Conduct a Reflective Search After Every UCC Filing
Obtaining a reflective search is the best practice to make sure the UCC Financing Statement or UCC change statement has been indexed accurately.
What is a Reflective UCC Search?
A reflective UCC search confirms that a UCC filing was recorded. The reflective search returns a jurisdictional report by debtor name reflecting all UCC filings through the date of your recorded UCC filing. This search also lists previous secured creditors by filing date to help determine your filing position. In 2001, Revised Article 9 changed the requirements of the debtor name and implemented standard search logic.
What is the Debtor Name?
Section 9-503(a) describes the debtor name as either:
- A registered organization, of which the name is as indicated on the public record of the debtor’s jurisdiction of organization; or
- An individual, which several states describe as the name on a birth certificate or driver’s license.
Article 9-506(b) clearly states “a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a) is seriously misleading.” Not following the rules for a correct debtor name will affect whether the UCC filing is found using the state’s standard search logic.
What is Standard Search Logic?
In 2001, standardized search logic rules were developed by the International Association of Commercial Administrators (IACA). IACA is the professional association for government administrators of business organizations and secured transaction record systems. Each state formed its own search logic rules based on IACA’s rules. The strict search logic intentionally left no margin for error or variances of the debtor name.
How are Filings Recorded?
A filing is recorded according to the law of a particular filing state. Options include XML, internet manual entry, fax or mail. Many states still have manual processes that can lead to errors by either the submitting party or the filing officer. Such errors can jeopardize the security.
Additionally, each state has its own rules to record names and index filings. Your filing is indexed in accordance with the particular method used in the recording state. This means the filing party must know the nuances of each state’s filing system in order to search the filings properly. For example, punctuation can be extremely important in one state and of little importance in another. Other ways states have adopted different rules include:
- The ampersand (&)
- How to treat the word “the”
- Individual names
Can a Reflective Search Help Confirm the Accuracy of a UCC Filing?
When done properly, a reflective search can confirm the accuracy of a UCC filing. It can assure:
- No errors in debtor name were made by the recording entity.
- The filing was recorded in accordance with a particular state’s methods and format.
- Change statements are indexed to the proper original filing.
Are you sure your debtor name is indexed correctly?
Unless you are familiar with these processes in all 50 states, assistance is recommended.
Looking for More?
Take a few moments to read “Articles of Incorporation: Not Just for Name Verification” and “What a Difference a Name Makes: Omission of “Inc.” Left Security Interest Unperfected“