How Can I Sign Rhode Island Travel Agency Agreement

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welcome to our webinar UCP debtor names what you don't know can hurt you my name is a new Sean and I will be your moderator joining us today is Paul Hartness field Paul is an associate general counsel for a corporate service company and served as the company's subject matter resource for UCC real estate and other transactional service matters he is a frequent speaker and writer on UCC search and filing issues and a 2013 recipient of National Association of secretaries of state medallion award and with that let's welcome Paul thank you there is no piece of information on a financing statement more important than the debtor named UCC article 9 has some very strict rules for how the debtor name must be provided and failure to comply with those rules has rather harsh consequences for the secured party therefore it is critical that those who file UCC records and to a lesser degree those who search UCC records understand how to correctly provide the debtor name for purposes of the financing statement now this isn't always an easy task and for a number of reasons first and foremost is that the debtor name rules are not intuitive relying on common sense and general understanding can be very risky in this process another challenge is that the rules are actually more simple than many filers realize as a result there tends to be some pilers tend to overcomplicate the process for determining the correct name of the debtor it is also possible for filers to get a little too complacent when it comes to preparing UCC records from about 2003 through approximately 2011 there was a steady stream of court cases on individual debtor name issues that continually reinforced to those who file UCC records it even this most seemingly minor error in the debtor name co carry exceedingly harsh consequences since about eleven there have been almost no debtor named cases very very few the the courts just have not addressed them the the issue hasn't been before the courts and this is not because there are fewer debtor named errors necessarily it isn't difficult to go into a state UCC index and find a host of debtor named errors without looking very hard at all more likely the reason for the lack of recent case law is simply that secured parties know when they've lost it's a very clear precedent that's out there and as a result they're not going to waste time and money trying to litigate the matter unless there truly is a novel issue and because there is there aren't these cases being handed down on a regular basis filers don't hear about them like they did during that period and as a result there is a possibility of getting a little more complacent but it is as important as ever for commercial lenders and their legal counsel to fully understand the debtor names sufficiency rules for UCC financing statements today I'll explain those rules by beginning with the essential concepts about debtor names and then moving on and talking about the specific rules for the different types of debtors or based upon the status of the collateral now the end of the program I will take questions as well with any remaining time so without any further ado let's go ahead and begin the program to begin with I want to cover some essential concepts about debtor names begin with I think the most important thing is to understand why the debtor name is on the financing statement to begin with I mean what is the purpose of the debtor name on the financing statement if you take a look at this and treat it kind of as a multiple-choice test where you can choose more than one correct answer I think many people would select two or more of these for possible reasons but in fact there is one per and one purpose only why a debtor name appears on the financing statement and that is to allow retrieval of the record it's not there to identify the debtor anybody's searching the UCC records by debtor name already knows who the debtor is it's not there to communicate information about the debtor it's not there to indicate the capacity of the debtor the only reason why it is on the financing statement is to allow retrieval the record using clear and consistent rules and because of the this sole purpose of the name on the financing statement the name of the name required for purposes of the financing statement the rules for determining that are not intuitive in some cases the name required for purposes of the financing statement is not the name of the debtor it's a name used to represent the debtor to allow for expediency in the retrieval process and what it really boils down to with the secured party name or the debtor name rules as well is that the burden is on the secured party to get it right searchers are not expected to go figure out what all the possible different names under which a UCC record could be filed and then search each it's the secured party's responsibility to get that name right and that's noted in the official comments to article 9 and as we'll see here in a minute it's also embedded in the statute based on the allocation of risk couple other essential concepts to understand about the better named rules one is that whatever goes in the name field is the debtor name and that's because the filing offices are required to index the contents of the name field exactly as it's presented to them so they they are going to enter that string of characters that's in the name field exactly as it appears even if there's a blatant error in there that any human could see and that's because when it comes to indexing judgment discretion have been removed from the filing office they just it's up to the filer to get it right so they they just enter it exactly as it appears and as a result if it goes in the name field it is it becomes part of the debtor name and whether its intended to be part of the debtor name or not and a corollary to that is if it's not in the name field the debtor name isn't provided it doesn't go on an attached schedule or something like that if it goes on an attached schedule it's not in a debtor name field the filing office won't index that because they're not required to look around and try to determine what the file are intended the way they determine what the file are intended is whether the name is in the name field and there's a case out there that illustrates this in rake Ametek you know they're the secured party put two