Wyoming Enacts Non-Uniform 10-Year UCC Effective Life

By: Despina Shields, COGENCY GLOBAL on Mon, Mar 25, 2013

Article 9 Amendments

This summer, when the 2010 Article 9 Amendments become effective in most states, Wyoming will be the only state with a significant non-uniform provision to Section 9-515. As a result, most initial financing statements in Wyoming filed on or after July 1, 2013, will have a ten-year life span instead of the uniform five-year statutory period.[1] In addition, continuations filed in Wyoming on or after July 1, 2013, will extend the life of a filing for ten years from the lapse date rather than the conventional five years.

Past Non-Uniform Effective Periods Eliminated With 1998 Article 9 Revisions|
Since the major (1998) revisions to Article 9 became effective in most states in 2001, filers and searchers have appreciated the uniformity that resulted when all states and the District of Columbia enacted the uniform § 9-515 five-year effective life for most financing statements. Previously, a number of states had non-uniform statutory periods, including Maryland (12 years) and Arizona (6 years), while other states, such as Tennessee, offered various grace periods. When all states moved to the uniform five-year effective life, it became easier for filers to know when to continue UCC financing statements.

Impact of Wyoming’s Ten-Year Statutory Period on Filers and Searchers
The benefit to secured parties of extending the effective life of Wyoming financing statements is the reduced costs, in terms of labor and filing fees, of filing continuations. In addition, the longer effective period reduces the risk that a secured party will unintentionally fail to file a timely continuation and lose perfection. But these benefits come with costs.

While fewer continuation filings may be necessary with a longer statutory effective period, it is likely that secured parties will need to file more terminations than they have had to file in the past since debtors will not want to wait many years for filings to lapse. Secured parties are also likely to see an increase in due diligence costs as search results will eventually contain eleven years’ worth of filings instead of the current six years.[2] With filings remaining in the public record so long, searchers will eventually need to review twice as many results as before and will need to take into account that filings continued before July 1, 2013, are only given an additional five years, while those filed after that date are given an additional 10 years. In other words, secured lenders and their counsel will be spending more time and money examining search results than before.

Another disadvantage of Wyoming’s non-uniform ten-year effective period is that it will make it more challenging for nationwide filers to create and maintain their own tickler systems for tracking filings.

Drafters of Article 9 Revisions Encouraged Uniformity
The drafters of the 1998 and 2010 Article 9 revisions went to great lengths to improve the statute and they strongly encouraged uniformity across all states wherever possible. The five-year statutory period for financing statements appears to have served filers, searchers, debtors and filing offices well over the past twelve years. It is a curious decision by Wyoming to depart from uniformity in such a significant way and it remains to be seen whether the benefits of the ten-year effective period will outweigh the disadvantages.

To remain current on all upcoming non-uniform provisions and state-by-state progress concerning the Article 9 Amendments, visit the UCC Article 9 Amendments page of COGENCY GLOBAL INC.'s website.

[1] Note that Wyoming, along with most other states, will continue to provide an indefinite life (until terminated) for filings that indicate the debtor is a transmitting utility and a 30-year life for financing statements filed in connection with public finance or manufactured home transactions.

[2] Article 9 requires filing offices to keep filings on record one year past the lapse date, even if terminated. See § 9-519(g).


This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Article 9 Filing, Searching and Due Diligence, UCC