Full Text of SB1692 97th General Assembly
SB1692 97TH GENERAL ASSEMBLY |
| | 97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012 SB1692 Introduced 2/9/2011, by Sen. A. J. Wilhelmi SYNOPSIS AS INTRODUCED: |
| 810 ILCS 5/9-501.1 new | | 810 ILCS 5/9-510 | | 810 ILCS 5/9-516 | |
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Amends the Uniform Commercial Code. Provides that no person shall file a fraudulent financing statement and assigns civil and criminal penalties for such filings. Provides a procedure for filing a form affidavit to provide notice of a fraudulent financing statement or amendment and provides guidance for when the Secretary of State may terminate the financing statement or amendment based on the affidavit. Provides that a filing office may terminate a record under specified circumstances with notice to the filer of the financing statement or amendment. Provides several circumstances where effective filing does not occur. Effective immediately.
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| | A BILL FOR |
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| 1 | | AN ACT concerning business.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Uniform Commercial Code is amended by | 5 | | changing Sections 9-510 and 9-516 and by adding Section 9-501.1 | 6 | | as follows: | 7 | | (810 ILCS 5/9-501.1 new) | 8 | | Sec. 9-501.1. Fraudulent financing statements and | 9 | | amendments. | 10 | | (a) No person shall cause to be presented for filing a | 11 | | financing statement or amendment that the person knows or | 12 | | reasonably should know: | 13 | | (1) is not related to a valid lien, a valid security | 14 | | agreement, or a judgment of a court of competent | 15 | | jurisdiction; | 16 | | (2) is for an improper purpose or purposes, such as to | 17 | | harass, hinder, defraud, or otherwise interfere with any | 18 | | person; or | 19 | | (3) contains materially false or misleading | 20 | | information. | 21 | | (b) A person who submits or is responsible for submitting | 22 | | any financing statement or amendment in violation of subsection | 23 | | (a) is guilty of a Class A misdemeanor and a Class 4 felony for |
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| 1 | | a second or subsequent offense. | 2 | | (c) A person who violates subsection (a) shall be liable to | 3 | | each injured person for: | 4 | | (1) the greater of nominal damages up to $10,000 or the | 5 | | actual damages caused by the violation; | 6 | | (2) reasonable attorney fees; | 7 | | (3) court costs and other related expenses of bringing | 8 | | an action, including investigative expenses; and | 9 | | (4) exemplary damages in an amount determined by the | 10 | | court. | 11 | | (d) The Secretary of State shall adopt and make available a | 12 | | form affidavit to provide notice of a fraudulent financing | 13 | | statement or amendment. A person identified as a debtor in a | 14 | | financing statement or amendment filed with the Secretary of | 15 | | State may file such fraudulent filing affidavit under penalty | 16 | | of perjury with the Secretary of State. | 17 | | A person shall not file an affidavit under this Section | 18 | | with respect to a financing statement or amendment filed by a | 19 | | regulated financial institution or a representative of a | 20 | | regulated financial institution. | 21 | | (e) Upon receipt of an affidavit filed under this Section, | 22 | | or upon administrative action by the Secretary, the Secretary | 23 | | of State shall request from the filer of the financing | 24 | | statement or amendment additional documentation supporting the | 25 | | filing. The Department of Business Services of the Office of | 26 | | the Secretary of State and the Office of the General Counsel |
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| 1 | | shall review all such documentation received within 30 days of | 2 | | receipt. The Secretary of State may terminate the financing | 3 | | statement or amendment effective 30 days from the date of | 4 | | notice if it has a reasonable basis for concluding that: | 5 | | (1) the record is materially false or fraudulent; | 6 | | (2) the record was filed for the purpose of harassing | 7 | | any person; | 8 | | (3) the record asserts a claim against a current or | 9 | | former employee or officer of a federal, State, county, or | 10 | | other local governmental unit that relates to the | 11 | | performance of the officer's or employee's public duties | 12 | | and for which the filer does not hold a properly executed | 13 | | security agreement or judgment from a court of competent | 14 | | jurisdiction; | 15 | | (4) in the case of a record submitted to the filing | 16 | | office described in Section 9-501(b), the debtor does not | 17 | | meet the definition of a transmitting utility as described | 18 | | in Section 9-102(a)(80); | 19 | | (5) in the case of a record submitted to the filing | 20 | | office described in Section 9-501(a), the transaction does | 21 | | not meet the definition of a manufactured-home transaction | 22 | | as described in Section 9-102(a)(54); or | 23 | | (6) in the case of a record submitted to the filing | 24 | | office described in Section 9-501(a), the transaction does | 25 | | not meet the definition of a public-finance transaction as | 26 | | described in Section 9-102(a)(67). |