debtor names on an attached schedule rather than using addendum forms to which have debtor name fields and by putting them on attach schedules the court held they weren't provided so the secured party wasn't perfected with respect to those debtors so be sure to put them in the debtor name fields now when it comes to debtor names sufficiency it's really important to understand the the general rules related to sufficiency the the rules for the specific debtor names that are required for purposes of the financing statement are found in section 9 503 a and these are based upon the particular type of debtor or the status of the collateral in certain cases the the status of the collateral determines what name is required for purposes of a financing statement now if a secured party fails to provide the name required by section 9 503 a then under Section nine 506 B the financing statement is seriously misleading and not effective now when it comes to providing the correct name it has to be precise even a comma out of place means it's not the correct name of the debtor and then nine 506 B I'll kick in and make it seriously misleading and not effective although there is an exception and the is an important exception and that is under Section nine 506 C if a search of the records of the filing office under the debtors correct name using the jurisdiction standard search logic would disclose the record then the the name or the financing statement that fails to sufficiently provide the debtor name it does not make the financing statement seriously misleading so in other words if a search using the jurisdiction standard search logic would find it then it does then it doesn't matter at that point in time if the debtor name doesn't comply with section nine 503 eight so when we boil it all down we've got two different options here one either the debtor name strictly complies with the name requirements of section 9 503 a and again I mean strictly it has to be an exact match to how that name appears on the source document for that name as specified in article 9 if there's any deviation whatsoever then it's not the name of the debtor but if it does comply with section 9 503 a then the secured party is going to be perfected even if the filing office makes an indexing error or something like that the secured party if they get it right they have those protections now if the name doesn't comply with section 903 a then we have the alternative test if it doesn't comply with 9 503 a then we do a search of the correct debtor name using the jurisdiction standard search logic and if the record is disclosed then the financing statement is not seriously misleading however the protection offered by standard search logic and by benign 506 C is actually very limited it's really important to understand how that search logic works so I'm going to run through that in a nutshell the idea behind the model standard search logic and section 9 506 C is to protect filers from minor very minor errors in a debtor name you know a deviation and punctuation that's really non substantive and it does this by disregarding certain parts of a name punctuation spacing ending noise words and but the beginning of the name and it does this through a normalization process what happens is the name that's provided on the financing statement is entered into the searchable index and then the computer takes that name and it runs it through a multi-step process first it makes a case neutral then it removes punctuation it strips out the ending noise words it disregards the from the beginning of the name and then it deletes the spacing and what you're left with is a string of text derived from the name on the financing statement then when somebody conducts a search the name searched has run through the same normalization process and at that point after both the search of name has been normalized and the financing statement name has been normalized does the computer match and report only exact matches at that point now again remember whatever goes in the name field gets run through that normalization process and whether it's intended to be part of the name or not it becomes part of the name I mean here's an example of how it can work in real life on at the top there on the left you see the name as it appears in the source document for this debtor this is the statutory source document for purposes of section 9 503 8 if you look to the right you see in box 1a that is how the name appears on the financing statement and the filer has added some descriptive information in there now you and I looking at this know it's the same debtor but it's not a human standard to determine whether a debtor name is correct or not well it's a computer standard and computers don't read think comprehend or understand all they do is match so if we take a look at this because the string of text on the financing statement not equal the string of text for the correct name of the debtor it's not the correct name of the debtor and as a result it's only going to be sufficient if a search using the jurisdiction standard search logic would disclose the record well in this case when we run through the normalization process we're gonna take that name we're gonna make a case neutral strip out the punctuation the ending noise words will delete the spaces there's no leading gutter removed and what you wind up with is the normalized name on the on the correct name on the public organic record here and the name on the financing statement and if you look at the normalized names in both cases they don't match as a result the name on the financing statement because it's not the name of the debtor required by nine 503 a and they don't match in the normalized strings that means it won't be disclosed on the record consequently financing statement is seriously misleading and not effective so there's not a lot of margin for error in here moreover there are other issues with standard search logic about two-thirds of the states out there use the type of search logic I've just described they use but they don't use it consistently each one had to program its own search logic so there's some variances by of interpretation as to what the normalization steps mean so you get some differences in how many times it'll go through and remove noise words the states have different noise word lists it's not consistent not all punctuation is treated as punctuation by all states for example the ampersand in