This document includes House Committee Amendments incorporated into the bill on Wed, Feb 25, 2015 at 11:49 AM by lerror.
Senator Lyle W. Hillyard proposes the following substitute bill:


1     
UNIFORM COMMERCIAL CODE FILING AMENDMENTS

2     
2015 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Lyle W. Hillyard

5     
House Sponsor: R. Curt Webb

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the Uniform Commercial Code and criminal provisions to address
10     certain filings.
11     Highlighted Provisions:
12          This bill:
13          ▸     addresses the effectiveness of a filed record;
14          ▸     provides for the termination of a wrongfully filed financing statement and possible
15     reinstatement;
16          ▸     modifies the provision of what constitutes a filing and the effectiveness of a filing;
17          ▸     creates a crime for certain filings filed with intent to harass or defraud; and
18          ▸     makes technical and conforming amendments.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          None
23     Utah Code Sections Affected:
24     AMENDS:
25          70A-9a-510, as enacted by Laws of Utah 2000, Chapter 252
26          70A-9a-516, as last amended by Laws of Utah 2013, Chapter 225
27          70A-9a-520, as last amended by Laws of Utah 2013, Chapter 225
28          70A-9a-521, as last amended by Laws of Utah 2013, Chapter 225
29     ENACTS:
30          70A-9a-513.5, Utah Code Annotated 1953
31          76-6-503.7, Utah Code Annotated 1953
32     

33     Be it enacted by the Legislature of the state of Utah:
34          Section 1. Section 70A-9a-510 is amended to read:
35          70A-9a-510. Effectiveness of filed record.
36          (1) A filed record is effective only to the extent that it was filed by a person that may
37     file it under Section 70A-9a-509 or by the filing office under Section 70A-9a-513.5.
38          (2) A record authorized by one secured party of record does not affect the financing
39     statement with respect to another secured party of record.
40          (3) A continuation statement that is not filed within the six-month period prescribed by
41     Subsection 70A-9a-515(4) is ineffective.
42          Section 2. Section 70A-9a-513.5 is enacted to read:
43          70A-9a-513.5. Termination of wrongfully filed financing statement --
44     Reinstatement.
45          (1) As used in this section:
46          (a) "Established filer" means a person that:
47          (i) regularly causes records to be communicated to the filing office for filing and has
48     provided the filing office with current contact information and information sufficient to
49     establish its identity; or
50          (ii) satisfies either of the following conditions:
51          (A) the filing office has issued the person credentials for access to online filing
52     services; or
53          (B) the person has established an account for payment of filing fees, regardless of
54     whether the account is used in a particular transaction.
55          (b) "Filing office" means the same as that term is defined in Section 70A-9a-102,
56     except that it does not include a county recorder office.
57          (2) A person identified as debtor in a filed financing statement may deliver to the filing
58     office the debtor's notarized affidavit, signed under penalty of perjury, that identifies the
59     financing statement by file number, indicates the affiant's mailing address, and states that the
60     affiant believes that the filed record identifying the affiant as debtor was not authorized and
61     was caused to be communicated to the filing office with the intent to harass or defraud the
62     affiant. The filing office shall adopt a form of affidavit for use under this section. The filing
63     office may reject an affidavit described in this Subsection (2) if:
64          (a) the affidavit is incomplete; or
65          (b) the filing office reasonably believes that the affidavit was communicated to the
66     filing office with the intent to harass or defraud, or for any other unlawful purpose.
67          (3) Subject to Subsection (10), if an affidavit is delivered to the filing office under
68     Subsection (2), the filing office shall promptly file a termination statement with respect to the
69     financing statement identified in the affidavit. The termination statement must identify by its
70     file number the initial financing statement to which it relates and must indicate that it was filed
71     pursuant to this section. A termination statement filed under this Subsection (3) is not effective
72     until 14 days after it is filed.
73          (4) The filing office may not charge a fee for the filing of an affidavit under Subsection
74     (2) or a termination statement under Subsection (3). The filing office may not return any fee
75     paid for filing the financing statement identified in the affidavit, whether or not the financing
76     statement is reinstated under Subsection (7).
