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Effective Life of UCC Filings under Article 9: Are You Aware of the Exceptions -- and the Exceptions to the Exceptions?

By: Despina Shields, COGENCY GLOBAL on Mon, Mar 16, 2015

The 2010 Amendments to Article 9 of the Uniform Commercial Code are finally near nationwide completion. New York State’s statute went into effect December 17th of 2014. Oklahoma is the only remaining state with legislation still pending. As the dust settles, focus turns to effective compliance with the new act in each state, including updating one’s tracking system for timely continuation of financing statements.

Model Act Exceptions to Five-Year Effective LifeUCC Effective Life
The model amended Article 9 provides a five-year effective life for most financing statements, with the following exceptions:

  1. When the filing indicates it is being filed in connection with a public finance or manufactured home transaction, the effective life is 30 years; or

  2. When it indicates that the debtor is a transmitting utility, there is an indefinite life, meaning the filing is effective until terminated.

First, to better understand the types of debtors and transactions that fall under the exceptions to the five-year effective life, clear definitions and examples are essential.

Transmitting Utility Filings
Per the model act, a “transmitting utility” is primarily engaged in the business of:

  1. Operating a railroad, subway, street railway or trolley bus;

  2. Transmitting communications electrically, electromagnetically, or by light;

  3. Transmitting goods by pipeline or sewer; or

  4. Transmitting, or producing and transmitting, electricity, steam, gas or water.

By the above definition, your mobile phone service provider is a transmitting utility, but the manufacturer of your mobile phone probably is not.  Amtrak, a passenger rail service, is a transmitting utility, but Greyhound, a passenger bus service provider, is not.  Traditional utilities such as California’s Pacific Gas & Electric, Chicago’s Commonwealth Edison, and New York’s Consolidated Edison are all transmitting utilities, as well.

Public Finance Transaction
A “public finance transaction” is defined as a secured transaction in connection with which all of the following characteristics are applied:

  1. Debt securities are issued;

  2. All or part of the issued securities have a stated initial maturity date of 20 years or more; and

  3. A party* to the transaction is a State, or a governmental unit of a State.

* Debtor, obligor, secured party, account debtor or other person obligated on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest.

The “public” aspect of the “public finance transaction” applies to one of the parties to the transaction. Per the above definition, for example, the debtor or secured party could be the State of Delaware or any of its departments or agencies.

Manufactured Home Transaction
The definition of a “manufactured home transaction” under the model act is a secured transaction in which:

  1. A purchase-money security interest is created in a manufactured home, not held as inventory; or

  2. A manufactured home, not held as inventory, is the primary collateral.

A manufactured home transaction is most likely to occur at the consumer level, when the home is initially purchased, or later used as collateral for a loan.

Exceptions --- and Exceptions to the Exceptions
It’s important to understand the above model act provisions for the effective life of UCC filings since thirty-four states have enacted all of them. It is equally important, however, to know about the states in which the exceptions do not apply.

The majority of states that have not conformed to the model act’s effective life provisions have chosen to limit the manufactured home and public finance transaction financing statements to the normal five-year effective life. Yet even among the outliers, there are outliers. Only West Virginia chose a 40-year effective life for manufactured home and public finance transactions. And Georgia has chosen to limit transmitting utility UCC filings to five years.

And did you know that the only state to depart from the standard five-year effective life of financing statements is Wyoming? There, financing statements filed after July 1, 2013, have a ten-year effective life.

Help with the New Rules
Now that the Article 9 Amendments are in place in almost all states, effective management of one’s UCC portfolio containing public finance transactions, manufactured home transactions, debtors which are transmitting utilities and Wyoming filings requires not just knowledge of the standard effective life rules and exceptions, but also the exceptions to the exceptions.

To view a concise summary of model act effective life rules along with details about the exceptions, review our Effective Life of Financing Statements Under Article 9 memo. It can be downloaded from the UCC Article 9 Filing and Searching Info page of the COGENCY GLOBAL INC. website, where you’ll find many other helpful UCC resources.


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