some states is deemed the equivalent of the word and in other states that's deleted as punctuation and in other states it's determined to be the equivalent of a word but it's different than and so it's left in during the normalization process states really struggle with any type character or symbol it isn't found on a standard keyboard and spacing can make a difference even though it does delete spaces some states of program their search logic to delete one space but not too so that can affect it and then to complicate matters further there are states that don't follow the model standard search logic the model standard search logic comes from the Ayaka model administrative rules for article 9 those are sometimes called Mars and there are a number of states that have the non Mars search logic some states like Florida and in Alaska they use a phone book style search logic others use an exact match like Utah and others have different variations and you know filers if they're at the mercy of the search logic they're at the mercy of the search logic of the particular state that they filed in there isn't a lot of room for error the search logic simply isn't going to prevent a lot of errors from making a record seriously misleading so even if the search logic does save a financing statement that has a non-compliant debtor name the filer should never rely on that savings clause amongst other things what happens if the search logic changes if the filer didn't provide the debtor name correctly I think there's a very good chance that the courts would determine that while they're at the mercy of the search logic search logic changed tough it doesn't show up anymore and you have no way of proving that it showed up before the search logic change change so never rely on the standard search logic get the debtor name right get it precise so with that now I want to talk about the specific types of debtors and collateral situations and what's required for those for those debtors and collateral types we'll begin with the most common type of debtor in a in a commercial loan transaction and that will be the registered organization article 9 defines registered organization to mean an entity formed or organized by the filing of or issuance of a public organic record or the enactment of legislation this is going to include corporations LLC's and and similar entities now if the debtor is a registered organization the financing statement is sufficient only if it provides the names stated to be the name of the organization on the public organic record most recently filed with or issued by or enacted by a jurisdiction so we have to actually look at the definition of what a public organic record is because clearly the public organic record is the source of the debtor name of a registered organization for purposes of the financing statement now public organic record is defined by article 9 and it means the record initially filed with or issued by a state or the US the forms and entity it also includes legislation that creates an entity it includes the record of a business trust that's required to be filed as a public record under state business trust law and it includes any record filed to amend to restate the name on any of those records I've just mentioned so for example registrate a public organic record would in this type of case would mean the Articles of Incorporation for a corporation the articles of organization for an LLC it would include the declaration of trust that has to be filed with the state for a business trust it would also include the legislation that performed a public type of entity such as Fannie Mae or Freddie Mac so public organic record and of course if they've been amended to change the name it's the amendment the most recently filed public organic record so there are also some things that people sometimes think provide a source of registered organization names that are not a public organic wreck most specifically a certificate of good standing that isn't the name necessarily that's on the public organic record and likewise the state online business and to the database is not a public organic record it's not the the record that formed or organized the entity and as a result the state online business entity bit database may be different from the name found on the on the public organic record in fact the name on the certificate of Good Standing usually comes directly out of the business entity database so neither one of those should be used as a source of a debtor name for a registered organization unless cared party is willing to accept a certain degree of risk so after running through you know bearing in mind the search logic performance I talked about and the requirements for a registered organization to provide the name on the public organic record let's take a look at some examples this is something we see from time to time it's common error here somebody has provided that the actually the correct name of the registered organizations in Ross tires Inc but then they've added more to it they've added DBA HTC Tire & Automotive centers first thing bear in mind that under article 9 a trade name is neither necessary nor sufficient for purposes of the financing statement in other words providing the name providing a debtor's trade name is not sufficient it's not required on the financing statement if it is provided in the debtor name field with the correct name of the debtor well the correct name of the debtor now forms only part of the debtor name and the debtor name is this entire string of characters now this particular example came out of a court case and what happened was the debtor had filed for bankruptcy the secured party that filed this financing statement found itself being challenged and the secured party argued that once you get the correct name of the debtor on there everything after that should just be disregarded but the court correctly pointed out that the filing office is required the index at entire characters and by indexing that entire string of characters that becomes the debtor name and by adding all these extra characters in there into the searchable index that will inevitably cause the standard search logic to not find this financing statement so it's not the name of the debtor and with the with the extra text in there it's going to prevent the search from finding it as a result it's going to be seriously misleading and not effective that's what the court found here