Last week, the Wyoming governor signed WY House Bill 3 into law. This piece of legislation, set to go into effect July 01, 2013, will extend the term of effectiveness for UCC Financing Statements filed in the state of Wyoming from five years to ten.
The change will not retroactively extend the term for existing UCC Financing Statements. All UCC Financing Statements filed before July 1, 2013 will retain their five year term while any UCC Financing Statement filed after July 1, 2013 will receive the newly extended ten year term. The Wyoming index is designed to be a self-purging system where a lapsed UCC filing will remain on the index for one year past its lapsed date, and then automatically drop off of the searchable index. Terminated filings will also remain on the index until one year past their natural lapse date.
Continuation Statements filed before July 1, 2013 will extend the term of the initial Financing Statement for an additional five years from the date the record would have originally lapsed. Continuation statements filed after July 01, 2013 will extend the term for ten years – even for UCC’s that were filed with an original five year term. Essentially, after July 01, 2013 all UCC1 Financing Statements and UCC3 Continuation Statements will have a ten year term of effectiveness.
The Wyoming legislature reasoned that extending the term for a UCC Financing Statement will benefit secured parties by sparing them the labor and expense of preparing and filing frequent continuations. They argue that the change will also result in fewer cases where a creditor loses their perfected status for an inadvertent failure to file a timely Continuation Statement.
Some UCC experts are concerned though that the passage of non-uniform provisions such as state-specific filing terms runs contrary to the spirit of the Uniform Commercial Code which seeks to provide a consistent foundation, across state lines, for commercial transactions. Critics also fear that a ten year term for UCC filings will result in UCC searches that generate more hits, many of which are no longer active, but will require additional research, at considerable time and expense for prospective lenders.
Readers, we want to hear from you! What are your thoughts? Are you in favor or opposed to Wyoming’s decision to extend the term of their UCC’s to ten years?
Click here to read the full text version of the bill.