All secured parties that filed UCC financing statements on individual debtors in Tennessee since May 1, 2008 may need to take immediate action to remain perfected.  On Friday, June 13th Tennessee Governor Bredesen signed Senate Bill 372 to limit the broad safe harbor for individual debtor names enacted earlier this year.  The governor’s signature triggered a sixty-day transition period for secured parties to bring certain financing statements into compliance with the new requirements.

When Public Chapter 648 took effect on May 1st it created a broad safe harbor for individual debtor names if the financing statement provides the name shown on any one of five different identification documents.  Senate Bill 372 scaled back the safe harbor to just the debtor’s driver’s license or state-issued identification card.

Senate Bill 372 contains a sixty-day transition period to protect secured parties that correctly filed financing statements with an individual name shown on one of documents removed from the safe harbor.  Names shown on the debtor’s Social Security card, birth certificate, passport or military identification are no longer sufficient if they differ from the name shown on the driver’s license or state-issued identification card.  During the transition period secured parties must amend any non-compliant financing statement filed after May 1, 2008 to provide the name shown on the driver’s license or state-issued identification card.

Not all financing statements with individual debtor names are affected by SB 372. The following is a list of recommended actions for secured parties based on the financing statement file date:

Financing Statements filed between May 1, 2008 and June 13, 2008.  If the name on the financing statement does not match the individual name on the driver’s license or state-issued identification document the secured party must amend the financing statement by August 13, 2008.

Financing Statements filed before May 1, 2008. No action is required.  Public Chapter 648 did not apply to UCC records filed prior to the effective date.  Financing statements that sufficiently provided the name under former law continue to be effective.

Financing Statements filed after June 13, 2008. Records must provide the name shown on the individual’s driver’s license, state-issued identification document or otherwise be sufficient under Article 9.

Again, secured parties must act quickly to ensure that their financing statements remain effective following the transition period.

Please contact Paul Hodnefield, Associate General Counsel, with any questions.  He can be reached at (800) 927-9801, extension 2375, or phodnefi@cscinfo.com.

Disclaimer: The material contained herein is intended for information purposes only and shall not constitute legal advice or counsel.