we have another example we have the Aspen utility company LLC but we have a little boo-boo in here somebody was a little fast on the keyboard and misspelled up well some people might think well it doesn't really matter because not the beginning is disregarded and that is true in most states but we don't have that at the beginning of the name we have Peh and the computer isn't that smart it sees teh at the beginning of the name it doesn't disregard it so somebody who is searching the Aspen utility company LLC the computer is going to compare Aspen utility to teh Aspen utility be after the ending noise words are disregarded it's not the name of the debtor and it won't show up on a search seriously misleading and not effective another example here we have kwm electronics corporation this is what was filed on the financing statement however if you look to the public organic record this is the name on the public organic record and if you look closely at this you'll find that there were periods after each of those initials and those periods were omitted from name on the financing statement well unfortunately for the secured party this record was filed in Utah Utah standard search logic does not disregard punctuation the court found that this was without the punctuation it was not the name of the debtor and because it didn't show up on a search of the correct name of the debtor because punctuation is not disregarded on the Utah search logic the result is that this financing statement was seriously misleading and not effective now if the same thing had happened in a different state the outcome might have been different so even the most tiny deviations can have a harsh consequence for the secured party from a searching perspective just one thing I want to point out don't assume just because something is really unusual looking that the name isn't effective searchers have a whole different set of concerns and filers do when it comes to looking for debtor names now here fisherman's corner LLC with LLC in quotation marks I stumbled across this one and I thought well somebody really made a boo-boo here because if this is in a state that doesn't disregard quotation marks is punctuation the secured parties in trouble until I looked at the public Organic record and lo and behold the public organic record has the LLC in quotes consequently this is the correct name of the debtor and the filer got it right so when it comes to providing the name of a registered organization the first step is always to conduct thorough due diligence taking any shortcuts like using the online database or certificate a good standing for the source of the name carries risk you know the the more due diligence the better of course it's always a cost benefit analysis on just how much to do but for a registered organization be sure to use the name exactly as it appears on the public organic record most recently filed with issued by or enacted by the state or the US and I mean exactly with spelling identical no abbreviations identical spelling spacing needs to be identical punctuation word order I would even go so far as to say upper and lower case should be identical to how it appears on the source document and never add anything to the name don't put in don't add in titles or the capacity of a debtor and this applies not just to registered organizations but all types of debtor names and never put any explanations or just Tripta text into that field it will almost always make the financing statement seriously misleading and not effective now I want to move on and talk about the second most common type of debtor out there and that's the individual when it comes to individual debtor name rules there was some controversy over what the best way to approach individual debtor names was during the drafting process for the most recent amendments article 9 ultimately the drafting committee in the stakeholders arrived at to all legislative alternatives that they offered to let the state's decide which way they wanted to go the the majority rule today what most states enacted is what was called the alternative a only if rule and what that means is that under the alternative a only if rule the financing statement is sufficient only if it provides the name in indicated on the individuals driver's license although some states added a phrase driver's license or state-issued ID card and to be sufficient though the driver's license has to be unexpired and issued by the state where the UCC record will be filed if the debtor doesn't have a driver's license or alternative ID if the state law allows then there's a second tier safe harbor that allows the financing statement to provide the surname and first personal name of the debtor or the individual name of the debtor whatever that might be so that's all DL and and there's about 45 states if you include DC that have the alternative a rule the minority rule with about six states is called alternative be the alternative be safe harbor here the the same driver's license rule applies except it's optional the financing statement is sufficient only if it provides the individual name of the debtor the surname and first personal name of the debtor or the name indicated on the debtors driver's license so this unexpired in issue the state of filing in practice the driver's license is almost always going to be the starting point there are some other states and territories however that haven't adopted these rules but all 50 states and DC have now because the driver's license is always going to be the starting point for determining the correct name of an individual debtor it's important to know how to use the driver's license remember I said it has to be unexpired and issued by the state where the UCC was is to be filed so the first step in looking at the driver's license is not to look at the debtor name but to look at what state issued the driver's license is it the state where the debtor is located if the debtor like in this case we have an individual debtor an individual is going to be located for purposes of article 9 at his or her principal residence and the law of that state will govern perfection and priority now people don't always change their driver's license when they move across state lines so with this example if if this person actually moved to New Jersey two years ago and just never changed or New York driver's license the correct filing location is New Jersey and therefore a driver's