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Filers and Searchers Beware! Maine Has Changed Its UCC Search Logic and Rules

By: Despina Shields, COGENCY GLOBAL INC. on Wed, Oct 30, 2013

UCC Search Logic resized 600On October 21, 2013, the Secretary of State’s office in Maine made a substantial change to its UCC search logic and administrative rules which affects search results for the Official Standard Debtor Search. This change limits search results to almost exact matches. According to the Maine Secretary of State’s website:[1]

One of the changes is that “noise words” (meaning the words and abbreviations at the end of a name that indicate the existence or nature of an organization) will no longer be disregarded in a search.

This means that when using the Official Standard Debtor Search in Maine, filings against the same name with different variations and common abbreviations of the corporate indicator at the end of the name will not be found.

EXAMPLE:  A UCC search on the debtor name “Example Entity, Corp.” typically yields the following results in most jurisdictions because corporate indicators are usually ignored:

  • Example Entity, Corp.
  • Example Entity, Corporation
  • Example Entity, Co.
  • Example Entity, Company
  • Example Entity, LLC
  • Example Entity, Limited Liability Company
  • Example Entity
  • Example Entity [with any other corporate
    indicators for entity types allowed in the particular state]

As a result of the change in search logic, an Official Standard Debtor Search in Maine on the name “Example Entity, Corp.” now only includes UCCs filed with that exact name and not any of the variations above that would be found in most other states. If any UCCs are on record for this debtor that do not have a corporate indicator, that spell out the word “Corporation” in full or that have a different corporate indicator, those financing statements will not  be included in the search results. In other words, “Corp.” and “Corporation” are no longer interchangeable in Maine, nor are the abbreviations and spelled out versions of other corporate indicators. 

So how might this change affect UCC filings already on record in Maine? Are there potential ramifications that secured parties need to be concerned about regarding the change in search logic? The answer to these questions is “Yes.” 

Section 9-506(c) of Article 9 says:

Financing statement not seriously misleading. If a search of the records of the filing office under the debtor’s correct name, using the filing office’s standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a), the name provided does not make the financing statement seriously misleading.

With Maine’s change in its standard search logic, filings that used to be found on a search of the correct legal entity name will no longer be found if the corporate indicator does not exactly match. So if the formation documents list the entity’s name as “Example Entity, Corp.,” a filing on record against “Example Entity, Corporation” will no longer be found on a standard search, and therefore, has become seriously misleading.

Tips for UCC Filers and Searchers

As a result of this change in standard search logic, there are some lessons for filers and searchers, no matter which jurisdiction they are filing in or searching:

  • FILERS:  Make sure to file against the EXACT legal name of registered organization debtors as the name appears in the formation documents or subsequent amendments, including the corporate indicator (spelled out or abbreviated) and punctuation.[2] If the UCC filing has a registered organization debtor name listed exactly as it is presented in the public organic record, then the filer is protected even if a jurisdiction changes the search logic. If you have UCC filings on record with the Maine Secretary of State and the debtor  name (even just the corporate indicator) does not exactly match the name that appears on the public organic record, you might consider filing an amendment to change the debtor name. This could prevent your filing from being missed on a standard search, which would make it seriously misleading.
  • SEARCHERS:  When conducting official searches of registered organization debtor names using the filing office’s standard search logic, make sure to search the name EXACTLY as it appears in the formation documents or subsequent amendments, including the corporate indicator and punctuation. Most searchers performing due diligence searches will likely also want to know about other filings on record, even if they would be deemed to be “seriously misleading," to get a clear picture of the borrower’s financial situation and to avoid future litigation. Many states, including Maine, offer “unofficial” searches that will bring up variations, thus making you aware of filings that would not be found against the exact correct name when the filing office’s standard search logic is used.

By following these tips, you can avoid problems and unpleasant surprises.


[2] While the standard search logic of Maine and most other states currently ignores punctuation, by making sure to include the correct punctuation on UCC filings, you will not have to worry if there is a subsequent change in the search logic which results in punctuation no longer being disregarded.

 

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

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