Amending the Article Nine Filing System to Meet Current Deficiencies
24 Pages Posted: 2 Jul 2015
Date Written: 1994
Article Nine is currently undergoing substantial revision. “Because secured credit is a trillion-dollar activity,” this revision is extraordinarily significant. A focal point of this amendment process is Article Nine's notice-filing system which apprises prospective creditors, and others, of a secured party's interest in a debtor's collateral. As few would dispute, the notice-filing system, which seeks to cure the “ostensible ownership problem,” is in serious need of repair.
Most fundamentally, the filing system, in its current form, has failed to achieve the uniformity and simplicity its drafters intended. Article Nine itself provides for three separate alternative filing office locations and some states have even adopted their own variations of these three suggested alternatives. Moreover, states and state filing offices have often supplemented the statute with their own administrative rules or procedures requiring the filing party to comply with requirements not sanctioned in the statute. With over 4300 filing offices in the United States, these peculiarities from jurisdiction to jurisdiction indicate little uniformity exists in the filing system.
In addition to difficulties with uniformity, the current Article Nine filing provisions also suffer from an inability to accommodate present and anticipated technological developments. For example, presently, section 9-402(1) includes the signature of the debtor among the formal requirements of a “sufficient” financing statement. However, suppose that current technology allows filing via electronic transmissions. Should a signature still be required? Why was it initially required? Do the same reasons exist today?
Unfortunately, yet perhaps not unexpectedly, a lack of uniformity and a failure to anticipate technological innovation are not the only problems with the Article Nine filing system. Many other problems exist. This Article details many of the more common problems below. It also suggests amendments to Article Nine, or areas of study for the drafters, to address these difficulties. By necessity, this Article's list of problems is incomplete. All those who have used, taught, or studied the Article Nine filing system doubtlessly have their own pet peeves or complaints. Although it is unrealistic to expect Article Nine to be revised to accommodate some of the more idiosyncratic problems, it is highly likely that the drafters will confront and, one hopes, remedy the more common difficulties explored in this Article -- a step clearly in the right direction.
Keywords: Article Nine, Amendment
Suggested Citation: Suggested Citation