license issued by New York State would not be a sufficient source of a debtor name however assuming that this individual does still reside in New York we still don't look to the name the next step is to look to the unexpired or to look to see when the driver's license expires here it doesn't expire until October of this year if we're filing today then that means the driver's license is unexpired and it's issued by the correct state so then we can go to the name but if it has expired then again the driver's licenses is not going to be legally sufficient as the name of the debtor even though it might provide the exact same name that would be sufficient for purposes of the financing statement now once we determine that the driver's license is a sufficient source of the name now we can extract the name to the financing statement this is an important step because then the components of the name on the financing statement may be in a different order than they appear on the driver's license it's up to the filer to extract the components of the name correctly and map them to the correct fields on the financing statement and in most cases that's fairly easy to do but there are some outliers there are some exceptions they don't pop up very often but when they do it it's necessary to address them one for example what happens if you have more than three components of the name here we have Mary Ellen Kate Johnson I can tell you that in some states they include no punctuation in driver's licenses so looking at this we can't tell if the first name is Mary Ellen or just Mary with Ellen is the middle name likewise we can't tell if Johnson is the last name or if K - Johnson would be the last name so how do you how do you get this correctly on the driver's license well or on the financing statement well the problem with this is that it has to be on the financing statement in the form that a court later is going to determine was the correct name of the debtor the problem is you can't always predict what a court is going to do so the the trick is to file it with name variations so that whatever a court decides was the correct name finds its way onto the financing statement and it you know in some cases that might be four different name variations most of the time it won't be another issue that can arise there's plenty of case law out there that says that nicknames are not sufficient as the name of the of an individual debtor you can't use Mike for Michael but those came out before the driver's license rule today how does that play out when it's the name on the driver's license and it displays what apparently is a nickname well in that case under the current law the name on the driver's license is the debtor name for purposes of the financing statement even if it provides a nickname or something like that so here because it is the for purposes of the financing statement that is the name that has to go on there now here's the the challenge for the filer what happens if the debtor later goes down changes our drivers license so it says Elizabeth instead of Liz well that's a name change event for purposes of article 9 and states are becoming a little less flexible and allowing people to pick how their name will appear on driver's licenses for a number of reasons not the least of which is the ability to travel by air these days so there's always a risk here that somebody's going to change your driver's license and if that happens that's a name change event for purposes of article 9 and the secured party will become unperfect 'add in after-acquired collateral unless they file an amendment within four months after that name change the problem for the secured party is that they don't have a way to know about the name change the debtor probably isn't going to think oh they change my driver's license changed I better run down and notify my secured lender so in this type of situation it might be a good idea to file as a second debtor the full name not so that if the driver's license ever does change the name is already on there what happens if there's a blatant typo in the debtor name well remember the name provided on the financing statement is the individual debtor name or the name on the driver's license is the correct debtor name for purposes of the financing statement and an error like that is going to have to go right on the financing statement now again what happens if this person goes down to the DMV and changes our driver's license to be correct well again that's going to be a name change event for purposes of article 9 so in this type of situation best practice would be to file the correct name without the typo as an alternative debtor and then that way you know if there is such a change then it does need its the financing statement already has it on there and that will help insulate the secured party against unknown named Changez another issue with the driver's license my understanding is there are some states that do allow certain special characters on a driver's license like the Enya character here that you know you might not find on your standard keyboard if that were to occur that is the correct name for purposes of the financing statement and therefore it has to go on the financing statement exactly as it appears on the driver's license you have to find a way to get that special character on there now this will be very rare it won't happen very often but if you ever do come across it be prepared and also be aware that in that some states will not index this character and it's very hard to tell how to search for this so in this type of situation I would recommend filing as a second debtor the name as somebody is likely to search it I mean we file these with the intent that they can be found on a search to avoid future problems so let's make it easy to find file it as somebody is likely to search it as an alternative debtor so when it comes to filing on individual debtors these days first step is to confirm that the driver's license or alternative ID is sufficient as the source of the debtor name remember it has to be issued by the state where the record will be filed and it has to be unexpired and if the debtor lacks the license or state ID that meets these qualifications then the filer needs to use the alternative safe harbor options once the driver's license is confirmed to be sufficient though then the secured party needs to map the name components onto the form into the correct fields and if