UCC News

Tennessee Enacts Non-Uniform Amendment to UCC PMSI Requirements

This year, Tennessee made a small change in its version of Revised Article 9 that should be of interest to purchase money lenders. The Tennessee General Assembly passed Senate Bill 426, which modified the time period for a secured party to perfect a purchase money security interest. Revised Article 9 allows the secured party to perfect its PMSI by filing before or within 20 days after the debtor received possession of the collateral. U.C.C. § 9-324(a). The non-uniform Tennessee amendment changed the time period to 30 days. 2007 Tenn. Pub. Acts Chapter 10.

This change should have no adverse impact on PMSI procedures for secured parties. Extending the PMSI window only works to the benefit of purchase money lenders by giving them more time to perfect. However, this legislation does mark the first significant departure from the uniform PMSI window created by Revised Article 9.

For more information contact Paul Hodnefield, Associate General Counsel, at 800-927-9801, ext. 2375, or phodnefi@cscinfo.com.

Washington Adopts Emergency UCC Rule Amendment

The Washington Department of Licensing (“DOL”) recently adopted a rule amendment that changes the lapse dates assigned to certain UCC filings. The amendment relates to UCC financing statements filed in connection with a public finance or manufactured housing transaction. It took effect on August 14, 2007, as a temporary measure, pending a public hearing to consider permanent adoption of the rule later this year.

Under UCC § 9-515, a financing statement is effective for five years, but there are some limited exceptions. If the debtor is a transmitting utility and the financing statement so indicates, it is effective until terminated. If the financing statement indicates it is filed in connection with a public finance transaction or manufactured home transaction, then the effective period is thirty years.

Washington, along with a few other states, adopted a non-uniform version of § 9-515 that omitted the extended effective dates for public finance and manufactured housing transactions. All financing statements filed in Washington are effective for five years, unless they indicate the debtor is a transmitting utility.

Although public finance and manufactured housing transaction financing statements are only effective by statute for five years, the DOL originally adopted UCC administrative rules that failed to account for the non-uniform version of § 9-515. Consequently, the UCC filing office incorrectly set the lapse dates for both public finance and manufactured housing transactions at thirty years from the date of filing.

The emergency amendment to the WA DOL rules deletes the thirty-year lapse date for public finance and manufactured housing transactions from the rules. The amendment eliminates any conflict between the statute and filing office rules. All financing statements will now receive a lapse date that is exactly five years from the file date, except for filings against transmitting utilities.

The DOL has corrected its UCC index to properly reflect the lapse date of all affected financing statements. In addition, the DOL is sending out corrected filing acknowledgments to the secured parties involved. While the scope of the problem is limited, all secured parties that filed financing statements with the WA DOL since 2001 that indicated either a public finance or manufactured housing transaction should verify that their internal tracking systems reflect the correct lapse date.

Contact the author with questions or comments at phodnefi@cscinfo.com, or 800-927-9801, ext 2375.