REVISED ARTICLE 9 CONTINUED
Re-Perfecting Interests Secured under old Rules
Finally, new Article 9 governs priority of security interests that were not established prior to adoption of the revised Article. Thus, the relative priorities of security interests attached and perfected prior to the adoption of new Article 9 will continue to be governed by pre-revision rules.
The above discussion merely highlights some of the most salient points of new Article 9. The revision makes numerous additional changes to prior law, and readers are advised to consult with an attorney prior to taking any action. For more
information, please contact one of the attorneys in our
transactions group.
TRANSITION RULES
One Year Grace Period
One important question facing creditors is "will the security interest I perfected under the old rules remain perfected under the new rules?" The short answer to this question is that security interests will remain perfected only if perfected under the new rules. If perfection under prior Article 9 would satisfy rules for perfection under new Article 9, then no further action is required. On the other hand, interests perfected under prior Article 9 that do not conform to Article 9's revised requirements will remain perfected for only one year following adoption of the revised Article. Action by the secured party will be required to amend or update the financing statement to maintain a perfected security interest. The following chart breaks down the various permutations:
Note that creditors whose security interests attached after adoption of new Article 9, and where the interest was perfected under pre-revision rules, are also given the one year grace period to update or correct the filing in order to perfect under new Article 9.
There are two ways to re-perfect a security interest previously perfected under prior Article 9. If the location of the original filing would be correct under new Article 9, a "continuation statement" may be filed containing any amended or additional information needed to perfect under the revised Article. On the other hand, if new Article 9 would require filing in a different state, then an "in lieu" financing statement must be filed with the appropriate Secretary of State. The "in lieu" statement must identify the original filing by filing office, date of filing and filing number, and must indicate that the original filing remains effective in order to "continue" the priority of the original filing.
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