there's any question on how to provide the name on the form or its electronic equivalent then don't be afraid to file name variations as additional debtors to ensure that whatever the court decides was the correct name which will always be after the fact that will ensure that whatever the court decides is on the financing statement hopef lly beyond the financing statement and finally preserve evidence it's a good idea to retain a copy of the driver's license that the secured party relied on because it's not a public record there's no not necessarily an easy paper trail that somebody can follow to show what the name was at a particular point in time once that driver's license changes there may be no evidence of what it was before so you know preserve that evidence in the files now there are two types of circumstances where the status of the collateral determines what name is required for purposes of financing statement one of those is when the collateral is being administered by a decedent's personal representative in other words when the collateral is part of a decedent's estate if the collateral is being administered by decedent's personal representative the debtor name is sufficient only if or the financing statement is sufficient only if it provides the name of the decedent and in a separate part of the financing statement indicates that the collateral is being administered by a personal representative so there's two requirements the name of the decedent and an indication so when filing on this type of debtor the thing to remember is the name of the decedent is an individual name it's not an organization name even though in a state is not an individual you know we're using a name to represent the debtor to allow retrieval the record not the actual name of the debtor itself the indication is not part of a debtor name it is to be provided in a separate part of the financing statement if it is provided in the debtor name it will nearly always render the financing statement seriously misleading and not effective when dealing with this type of debtor name you know remember that we're dealing with that individual name here we have an example of how people are tempted to provide the name of an estate and by the way most of the examples I'm using in this presentation are very recent most of them within the last year or two were filed so this isn't these aren't old things that have been sitting out there since the since the old days before 2001 here we have a state of palsy premise a number of problems here first of all it's in the organization name field if the name of the decedent is required it's an individual name it has to go in the individual name field premise and the last name Paul in the first name C in the middle name plus it has the indication in the name field remember this has to go in a separate part of the financing statement if it's added to the name field this extra text because it's not part of the name will prevent a search on the correct name from finding it capacity is not part of a debtor name and in fact if the collateral is being administered by decedent's personal representative who may be called an executor the name of the executor is not sufficient proper way to provide this one is Nelson in the last name Douglas and the first name me in the middle name check the box on the bottom of the form but here they've just provided a lot of extra information that will prevent it from ever being found in a search and it won't be the correct name of the debtor here we have somebody that provided it as an individual name but included the indication in the name field in the surname field rather than in a separate part of the financing statement that'll make it seriously misleading and not effective every time here we have somebody that provided the indication in the suffix field I don't know if this qualifies as a separate part of the financing statement suffix is very closely related to the debtor name field but I'm not I'm not sure if it would count as part of the name or part of a or a separate part of the financing statement so it you know Court would have to decide that issue definitely not the middle name field you know the that indication must not be made there the proper way to make that indication is using the checkbox on the form so remember the name of the decedent is an individual name use the individual name fields and provide it just as if it was a living person's name there is a safe harbor for the name of the decedent a court order appointing a personal representative can serve as the source document for the name of the decedent and make that indication checking the appropriate box in item 5 of the form or it's electronic equivalent don't put it in the name field if the collateral is held in a trust that is not a registered organization then the financing statement is sufficient only if it provides the name of the trust specified in its Organic records or if no name is specified in the organic record the name of the set lor or test state or the set lor is the person or entity that created the trust so as a test state or so it applies to both a trust created by a living person or a trust that's created as part of a last will and testament and then in a separate part of the financing statement the financing statement must indicate that the collateral is held in a trust now if the name of the set lor is provided then there's some additional information that's required in a separate part of the financing statement there has to be additional information to distinguish the trust from other trusts with one or more of the same set Wars but again this is all separate part of the financing statement so remember the only names that are permitted are the names of the trust or the name of the cell or of an unnamed trust the name of the trustee is not sufficient even though the trustee typically is going to be the debtor the actual debtor when when the collateral is held in a common law trust the trustee is the one granting the security interest but don't confuse the name of the debtor of the actual debtor with the name of the debtor that's required for purposes of the financing statement they may be different the additional information and the trust indication is not part of the debtor name it is required to be provided in a separate part of the financing statement and use the check box to make the indication that's required I mean there are a lot of different ways people