC 26-1-9.1-210
that never claimed an interest in the collateral or
obligations that are the subject of a request under that section has a
reasonable excuse for failure to comply with the request within the
meaning of this subsection.
(g) If a secured party fails to comply with a request regarding a list
of collateral or a statement of account under
IC 26-1-9.1-210
, the
secured party may claim a security interest only as shown in the list or
statement included in the request as against a person that is reasonably
misled by the failure.
SECTION 7.
IC 26-1-9.1-705
, AS ADDED BY P.L.57-2000,
SECTION 45, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2001]: Sec. 705. (a) If action, other than the filing of a
financing statement, is taken before
IC 26-1-9.1
takes effect and the
action would have resulted in priority of a security interest over the
rights of a person that becomes a lien creditor had the security interest
become enforceable before
IC 26-1-9.1
takes effect, the action is
effective to perfect a security interest that attaches under
IC 26-1-9.1
within one (1) year after
IC 26-1-9.1
takes effect. An attached security
interest becomes unperfected one (1) year after
IC 26-1-9.1
takes effect
unless the security interest becomes a perfected security interest under
IC 26-1-9.1
before the expiration of that period.
(b) The filing of a financing statement before
IC 26-1-9.1
takes
effect is effective to perfect a security interest to the extent the filing
would satisfy the applicable requirements for perfection under
IC 26-1-9.1.
(c)
IC 26-1-9.1
does not render ineffective an effective financing
statement that is filed before
IC 26-1-9.1
takes effect and satisfied the
applicable requirements for perfection under the law of the jurisdiction
governing perfection as provided in
IC 26-1-9-103
, before its repeal.
However, except as otherwise provided in subsections (d) and (e) and
IC 26-1-9.1-706
, the financing statement ceases to be effective at the
earlier of:
(1) the time the financing statement would have ceased to be
effective under the law of the jurisdiction in which it is filed; or
(2) June 30, 2006.
(d) The filing of a continuation statement after
IC 26-1-9.1
takes
effect does not continue the effectiveness of the financing statement
filed before
IC 26-1-9.1
takes effect. However, upon the timely filing
of a continuation statement after
IC 26-1-9.1
takes effect and in
accordance with the law of the jurisdiction governing perfection as
provided in subsection (c), the effectiveness of a financing statement
filed in the same office in that jurisdiction before
IC 26-1-9.1
takes
effect continues for the period provided by the law of that jurisdiction.
(e) Subsection (c)(2) applies to a financing statement that is filed
against a transmitting utility before
IC 26-1-9.1
takes effect and
satisfied the applicable requirements for perfection under the law of the
jurisdiction governing perfection as provided in
IC 26-1-9-103
, before
its repeal, only to the extent that subsection (c) provides that the law of
a jurisdiction other than jurisdiction in which the financing statement
is filed governs perfection of a security interest in collateral covered by
the financing statement.
(f) A financing statement that includes a financing statement filed
before
IC 26-1-9.1
takes effect and a continuation statement filed after
IC 26-1-9.1
takes effect is effective only to the extent that it satisfies
the requirements of subsection (e)
IC 26-1-9.1-501
through
IC 26-1-9.1-527
for an initial financing statement.