77          (5) On the same day that a filing office files a termination statement under Subsection
78     (3), it shall send to the secured party of record for the financing statement to which the
79     termination statement relates a notice stating that the termination statement has been filed and
80     will become effective 14 days after filing. The notice shall be sent by mail to the address
81     provided for the secured party of record in the financing statement or by electronic mail to the
82     electronic mail address provided by the secured party of record, if any.
83          (6) (a) A secured party that believes in good faith that the filed record identified in an
84     affidavit delivered to the filing office under Subsection (2) was authorized and was not caused
85     to be communicated to the filing office with the intent to harass or defraud the affiant may:
86          (i) before the termination statement takes effect under Subsection (3), request the filing
87     office to review the filed record concerning whether the filed record was filed with the intent to
88     harass or defraud; or
89          (ii) regardless of whether the affiant seeks a review under Subsection (6)(a)(i), file an
90     action against the filing office seeking reinstatement of the financing statement to which the
91     filed record relates.
91a          Ĥ→ (b) ←Ĥ Within 10 days after being served with process in an action under this
92     Subsection (6), the filing office shall file a notice indicating that the action has been
93     commenced. The notice shall indicate the file number of the initial financing statement to
94     which it relates.
95          Ĥ→ [(b)] (c) ←Ĥ If the affiant is not named as a defendant in the action described in
95a     Subsection
96     (6)(a)(ii), the secured party shall send a copy of the complaint to the affiant at the address
97     indicated in the affidavit. The exclusive venue for the action shall be in the Third District
98     Court. A party may petition the court to consider the matter on an expedited basis.
99          Ĥ→ [(c)] (d) ←Ĥ An action under this Subsection (6) must be filed before the
99a     expiration of six
100     months after the date on which the termination statement filed under Subsection (3) becomes
101     effective.
102          (7) If, in an action under Subsection (6), the court determines that the financing
103     statement should be reinstated, the filing office shall promptly file a record that identifies by its
104     file number the initial financing statement to which the record relates and indicates that the
105     financing statement has been reinstated.
106          (8) Upon the filing of a record reinstating a financing statement under Subsection (7),
107     the effectiveness of the financing statement is reinstated and the financing statement shall be
108     considered never to have been terminated under this section. A continuation statement filed as
109     provided in Subsection 70A-9a-515(4) after the effective date of a termination statement filed
110     under Subsection (3) or (10) becomes effective if the financing statement is reinstated.
111          (9) If, in an action under Subsection (6), the court determines that the filed record
112     identified in an affidavit delivered to the filing office under Subsection (2) was unauthorized
113     and was caused to be communicated to the filing office with the intent to harass or defraud the
114     affiant, the filing office and the affiant may recover from the secured party that filed the action
115     the costs and expenses, including reasonable attorney fees, that the filing office and the affiant
116     incurred in the action. This recovery is in addition to any recovery to which the affiant is
117     entitled under Section 70A-9a-625.
118          (10) If an affidavit delivered to a filing office under Subsection (2) relates to a filed
119     record communicated to the filing office by an established filer, the filing office shall promptly
120     send to the secured party of record a notice stating that the affidavit has been delivered to the
121     filing office and that the filing office is conducting an administrative review to determine
122     whether the record was unauthorized and was caused to be communicated with the intent to
123     harass or defraud the affiant. The notice shall be sent by mail to the address provided for the
124     secured party in the financing statement or sent by electronic mail to the electronic mail address
125     provided by the secured party of record, if any, and a copy shall be sent in the same manner to
126     the affiant. The administrative review shall be conducted on an expedited basis and the filing
127     office may require the affiant and the secured party of record to provide any additional
128     information that the filing office considers appropriate. If the filing office concludes that the
129     record was Ĥ→ not authorized and was ←Ĥ caused to be communicated with the intent to harass
129a     or defraud the affiant, the
130     filing office shall promptly file a termination statement under Subsection (3) that will be
131     effective immediately and send to the secured party of record the notice required by Subsection
132     (5). The secured party may thereafter file an action for reinstatement under Subsection (6), and
133     Subsections (7) through (9) are applicable.
134          Section 3. Section 70A-9a-516 is amended to read:
135          70A-9a-516. What constitutes filing -- Effectiveness of filing.
