Revised UCC Article 9 On Its Way

The Y2K problem is only one hurdle which the secured credit industry will be facing in the new millennium. In July, 1998, the National Commission on Uniform Laws adopted a complete revision of Article 9 of the Uniform Commercial Code. Article 9 governs various aspects of secured transactions, including the respective priorities among secured creditors, the methodology for perfecting a security interest in a borrower's assets and the procedures which enable a secured creditor to take control of the collateral upon default. It is anticipated that by January, 2001, many if not all of the fifty states will have adopted revised Article 9. Among the highlights are the elimination of the requirement of a borrower's signature on a financing statement (a letter authorizing the lender to sign the financing statement is sufficient), a revision of the rules regarding where the UCC financing statement must be filed and the adequacy of the description of collateral to be contained on the financing statement and in the security agreement. These revisions may potentially cause greater upheaval in the "space odyssey year" than most anticipate. In future issues, we will provide further background on the proposed Article 9.