• Using Full Debtor Name Crucial in UCC Filings
  • April 24, 2018 | Author: Lawrence D. Coppel
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • Section 9-503(a)(4) of the Maryland Uniform Commercial Code (MUCC) requires that a financing statement for collateral owned by an individual who has been issued a driver’s license or identification card by the state be filed in “the name of the individual indicated on the driver’s license or identification card.” In a recent case, the Bankruptcy Court for the Southern District of Georgia considered whether a lender properly perfected a security interest by filing a financing statement using the first and last name of a debtor where the debtor’s state-issued license used the debtor’s middle name and the debtor signed the license using only his first and last name. The Georgia UCC version of §9-503(a)(4) is substantially similar to Maryland’s. The lender argued that its financing statement satisfied §9-503(a)(4) because it was filed in the signed name of the debtor on the license and that, in any event, any error made in the financing statement was not “seriously misleading” within the meaning of the UCC §9-506(a) “safe harbor” provision. The court rejected the signed name argument ruling that “limiting the meaning of ‘indicated on the driver’s license’ to the debtor’s printed name ensures simplicity and predictability” consistent with the Official Comment to §9-503. Further, the court noted that instructions on the financing statement form require use of the debtor’s “exact, full name” and not to “omit, modify or abbreviate any part of the Debtor’s name.” The court also overruled the lender’s safe harbor argument. Having ruled that the printed name on the driver’s license governs, the court pointed to §9-506(b) which provides that “except as provided in subsection (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with §9-503(a) is seriously misleading.” The court further ruled that §9-506(c) did not apply because a search of the Georgia financing records under the debtor’s first and last name did not disclose the correct name and a search of the financing records under the debtor’s full name did not disclose the financing statement at all. Therefore, the lender’s security interest was held to be unperfected and avoidable by the debtor in bankruptcy.

    PRACTICE TIP: Maryland courts have not decided the issue decided by the court in the Georgia case. To avoid the issue, a lender that has been granted a security interest by an individual who has been issued a Maryland driver’s license (or identification card) should always use the debtor’s printed name on the license (or card) on the financing statement that is going to be filed to perfect the lender’s interest. If the license or card is signed with a name that is different (even slightly different) from the printed name, the lender should add the signed name as an additional debtor so that the financing statement can be filed under both names. Note that if the debtor has not been issued a driver’s license or identification card, MUCC §9-503(a)(5) states that the financing statement must provide “the individual name of the debtor or the surname and first personal name of the debtor.”