Okla. Stat. tit. 12A § 1-9-507

Current through Laws 2024, c. 453.

Section 1-9-507 - Effect of certain events on effectiveness of financing statement

(a) A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest or agricultural lien continues, even if the secured party knows of or consents to the disposition.

(b) Except as otherwise provided in subsection (c) of this section and Section 1-9-508 of this title, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 1-9-506 of this title.

(c) If the name that a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under subsection (a) of Section 1-9-503 of this title so that the financing statement becomes seriously misleading under Section 1-9-506 of this title:

(1) the financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four (4) months after, the filed financing statement becomes seriously misleading; and

(2) the financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four (4) months after the filed financing statement becomes seriously misleading, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four (4) months after that event.

Okla. Stat. tit. 12A, § 1-9-507

Amended by Laws 2015 , c. 374, s. 12, eff. 11/1/2015.

Added by Laws 2000 , SB 1519, c. 371, § 85, eff. 7/1/2001.

Oklahoma Code Comment

Section 9-507(c) clarifies the rule of former section 9-402(7) in instances of changes to the debtor's name, i.e., a change that does not implicate a new debtor. Section 9-507(c) continues the effectiveness of the original financing statement with respect to collateral acquired within four months before the name change as well as collateral acquired after the change. If the change renders the earlier financing statement seriously misleading, however, it is not effective as to collateral acquired more than four months after the change, unless an amendment is filed. Even in this case, however, if an amendment is not filed and the filing is seriously misleading, the filing will continue to constitute perfection as to collateral acquired before the end of the four month period. Thus a searching party will need to inquire as to previous debtor name changes and search under prior names if such collateral is important.

This is the only scenario in which a post-filing change in the information on the financing statement that renders it seriously misleading will cause loss of perfection. Revised section 9-507(b) . Whether such a change is seriously misleading will be determined under revised section 9-506 . See also revised section 9-503 (debtor's name). Generally under sections 9-503 and 9-506 only an error or change in the debtor's name can be seriously misleading. These sections also reject Oklahoma case law holding that a debtor's trade name can be sufficient. See, e.g., In re Thriftway, 39 F. 3d 1193, 25 U.C.C. Rep. Serv.2d 982 (10th Cir. 1994).

As a consequence of the collateral's disposition the collateral may be owned by a person other than the original debtor. Old section 9-402(7) and revised section 9-507 also apply to transfers of collateral. The secured party remains perfected even if the secured party does not correct the public record; therefore any person seeking to determine whether a debtor owns collateral free of a security interest must also inquire as to the debtor's source of title. Revised section 9-507(a) . As a safeguard, prospective lenders should prepare themselves to search in the name of any former owner.

This new Section ratifies the case law findings in Oklahoma which stated: A "[w]hat is required by the code is accuracy sufficient to reasonably put a third party on notice that further inquiry is needed." Union National Bank of Chandler v. Bancfirst, 871 P.2d 422, 426 (Okla. 1993); In re Thriftway Auto Supply, Inc. v. Star Automotive Warehouse, Inc., 39 F. 3d 1193, 25 U.C.C. Rep. Serv. 2d 982.

As stated in the Comments to revised section 9-506 , the UCC Central Filing Office will not review financing statements for errors, including errors which render the financing statement "seriously misleading" under Article 9. It is the sole responsibility of the filer to submit a properly prepared Financing Statement (see revised sections 9-516, 9-520, and 9-521) or, if needed, to file a UCC-3 Financing Statement Amendment correcting any deficiencies that may cause the Initial Financing Statement to subsequently become misleading to the existence of the filed financing statement. Revised Article 9 rejects cases holding that an error in the secured party's name precludes perfection (e.g. In re Leach, 206 B.R. 903 (M.D. Tenn. 1997)), and affirms cases holding that other minor errors are not fatal to perfection. See, e.g., In re Suddath, 222 B.R. 352 (N.D. Okla. 1998). However, if the secured party's name is not correct, it may not receive important notices from the Clerk, e.g., the filing by the debtor of rogue documents. See sections 9-513 and 9-518 .

Third, the secured party may not be required to use the model form of section 9-521 ; if the financing statement does not meet the requirements of sections 9- 516 and 9-521, but is nonetheless accepted by the filing office, its effective will be determined under sections 9-502, 9-503 , and 9-506 . See section 9-520 ; Bose, supra. But if the secured party does use the model form, it will incur a lower filing fee.