136          (1) Except as otherwise provided in Subsection (2) or [(4)] (5), communication of a
137     record to a filing office and tender of the filing fee or acceptance of the record by the filing
138     office constitutes filing.
139          (2) Filing does not occur with respect to a record that a filing office refuses to accept
140     because:
141          (a) the record is not communicated by a method or medium of communication
142     authorized by the filing office;
143          (b) an amount equal to or greater than the applicable filing fee is not tendered;
144          (c) the filing office is unable to index the record because:
145          (i) in the case of an initial financing statement, the record does not provide a name for
146     the debtor;
147          (ii) in the case of an amendment or information statement, the record:
148          (A) does not identify the initial financing statement as required by Section 70A-9a-512
149     or 70A-9a-518, as applicable; or
150          (B) identifies an initial financing statement whose effectiveness has lapsed under
151     Section 70A-9a-515;
152          (iii) in the case of an initial financing statement that provides the name of a debtor
153     identified as an individual or an amendment that provides a name of a debtor identified as an
154     individual which was not previously provided in the financing statement to which the record
155     relates, the record does not identify the debtor's surname; or
156          (iv) in the case of a record filed or recorded in the filing office described in Subsection
157     70A-9a-501(1)(a), the record does not provide a sufficient description of the real property to
158     which it relates;
159          (d) in the case of an initial financing statement or an amendment that adds a secured
160     party of record, the record does not provide a name and mailing address for the secured party of
161     record;
162          (e) in the case of an initial financing statement or an amendment that provides a name
163     of a debtor which was not previously provided in the financing statement to which the
164     amendment relates, the record does not:
165          (i) provide a mailing address for the debtor; or
166          (ii) indicate whether the name provided as the name of the debtor is the name of an
167     individual or an organization;
168          (f) in the case of an assignment reflected in an initial financing statement under
169     Subsection 70A-9a-514(1) or an amendment filed under Subsection 70A-9a-514(2), the record
170     does not provide a name and mailing address for the assignee; [or]
171          (g) in the case of a continuation statement, the record is not filed within the six-month
172     period prescribed by Subsection 70A-9a-515(4)[.]; or
173          (h) in the case of an initial financing statement or an amendment that provides a name
174     of a debtor that was not previously provided in the financing statement to which the
175     amendment relates, the record was not communicated to the filing office, as defined in Section
176     70A-9a-513.5, by an established filer, as defined in Section 70A-9a-513.5, and the filing office
177     reasonably believes that the record was caused to be communicated to the filing office with the
178     intent to harass or defraud the person identified as debtor or for another unlawful purpose.
179          (3) Ĥ→ [The] Except as provided in Section 70A-9a-513.5, the ←Ĥ filing office
179a      Ĥ→ [, as defined in Section 70A-9a-513.5,] ←Ĥ has no duty to form a belief
180     as to whether a record was caused to be communicated with the intent to harass or defraud the
181     person identified as debtor or for another unlawful purpose and has no duty to investigate or
182     ascertain facts relevant to whether the intent or purpose was present.
183          [(3)] (4) For purposes of Subsection (2):
184          (a) a record does not provide information if the filing office is unable to read or
185     decipher the information; and
186          (b) a record that does not indicate that it is an amendment or identify an initial
187     financing statement to which it relates, as required by Section 70A-9a-512, 70A-9a-514, or
188     70A-9a-518, is an initial financing statement.
189          [(4)] (5) A filing office may refuse to accept a record for filing, and if it does so, filing
190     does not occur with respect to the record, because:
191          (a) the debtor is an individual and the debtor's name contains unusually placed and
192     apparently unnecessary punctuation, symbols, or other nonalphabetic characters;
193          (b) the record, in the collateral description or elsewhere, including an attachment,
194     discloses personally identifying information such as a Social Security number, driver license
195     number, identification card number, bank account number, credit or debit card account number,
196     date of birth, or place of birth; or
197          (c) the debtor is an individual and the record indicates that the debtor is a transmitting
198     utility.
