Safe Harbors Or Treacherous Waters Debtor Name Issues, And the Changes Ahead (Part 2)
(Part Two of Three Parts) It the last installment of this article we examined the Uniform Commercial Code as we currently know it.
In this article we will look at what promoted the discussions as to amend in the code.
In 2007 Texas, took action in how to determine a debtor's name when the debtor was an individual.
Texas passed legislation that created a Safe Harbor for any filer that relied on a driver's license or state issued identification card to determine the name of an individual.
Unfortunately the legislation remained silent on the issue of organizational debtors and trusts.
It was a result of the move to non-uniformity that in May 2007 it was recommended to the National Conference of Commissioners on Uniform State Laws (NCCUSL) that the permanent editorial board (PEB) should consider amending the commercial code before non-uniform provisions had become the norm.
By 2008 Tennessee was drafting an amendment to §9-503 to define Individual debtor names.
In 2008 the amendment went into effect allowing one of five pieces of identification to determine an individual's name for a financing statement.
The five approved documents were: 1.
Drivers license 2.
State identification card 3.
Passport 4.
Birth certificate 5.
Military identification card The law created safe harbors for any filer relying on any one of these documents used to determine a debtor's name that was an individual.
The Tennessee amendment resulted in a system where there was not one type of document that could be relied upon but rather five debtor names to possibly search, because no system was put into place as to what to do when conflicting names were provided on the documents.
By this time the Texas amendment had been in effect for about a year and Virginia was getting close to enacting an amendment.
States often look to one another to solve legal issues and the problem of individual debtor names was no different.
Desiring to not create a different system for determining a debtors name another amendment was passed by Tennessee to reduce the documents acceptable for safe harbor to two, the drivers license or state issued identification card.
Virginia enacted similar legislation that took effect on July 1, 2009, that also defined that only the drivers license or state issued identification card would provide the legal name of the debtor and create a safe harbor for filers.
By 2010 we had 3 states had amended §9-503 to defining legal name for debtors who are individuals.
In 47 other states (and the District of Columbia) the standard remains as the version originally enacted.
Thereby leaving the issue unanswered.
So what is the legal name of a debtor that is an individual? The Permanent Editorial Board (PEB) of the Uniform Commercial Code actually began working on this issue in 2008 along with other housekeeping items in Revised Article 9.
The revisions being recommended for debtor names cover much more than debtor name amendments that have been enacted thus far.
In the changes being proposed, debtor names will be thoroughly defined in an attempt to create little question as to what documentation should be relied upon.
In addition unlike the state legislation passed in Texas, Tennessee and Virginia, the PEB version addresses the issue of debtor names when the debtor is an Organization or Trust.
In this article we will look at what promoted the discussions as to amend in the code.
In 2007 Texas, took action in how to determine a debtor's name when the debtor was an individual.
Texas passed legislation that created a Safe Harbor for any filer that relied on a driver's license or state issued identification card to determine the name of an individual.
Unfortunately the legislation remained silent on the issue of organizational debtors and trusts.
It was a result of the move to non-uniformity that in May 2007 it was recommended to the National Conference of Commissioners on Uniform State Laws (NCCUSL) that the permanent editorial board (PEB) should consider amending the commercial code before non-uniform provisions had become the norm.
By 2008 Tennessee was drafting an amendment to §9-503 to define Individual debtor names.
In 2008 the amendment went into effect allowing one of five pieces of identification to determine an individual's name for a financing statement.
The five approved documents were: 1.
Drivers license 2.
State identification card 3.
Passport 4.
Birth certificate 5.
Military identification card The law created safe harbors for any filer relying on any one of these documents used to determine a debtor's name that was an individual.
The Tennessee amendment resulted in a system where there was not one type of document that could be relied upon but rather five debtor names to possibly search, because no system was put into place as to what to do when conflicting names were provided on the documents.
By this time the Texas amendment had been in effect for about a year and Virginia was getting close to enacting an amendment.
States often look to one another to solve legal issues and the problem of individual debtor names was no different.
Desiring to not create a different system for determining a debtors name another amendment was passed by Tennessee to reduce the documents acceptable for safe harbor to two, the drivers license or state issued identification card.
Virginia enacted similar legislation that took effect on July 1, 2009, that also defined that only the drivers license or state issued identification card would provide the legal name of the debtor and create a safe harbor for filers.
By 2010 we had 3 states had amended §9-503 to defining legal name for debtors who are individuals.
In 47 other states (and the District of Columbia) the standard remains as the version originally enacted.
Thereby leaving the issue unanswered.
So what is the legal name of a debtor that is an individual? The Permanent Editorial Board (PEB) of the Uniform Commercial Code actually began working on this issue in 2008 along with other housekeeping items in Revised Article 9.
The revisions being recommended for debtor names cover much more than debtor name amendments that have been enacted thus far.
In the changes being proposed, debtor names will be thoroughly defined in an attempt to create little question as to what documentation should be relied upon.
In addition unlike the state legislation passed in Texas, Tennessee and Virginia, the PEB version addresses the issue of debtor names when the debtor is an Organization or Trust.
Source...