SB 1046, which is Arizona’s version of the 2010 amendments to Article 9 of the Uniform Commercial Code (Secured Transactions) (UCC), has passed both Houses of the Arizona Legislature and may be signed by the Governor in the next few days. The bill contains an emergency clause, which means the amendments become effective immediately when the Governor signs the bill.
The 2010 Article 9 amendments, which became effective in most states last year, contain a number of updates and clarifications to the law governing security interests in personal property. The law will immediately affect some of the procedures and practices of lenders when preparing, filing and updating UCC Financing Statements.
One of the most important changes is a new requirement that if the debtor named on a UCC Financing Statement is an individual with an Arizona driver’s license, the Financing Statement must provide the name of the individual as indicated on the driver’s license.
In addition, updated rules will apply in other situations, including, for example:
Financing Statement amendments and re-filings may be needed when a new driver’s license is issued for an individual due to a name change; when an organization changes its location to another jurisdiction; or if collateral is acquired by a new debtor;
Naming requirements for Financing Statements if the debtor includes a trust/trustee or a descendant’s estate;
Clarification of what constitutes a “public organic record” used to determine the correct name of other entities such as corporations and limited liability companies;
Expansion of the definition of “registered organization” to include organizations formed by state or federal legislation and certain business trusts;
Requirements for making claims regarding wrongfully filed Financing Statements.
In addition, there are provisions for updates to UCC Financing Statement forms which simplify some of the information required.
The bill contains a five-year transition period for most Financing Statement filings made before the effective date of the amendments.
The above is only a short summary of the amendments. This alert is intended to provide general information about AZ-SB 1046. It is not intended to provide legal advice.