199          [(5)] (6) A record that is communicated to the filing office with tender of the filing fee,
200     but which the filing office refuses to accept for a reason other than one set forth in Subsection
201     (2) or [(4)] (5), is effective as a filed record except as against a purchaser of the collateral
202     which gives value in reasonable reliance upon the absence of the record from the files.
203          (7) A record that the filing office, as defined in Section 70A-9a-513.5, initially refuses
204     to accept under Subsection (2)(h) but that it later accepts after it receives additional information
205     is effective as if the filing office had not initially refused to accept the record except as against
206     a purchaser of the collateral that gives value in reasonable reliance upon the absence of the
207     record from the files.
208          Section 4. Section 70A-9a-520 is amended to read:
209          70A-9a-520. Acceptance and refusal to accept record.
210          (1) A filing office shall refuse to accept a record for filing for a reason set forth in
211     Subsection 70A-9a-516(2) or [(4)] (5) and may refuse to accept a record for filing only for a
212     reason set forth in Subsection 70A-9a-516(2).
213          (2) If a filing office refuses to accept a record for filing, it shall communicate to the
214     person that presented the record the fact of and reason for the refusal and the date and time the
215     record would have been filed had the filing office accepted it. The communication must be
216     made at the time and in the manner prescribed by filing-office rule but, in the case of a filing
217     office described in Subsection 70A-9a-501(1)(b), in no event more than two business days after
218     the filing office receives the record.
219          (3) A filed financing statement satisfying Subsections 70A-9a-502(1) and (2) is
220     effective, even if the filing office is required to refuse to accept it for filing under Subsection
221     (1). However, Section 70A-9a-338 applies to a filed financing statement providing information
222     described in Subsection 70A-9a-516(2)(e) which is incorrect at the time the financing
223     statement is filed.
224          (4) If a record communicated to a filing office provides information that relates to more
225     than one debtor, this part applies as to each debtor separately.
226          (5) This section does not apply to a filing office described in Subsection
227     70A-9a-501(1)(a).
228          Section 5. Section 70A-9a-521 is amended to read:
229          70A-9a-521. Uniform form of written financing statement and amendment.
230          (1) A filing office that accepts written records may not refuse to accept a written initial
231     financing statement in the form and format set forth in the final official text of the 2010
232     revisions to Article 9 of the Uniform Commercial Code promulgated by The American Law
233     Institute and the National Conference of Commissioners on Uniform State Laws, except for a
234     reason set forth in Subsection 70A-9a-516(2) or [(4)] (5).
235          (2) A filing office that accepts written records may not refuse to accept a written record
236     in the form and format set forth in the final official text of the 2010 revisions to Article 9 of the
237     Uniform Commercial Code promulgated by The American Law Institute and the National
238     Conference of Commissioners on Uniform State Laws, except for a reason set forth in
239     Subsection 70A-9a-516(2) or [(4)] (5).
240          Section 6. Section 76-6-503.7 is enacted to read:
241          76-6-503.7. Records filed with intent to harass or defraud.
242          (1) No person shall cause a record to be communicated to the filing office, as defined
243     in Section 70A-9a-513.5, for filing if:
244          (a) the person is not authorized to file the record under Section 70A-9a-509,
245     70A-9a-708, or 70A-9a-808;
246          (b) the record is not related to an existing or anticipated transaction that is or will be
247     governed by Title 70A, Chapter 9a, Uniform Commercial Code - Secured Transactions; and
248          (c) the record is filed knowingly or intentionally to:
249          (i) harass the person identified as the debtor in the record; or
250          (ii) defraud the person identified as the debtor in the record.
251          (2) (a) A person who violates Subsections (1)(a), (b), and (c)(i) is guilty of a class B
252     misdemeanor for a first offense and a class A misdemeanor for a second or subsequent offense.
253          (b) A person who violates Subsections (1)(a), (b), and (c)(ii) is guilty of a third degree
254     felony.