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Changes to Florida’s secured transaction laws to take effect July 1, 2013
House Bill 483, which was signed by the Governor on April 6, 2012, adopts the 2010 amendments to Article 9 of the Uniform Commercial Code. Among other things, the bill revises Florida’s (i) debtor identification standards, (ii) procedures for filing information statements for inaccurate or wrongly filed records, (iii) perfection of certain security interests, and (iv) standards for control of electronic chattel paper. The changes are summarized below.
Identifying the debtor
The bill amends the Florida Statutes to more clearly specify acceptable names on UCC-1 financing statements. Under the new law, if the debtor is a registered organization, a financing statement is deemed to sufficiently name the debtor if it names the registered organization on the most recent “public organic record” filed or issued by the organization’s jurisdiction of organization. This also applies to a registered organization that holds collateral in trust.
Where the collateral is being administered by a personal representative of a decedent, the financing statement is sufficient if it provides the name of the decedent as the debtor and indicates that the collateral is being administered by a personal representative. The name of the decedent indicated on the order appointing the personal representative of the decedent, which was issued by a court having jurisdiction over the collateral, is sufficient as the name of the decedent.
If the collateral is held in a trust that is not a registered organization, the financing statement must indicate the name specified in the organic record of the trust and that the collateral is held in trust. If the organic record does not specify a name, the financing statement must indicate the name of the settlor or testator, additional information sufficient to distinguish the trust from other trusts, and that the collateral is held in a trust.
The new law also provides standards for the name of an individual debtor on a financing statement. If the debtor is an individual, the financing statement must provide the name on the debtor’s driver’s license if the license has not expired. If Florida has instead issued a non-driver’s identification card, the name provided on the identification card may be used with the same effect as a driver’s license name. If Florida has issued to an individual more than one driver’s license or identification card, the most recent driver’s license or identification card applies. If the debtor does not have a driver’s license or identification card, the financing statement must provide either debtor’s name under current law or the debtor’s surname and first personal name.
In other cases, if the debtor does not have a name, the financing statement must include the name of partners, members, associates, or others comprising the debtor. The names must be provided in a manner so that each name provided would be sufficient if the person named was the debtor.
Claims concerning inaccurate or wrongfully filed record
Current Florida law authorizes the debtor to file a “correction statement” – a claim that a financing statement filed against such debtor was unauthorized or inaccurate. While this filing has no legal effect on the underlying claim, it does put in the public record the debtor’s claim that the financing statement was wrongfully filed or inaccurate.
The new law also changes the name of the form to an “information statement.” Second, the new law authorizes the secured party of record to file an information statement if the secured party believes that an amendment to its financing statement was not authorized. The change addresses concerns that an amendment to a different financing statement may be inadvertently filed on the secured party’s financing statement if the amendment contains a file number error. Still, the secured party has no duty to file an information statement, even if it is aware of the unauthorized filing.
Perfection of security interests
“Perfection of a security interest gives constructive notice to the world of the claim or interest of the one asserting it.” Article 9 provides guidelines for the continued perfection of security interests that have been perfected according to the law of another jurisdiction. Generally, a security interest perfected according to another jurisdiction or state’s law is not automatically “unperfected.” Current law provides that a security interest perfected by filing continues for four months after the debtor relocates to another jurisdiction. However, this temporary period of perfection applies only with respect to collateral owned by the debtor at the time of the change. Even if the security interest attaches to after-acquired collateral, there is currently no perfection with respect to such new collateral unless and until the secured party perfects pursuant to the law of the new jurisdiction.
Under the new law, filers will be temporarily perfected in collateral acquired post-move for four months. A similar change is made with respect to a new debtor that is a successor by merger. The new rule provides for temporary perfection in collateral owned by the successor before the merger or collateral acquired by the successor within four months after the merger.
Control of electronic chattel paper
Currently, control of electronic chattel paper is the functional equivalent of possession of tangible chattel paper. “Chattel paper” is a record or records that show both a monetary obligation and a security interest in specific goods. “Electronic chattel paper” is chattel paper evidenced by a record or records consisting of information stored in an electronic medium. The law provides that a secured party has control of electronic chattel paper if the record comprising the chattel paper are created, stored and assigned according to six requirements.
The new law provides a more general test for establishing when a secured party has control of electronic chattel paper. Specifically, a party will be deemed to control electronic chattel paper if such party employs a system to evidence the transfer of interests in the electronic chattel paper that reliably establishes the secured party as the party to whom the chattel paper is assigned. The new law also provides a safe harbor test that, if satisfied, establishes control under the new test. The safe harbor test, however, is still consistent with the original six requirements under the current law.
This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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