provide trust names and if you look at these five examples these are all filed covering collateral held in the same trust yet we've got five different names which name is correct I don't know if any of them are correct because you have to start with the with the organic record of the trust that's the only way that somebody preparing a financing statement can know what name is required it's either the name of the trust or the name of the set lor you know here we have they provided the Clarence a Gris fingered declaration of trust agreement dated April 22nd 1996 in other words they're naming the trust agreement as the debtor no it's the name of the trust or the name of the cell or not the agreement the agreement cannot be a debtor here we've got the name of the trustee that's been provided the name of the trustee is not sufficient and even if it was the name of the trustee you know adding the word trustee is adding a statement of capacity and that's not part of a debtor name so you know the name of the trustee is typically not sufficient unless the trustee is also the cell or of an unnamed trust but then the name is being provided in the capacity and set lor nevertheless adding capacity to the name provided on the financing statement is going to be a problem here we have you know you know that they're giving information in the name field that is not part of the name they're describing the agreement well that's helpful to distinguish from other trusts with the same set lower set lures but remember it goes in a separate part of the financing statement and here again we have the name of the set lor it's a registered organisation Joe pecky Inc and so it's provided correctly in the organisation name field but it includes a statement of capacity and it describes the trust the debtor name that the CAIR party is provided here is that pull string of text that pull string of text doesn't equal the correct name of the set lor which is simply Joe techie Inc as a results not the name of the debtor and it will prevent the financing statement from being effective because it won't show up on a search in fact long trust names are almost always a red flag that if it's a long name it generally means that they're providing extra information that doesn't belong as part of the debtor name here the secured party has provided the name of the trustee and a whole list of the succession of trustees and name changes and everything the only problem with this 458 character debtor name is that the state where this was filed can't even index that many characters in fact it gets cut off on the third line and the only unique identifier in that whole thing would be trust number 3 1 5 and because that appears at the end it never makes it into the index and there's no search in the world that's going to find this it's not the name of the debtor the extra text means it'll never show up on a search good rule of thumb if a financing statement if the name on the financing statement ever exceeds the space provided one line that's probably because it contains information that would render it seriously misleading so again a good rule of thumb it's a red flag if the debtor name can't easily fit within the space provided on the form or it's electronic equivalent so when dealing with trust related financing statements always start with the Trust's organic record without it the filer cannot know whether the name of the trust or the name of the set lor is required there is a safe harbor for the name of the set lor or the testator and that's the name indicated on the Trust's organic record for the set lor or test date or unless the settler is a registered organisation in which case they're treated as a registered organisation determine the type of you know what type of name if it's a organisation name it goes in the organisation name field if it's an individual name of a cell or it goes in the individual name field and make sure to provide it correctly don't include statements of capacity or additional descriptive information to distinguish from other trusts all that goes in a separate part of the financing statement now for any other type of organization the name that's required is the name of the debtor it's a catch-all provision so it's really left to the best judgment to the filer so the fight it's the filers best judgment that's going to determine what the name is you know they there's no there's been one case on this it was only a couple of years ago where the individual names of joint pet joint venture partners were not required because there was a name for the joint venture and therefore they didn't have to have the individual names so but the the file are they're determined that the name of the joint what the name of the joint venture was by conducting adequate due diligence to determine that so when it comes to other organizations conduct thorough due diligence and what the organization's name can be review all the official documents and again it's not a registered organization so there's not going to be that public record of what the name is so if more than one name could be correct don't be afraid to file possible name variations as additional debtors and finally what does somebody do if the debtor doesn't have a name well under article 9 if the debtor doesn't have a name then the financing statement must provide the names of the partners members associates and other persons comprising the debtor and the name must be provided as if those parties were debtors in their own right so list them each as a separate debtor and beware if there is an unnamed debtor don't be tempted to create a name don't assume that it must have a name if it doesn't appear to have one you can certainly file under what could possibly be correct but if it's not clear that the debtor has a name file in addition to what name or names might be be sure to include the names of the parties that comprised of the debtor all listed as separate debtors to wrap up here just a couple of additional resources we do have some debtor name resources on CSC transaction watch including a 50-state survey and checklist of individual debtor name requirements I also recommend looking at the official comments that are relative to debtor names found in article 9 the official comments oftentimes explain in more detail what really is required these you typically aren't going to find in the statutes you're going to have to look to the probably the official publication of