Authorization Required to File Financing Statement - Explained
Permission to File a Financing Statement
Written by Jason Gordon
Updated at September 26th, 2021
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Table of Contents
What authorization is required to file a financing statement?Discussion QuestionPractice QuestionAcademic ResearchWhat authorization is required to file a financing statement?
A secured party must be authorized to file a financing statement against the assets of the debtor. If the debtor is bound by a security agreement, authorization to file a financing statement is implied. If the debtor is not bound (or not yet bound) by the security agreement, the debtor must authenticate the financing statement. This is normally done by signing a confirmation document. If the financing statement is not authorized, it is ineffective and the secured party is obligated to file a termination statement (or the debtor may do so). The UCC provides for a statutory penalty of $500 against the unauthorized filer.
Next Article: Appropriate Office to File a Financing Statement Back to: SECURED TRANSACTIONS
Related Topics
- Perfection of a security interest?
- Perfecting a security interest in personal property?
- UCC-1 Statement
- Security interest in real property (land)?
- Register of Deeds
- Automatic Perfection of a security interest?
- Purchase Money Security Interest (PMSI) in consumer goods?
- Purchase Money Grace Period for a PMSI in non-consumer goods?
- Continue perfection of a PMSI in non-consumer goods?
- Temporary Automatic Perfection in Proceeds from the sale of goods?
- How is a security interest created in Assignment of Accounts Receivable and Contract Rights?
- Perfect a security interest by Possession of the collateral?
- Perfect a security interest by Control of collateral?
- Perfect a security interest by Filing a Financing Statement?
- Authorization is required to file a financing statement?
- Where to file a financing statement?
- Defeasance
- Continuation Statement
Discussion Question
Why do you think the law provides detailed instructions on when a financial statement may be filed and when a party must terminate or withdraw the filing? Should the law allow for a secured party to file a financing statement if the debtor is not yet bound by a security agreement? Why or why not?
Practice Question
Mark agrees to purchase Eric's tractor. The parties have signed a promissory not, but have not yet established a written security agreement. Eric goes ahead and files a financing statement to perfect a security interest in the tractor until it is paid. What additional procedures must the parties follow?