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| 1 | | (f) The Secretary of State shall not charge a fee to file | 2 | | an affidavit under this Section. The Secretary of State shall | 3 | | not return any filing fee paid for filing a financing statement | 4 | | or amendment, regardless of whether the financing statement or | 5 | | amendment is terminated under this Section. | 6 | | (g) The Secretary of State shall send notice of the | 7 | | termination of a financing statement or an amendment under | 8 | | subsection (e) to the filer of the financing statement or | 9 | | amendment advising the filer that the financing statement or | 10 | | amendment has been terminated. If the filer believes in good | 11 | | faith that the statement or amendment was legally filed and is | 12 | | not fraudulent, the filer may file an action to reinstate the | 13 | | financing statement or amendment. | 14 | | (h) If a court or tribunal in an action under this Section | 15 | | determines that the financing statement or amendment should be | 16 | | reinstated or accepted, the court or tribunal shall provide a | 17 | | copy of its order to the Secretary of State. On receipt of an | 18 | | order reinstating a financing statement or an amendment, the | 19 | | Secretary of State shall file a record that identifies by its | 20 | | file number the initial financing statement or amendment to | 21 | | which the record relates and indicates that the financing | 22 | | statement or amendment has been reinstated. | 23 | | (i) On the filing of a record reinstating a financing | 24 | | statement or an amendment under subsection (h), the financing | 25 | | statement or amendment is effective as a filed record from the | 26 | | initial filing date. If a financing statement that is |
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| 1 | | reinstated would have lapsed during the period of termination, | 2 | | the secured party may file a continuation statement within 30 | 3 | | days after the record reinstating the financing statement is | 4 | | filed. The continuation statement is effective as a filed | 5 | | record from the date the financing statement would have lapsed. | 6 | | However, a financing or continuation statement or amendment is | 7 | | not retroactive as provided in this subsection as against a | 8 | | purchaser of the collateral that gives value in reasonable | 9 | | reliance on the absence of the record from the files. | 10 | | (j) Neither the filing office nor any of its employees | 11 | | incur liability for the termination of a record under this | 12 | | Section, the refusal to accept a record for filing under | 13 | | Section 9-516, or the failure to terminate a record or to | 14 | | refuse to accept a record for filing in the lawful performance | 15 | | of its duties. | 16 | | (k) As used in this Section, the term "regulated financial | 17 | | institution" means a financial institution subject to | 18 | | regulatory oversight or examination by a State or federal | 19 | | agency and includes banks, savings banks, savings | 20 | | associations, building and loan associations, credit unions, | 21 | | consumer finance companies, industrial banks, industrial loan | 22 | | companies, insurance companies, investment companies, | 23 | | installment sellers, mortgage servicers, sales finance | 24 | | companies, and leasing companies.
| 25 | | (810 ILCS 5/9-510)
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| 1 | | Sec. 9-510. Effectiveness of filed record.
| 2 | | (a) Filed record effective if authorized. A filed record is | 3 | | effective
only to the extent that it was filed by a person that | 4 | | may file it under Section
9-509.
| 5 | | (b) Authorization by one secured party of record. A record
| 6 | | authorized by one secured party of record does not affect the | 7 | | financing
statement
with respect to another secured party of | 8 | | record.
| 9 | | (c) Continuation statement not timely filed. A | 10 | | continuation
statement that is not filed within the six-month | 11 | | period prescribed by Section
9-515(d) is ineffective.
| 12 | | (d) A filed record ceases to be effective if the filing | 13 | | office terminates the record pursuant to Section 9-501.1. | 14 | | (Source: P.A. 91-893, eff. 7-1-01.)
| 15 | | (810 ILCS 5/9-516)
| 16 | | Sec. 9-516. What constitutes filing; effectiveness of | 17 | | filing.
| 18 | | (a) What constitutes filing. Except as otherwise provided | 19 | | in
subsection (b), communication of a record to a filing office | 20 | | and tender of the
filing
fee or acceptance of the record by the | 21 | | filing office constitutes filing.
