Amendments to UCC Law and How it Affects Major Lender’s in Cooperative Lending
By: Rosemary Liuzzo
Important amendments to the New York Uniform Commercial Code (UCC) were enacted as of December 17, 2014. The amendments specifically amended Articles 1, 7 and 9. As attorneys for major lenders we are particularly concerned with amendments made to Article 9 §9-503 (a)(4), “Sufficiency of debtor’s name.”
The new law, which is applied to all UCC’s filed on or after December 17, 2014, reads as follows, “If the debtor is an individual to whom NY State has issued a driver’s license or non-driver photo identification card that has not expired, the financing statement must provide the name of the individual as indicated on the driver’s license or non-driver photo identification card.”
Therefore, for every UCC filed on behalf of a lender in connection with a cooperative purchase or refinance the lender’s attorney must first request a copy of the borrower’s NY State issued driver’s license or non-driver photo identification card that has not expired prior to filing the UCC. The debtor’s name on the UCC must match the NY State issued driver’s license or non-driver photo identification card that has not expired.
In cases where a borrower’s name already does or will appear differently on the stock certificate and proprietary lease the lender’s attorney should add the name variation as debtor #2 on the UCC. If there is more then one borrower the lender’s attorney may file all variations using the UCC Financing Statement Additional Party (UCC1AP) form. This form will not cost the borrower any additional filing fees. By filing against both name variations the lender’s lien is guaranteed to be properly perfected.
It is important to note that the lender’s attorney must retain it’s copy of the NY State issued driver’s license or non-driver photo identification card that has not expired. This will protect the lender against future claims which may arise if a borrower changes his/her name on his/her license or non-driver ID post closing.
It is further important to note that according to §9-503(a)(5) “the individual name of the debtor or the surname and fist personal name of the debtor” may be used if a borrower ‘s identification is issued by another state.