the Uniform Law Commission of the UCC and it also helps to have the Akkad model model administrative rules which are what most states follow when it comes to how they handle better names during indexing they will explain you know what goes into a name and more importantly what doesn't go into a name in those rules so most states do follow those so with that I'm going to wrap up the presentation you can download a copy from Adobe Connect here and my contact information will be on there I'm going to take questions here in just a minute but if you think of questions after the fact you can always feel free to contact me directly so with that I knew I'm going to turn it back over to you for Q&A thank you Paul that was great we will now open up the Q&A session also on the screen we have one last question for you would you like to be contracted by UCC specialist we'll keep this up so you cannot make your selection throughout the Q&A session and also just as a reminder you can download a copy of today's materials from the handouts box and if you'd like to see what other webinar CSC offers click on the free education webinars link in the join us for more box so now let's take some questions from the audience Paul Pattie Roden do you have to have an unexpired driver's life before renewing a UCC it's a good idea because if the driver's license has expired then that can that can create a name change for example let's say the driver's license provides the first name of Mike and it expires then it can't then it doesn't serve as the sufficient source of the name anymore and that may be a name name change event for purposes of article 9 and under the case law that's out there Mike is not sufficient for Michael so the secured party is going to become unperfect 'add and if they continue I should say they'll become unperfect and after acquired property they'll their existing collateral will remain they'll remain perfected in but usually around continuation time is a good time to check and verify that the driver's license is still unexpired and that there's been no no change in the driver's license but you can continue it without doing it but you know it's a good time it's a good time to check and make sure the name is still the correct name thank you Linda wrote in what is the most reliable source for verification of better name it depends on the type of debtor for a registered organization it's the public organic record that's the only sufficient source of the better name for an individual it's the starting point is always the driver's license although that may not be sufficient if it's unexpired or issued by the wrong state for a decedent's estate it's the name of the decedent and if there's a court order appointing a personal representative it would be the name of the decedent indicated on that court order and for a trust it's always the organic record of the trust for any other type of debtor there is no hard and fast rule as to what the source of the name is you have to go conduct thorough due diligence determine what name or names could be correct and then file on any possibly correct variations great thank you and Rodan should the entity description be added at the end of the debtor name I frequently see ABC LLC the state name limited liability company yeah this happens all the time you'll see XYZ LLC a Texas limited liability company and if that is added on to the end of the name it will in nearly all cases render the financing statement seriously misleading because with that extra text in there the string of text in the name field is not the string of text that represents the correct name of the debtor and because it's not the correct name of t e debtor that means it's only going to be sufficient if it shows up on a search using the jurisdiction standard search logic and the while while the ending there the limited liability company would be disregarded Texas is not an ending noise word and would not be disregarded so they're a search of the correct name would normalize to if it was XYZ LLC that would normalize that just X Y Z whereas XYZ LLC a Texas limited liability company would normalize to XYZ LLC a Texas and as a result the two strings aren't going to match it'll be seriously misleading and not effective use the name exactly as it appears in the source document do not ever add anything to the name it will in most cases result in a seriously misleading financing statement thank you Trish is asking on individual name variations are we to add all the variations to the security agreement as well that's not necessary the security agreement is is a different purpose that's what defines the rights of the parties normal contract law pretty much applies to that as well as the article 9 security agreement requirements but remember that the financing statement is just a notice and it's out there just to be found the debtor name on the security agreement is there to bind the debtor the debtor name on the UCC record the financing statement is there to allow retrieval the records so the the it's apples and oranges no need add all those to the security agreement it's a whole different whole different purpose for that that type of record okay let's take one more question Jody is asking what our safe harbor option birth certificate any other no birth certificate is not a safe harbor option there are two safe harbor options if a safe harbor applies to an individual debtor named and that is the surname and first personal name of the debtor in other words just the last name and first name or the individual name of the debtor which is what the standard was before the recent amendments took effect in most states in 2013 which is kind of a vague standard it's one that leaves it up to the best judgment of the filer the birth certificate is not a safe harbor option so you know again even with a safe harbor option it may be necessary to file one or more name variations as separate debtors because it really is left to the best judgment of the filer based on the available evidence the birth certificate is part of that evidence but it is by no means determinative of what the correct name of the debtor is for purposes of the safe harbor options okay thank you so that is all the time we have today if we didn't get your question and I know that there are many that we did not get to we will contact you with the response after the webinar thank you to everyone who joined us today we hope to see you next time [Music]