| 22 | | (b) Refusal to accept record; filing does not occur. Filing | 23 | | does
not occur with respect to a record that a filing office | 24 | | refuses to accept
because:
| 25 | | (1) the record is not communicated by a method or |
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| 1 | | medium
of communication authorized by the filing office;
| 2 | | (2) an amount equal to or greater than the applicable | 3 | | filing
fee is not tendered;
| 4 | | (3) the filing office is unable to index the record | 5 | | because:
| 6 | | (A) in the case of an initial financing statement, | 7 | | the
record does not provide a name for the debtor;
| 8 | | (B) in the case of an amendment or correction
| 9 | | statement, the record:
| 10 | | (i) does not identify the initial financing
| 11 | | statement as required by Section 9-512 or 9-518, as | 12 | | applicable; or
| 13 | | (ii) identifies an initial financing statement
| 14 | | whose effectiveness has lapsed under Section | 15 | | 9-515;
| 16 | | (C) in the case of an initial financing statement | 17 | | that
provides the name of a debtor identified as an | 18 | | individual or an amendment that
provides a name of a | 19 | | debtor identified as an individual which was not | 20 | | previously
provided in the financing statement to | 21 | | which the record relates, the record does not
identify | 22 | | the debtor's last name;
| 23 | | (D) in the case of a record filed or recorded in | 24 | | the
filing office described in Section 9-501(a)(1), | 25 | | the record does not provide a
sufficient description of | 26 | | the real property to which it relates; or
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| 1 | | (E) in the case of a record submitted to the filing | 2 | | office described in Section 9-501(b), the debtor does | 3 | | not meet the definition of a transmitting utility as | 4 | | described in Section 9-102(a)(80); | 5 | | (F) in the case of a record submitted to the filing | 6 | | office described in Section 9-501(a), the transaction | 7 | | does not meet the definition of a manufactured home | 8 | | transaction as described in Section 9-102(a)(54); | 9 | | (G) in the case of a record submitted to the filing | 10 | | office described in Section 9-501(a), the transaction | 11 | | does not meet the definition of a public-finance | 12 | | transaction as described in Section 9-102(a)(67); | 13 | | (3.5) in the case of an initial financing statement or | 14 | | an amendment, if the filing office believes in good faith | 15 | | that a document submitted for filing is materially false or | 16 | | fraudulent or is being filed for the purpose of harassing | 17 | | any person or asserts a claim against a current or former | 18 | | employee or officer of a federal, State, county, or other | 19 | | local governmental unit that relates to the performance of | 20 | | the officer's or employee's public duties and for which the | 21 | | filer does not hold a properly executed security agreement | 22 | | or judgment from a court of competent jurisdiction being | 23 | | filed for the purpose of defrauding any person or harassing | 24 | | any person in the performance of duties as a public | 25 | | servant ;
| 26 | | (4) in the case of an initial financing statement or an
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| 1 | | amendment that adds a secured party of record, the record | 2 | | does not provide a
name
and mailing address for the secured | 3 | | party of record;
| 4 | | (5) in the case of an initial financing statement or an
| 5 | | amendment that provides a name of a debtor which was not | 6 | | previously provided in
the financing statement to which the | 7 | | amendment relates, the record does not:
| 8 | | (A) provide a mailing address for the debtor;
| 9 | | (B) indicate whether the debtor is an individual or | 10 | | an
organization; or
| 11 | | (C) if the financing statement indicates that the
| 12 | | debtor is an organization, provide:
| 13 | | (i) a type of organization for the debtor;
| 14 | | (ii) a jurisdiction of organization for the
| 15 | | debtor; or
| 16 | | (iii) an organizational identification number
| 17 | | for the debtor or indicate that the debtor has | 18 | | none;
| 19 | | (6) in the case of an assignment reflected in an | 20 | | initial
financing statement under Section 9-514(a) or an | 21 | | amendment filed under Section
9-514(b), the record does not | 22 | | provide a name and mailing address for the assignee;
or
| 23 | | (7) in the case of a continuation statement, the record | 24 | | is not
filed within the six-month period prescribed by | 25 | | Section 9-515(d).
| 26 | | (c) Rules applicable to subsection (b). For purposes of |
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| 1 | | subsection
(b):
| 2 | | (1) a record does not provide information if the filing | 3 | | office
is unable to read or decipher the information; and
| 4 | | (2) a record that does not indicate that it is an | 5 | | amendment or
identify an initial financing statement to | 6 | | which it relates, as required by
Section
9-512, 9-514, or | 7 | | 9-518, is an initial financing statement.
| 8 | | (d) Refusal to accept record; record effective as filed | 9 | | record. A
record that is communicated to the filing office with | 10 | | tender of the filing fee,
but
which the filing office refuses | 11 | | to accept for a reason other than one set forth
in
subsection | 12 | | (b), is effective as a filed record except as against a | 13 | | purchaser of
the
collateral which gives value in reasonable | 14 | | reliance upon the absence of the
record
from the files.
| 15 | | (e) The Secretary of State may refuse to accept a record | 16 | | for filing under subdivision (b)(3)(E) or (b)(3.5) only if the | 17 | | refusal is approved by the Department of Business Services of | 18 | | the Secretary of State and the General Counsel to the Secretary | 19 | | of State.
| 20 | | (Source: P.A. 95-446, eff. 1-1-08.)
| 21 | | Section 99. Effective date. This Act takes effect upon | 22 | | becoming law.
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