- Ohio Adopts Revised Article 9 of the Uniform Commercial Code
- May 7, 2003
- Law Firm: Dinsmore & Shohl LLP - Cincinnati Office
On June 19, 2001, Ohio Governor Robert Taft signed into law Senate Bill 74 making Ohio one of 43 jurisdictions to have adopted, in some form, Revised Article 9 of the Uniform Commercial Code as promulgated by the American Law Institute and the National Conference of Commissioners of Uniform State Laws. For purposes of this alert, Ohio's version of Revised Article 9 shall be referred to as "Revised Article 9." The effective date of Revised Article 9 is July 1, 2001 (the "Effective Date"). As of the Effective Date, all secured transactions in Ohio, including those entered into prior to the Effective Date, will be governed by Revised Article 9. A copy of the full text of this new law can be obtained at the following website:
Revised Article 9 makes significant changes to the scope, substantive rules and procedures (including the filing of financing statements) pertaining to secured transactions. Several, but by no means all, of these changes are described below.
Scope of Revised Article 9
Revised Article 9 expands the scope of the current law governing secured transactions. More types of collateral are included within the scope of the new law and more transactions are covered. Revised Article 9 expands the definitions of certain types of collateral, adds new collateral categories, and expressly includes within its scope certain transactions that under the current law are excluded. Some of these changes in scope are as follows:
- expansion of the definition of "account";
- expressly providing for a security interest in "deposit accounts";
- including within its scope sales of "payment intangibles" and sales of "promissory notes";
- providing for a security interest in "commercial tort claims"; and
- including true consignments within its scope.
Contents of Financing Statement
Under Revised Article 9, a financing statement is sufficient only if it:
- provides the name of the debtor;
- provides the name of the secured party or a representative of the secured party; and
- indicates the collateral covered by the financing statement.
Note that the addresses of the debtor and secured party are no longer required. With respect to the name of the debtor, if the debtor is a registered organization (e.g., corporation, LLC, LP) the name on the UCC-1 must be the name of the debtor exactly as indicated on the public records of the debtor's jurisdiction of organization. Inaccurate debtor names could render the UCC-1 invalid, and could leave the secured party unperfected. Furthermore, Revised Article 9 expressly states that filing a financing statement under only a trade name of the debtor is not sufficient.
Where to File Financing Statement
Revised Article 9 does away with the current "dual filing" system for financing statements for most personal property (i.e., not real property related) collateral. As of the Effective Date, UCC-1s for personal property collateral are to be filed only at the Secretary of State's office. Fixture filings and filings on as-extracted collateral and timber to be cut shall continue to be filed at the local or county level.
The proper jurisdiction in which to file a UCC-1 under Revised Article 9 for most personal property collateral is the location of the debtor; not, as is the case under current law, the location of the collateral. The "location" of the most typical debtors is as follows:
- an individual is located at the individual's principal residence;
- a registered organization that is organized under the laws of a state is located in that state;
- an unregistered organization with only one place of business is located at its place of business; and
- an unregistered organization with more than one place of business is located at its chief executive office.
Revised Article 9 makes significant changes to the current Title 13, Section 1309 of the Ohio Revised Code. This alert addresses only a select few of those changes. Note, that Ohio's neighboring states, Kentucky, Tennessee, Indiana, Pennsylvania and West Virginia have also adopted revisions to Article 9 effective July 1, 2001.