Sen. Don Harmon

Filed: 3/26/2012

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 3813

2    AMENDMENT NO. ______. Amend Senate Bill 3813 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Uniform Commercial Code is amended by
5changing Sections 9-510 and 9-516 and by adding Section 9-501.1
6as follows:
 
7    (810 ILCS 5/9-501.1 new)
8    Sec. 9-501.1. Fraudulent records.
9    (a) No person shall cause to be communicated to the filing
10office for filing a false record the person knows or reasonably
11should know:
12        (1) is not authorized or permitted under Section 9-509,
13    9-708, or 9-808 of this Article;
14        (2) is not related to a valid existing or potential
15    commercial or financial transaction, an existing
16    agricultural or other lien, or a judgment of a court of

 

 

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1    competent jurisdiction; and
2        (3) is filed with the intent to harass or defraud the
3    person identified as debtor in the record or any other
4    person.
5    (b) A person who violates subsection (a) is guilty of a
6Class A misdemeanor for a first offense and a Class 4 felony
7for a second or subsequent offense.
8    (c) A person who violates subsection (a) shall be liable in
9a civil action to each injured person for:
10        (1) the greater of the actual damages caused by the
11    violation or up to $10,000 in lieu of actual damages;
12        (2) reasonable attorney's fees;
13        (3) court costs and other related expenses of bringing
14    an action, including reasonable investigative expenses;
15    and
16        (4) in the discretion of the court, exemplary damages
17    in an amount determined by the court or jury.
18    (d) A person identified as debtor in a filed record the
19person believes was caused to be communicated to the filing
20office in violation of subsection (a) may, under penalty of
21perjury, file with the Secretary of State an affidavit to that
22effect. The Secretary of State shall adopt and make available a
23form affidavit for use under this Section.
24    (e) Upon receipt of an affidavit filed under this Section,
25or upon administrative action by the Secretary of State, the
26Secretary of State shall communicate to the secured party of

 

 

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1record on the record to which the affidavit or administrative
2action relates and to the person that communicated the record
3to the filing office, if different and known to the office, a
4request for additional documentation supporting the
5effectiveness of the record. The Department of Business
6Services of the Office of the Secretary of State and the Office
7of the General Counsel shall review all such documentation
8received within 30 days after the first request for additional
9documentation is sent. The Secretary of State may terminate the
10record effective 30 days after the first request for additional
11documentation is sent if it has a reasonable basis for
12concluding that the record was communicated to the filing
13office in violation of subsection (a).
14    The Secretary of State may initiate an administrative
15action under the first paragraph of this subsection (e) with
16regard to a filed record if it has reason to believe, from
17information contained in the record or obtained from the person
18that communicated the record to the filing office, that the
19record was communicated to the filing office in violation of
20subsection (a). The Secretary of State may give heightened
21scrutiny to a record that indicates that the debtor is a
22transmitting utility or that indicates that the transaction to
23which the record relates is a manufactured-home transaction or
24a public-finance transaction.
25    (f) The Secretary of State shall not charge a fee to file
26an affidavit under this Section and shall not return any fee

 

 

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1paid for filing a record terminated under this Section.
2    (g) The Secretary of State shall promptly communicate to
3the secured party of record a notice of the termination of a
4record under subsection (e). A secured party of record that
5believes in good faith that the record was not communicated to
6the filing office in violation of subsection (a) may file an
7action to require that the record be reinstated by the filing
8office. A person that communicated a record to the filing
9office that the filing office rejected in reliance on Section
109-516(b)(3.5), who believes in good faith that the record was
11not communicated to the filing office in violation of Section
129-516(b)(3.5), may file an action to require that the record be
13accepted by the filing office.
14    (h) If a court or tribunal in an action under this Section
15determines that a record terminated under this Section or
16rejected in reliance on Section 9-516(b)(3.5) should be
17reinstated or accepted, the court or tribunal shall provide a
18copy of its order to that effect to the Secretary of State. On
19receipt of an order reinstating a terminated record, the
20Secretary of State shall refile the record along with a notice
21indicating that the record was refiled pursuant to this Section
22and its initial filing date. On receipt of an order requiring
23that a rejected record be accepted, the Secretary of State
24shall promptly file the record along with a notice indicating
25that the record was filed pursuant to this Section and the date
26on which it was communicated for filing. A rejected record that

 

 

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1is filed pursuant to an order of a court or tribunal shall have
2the effect described in Section 9-516(d) for a record the
3filing office refuses to accept for a reason other than one set
4forth in Section 9-516(b).
5    (i) A terminated record that is refiled under subsection
6(h) is effective as a filed record from the initial filing
7date. If the period of effectiveness of a refiled record would
8have lapsed during the period of termination, the secured party
9may file a continuation statement within 30 days after the
10record is refiled and the continuation statement shall have the
11same effect as if it had been filed during the 6-month period
12described in Section 9-515(d). A refiled record shall be
13considered never to have been ineffective against all persons
14and for all purposes except that it shall not be effective as
15against a purchaser of the collateral that gave value in
16reasonable reliance on the absence of the record from the
17files.
18    (j) Neither the filing office nor any of its employees
19shall incur liability for the termination or failure to
20terminate a record under this Section or for the refusal to
21accept a record for filing in the lawful performance of the
22duties of the office or employee.
23    (k) This Section does not apply to a record communicated to
24the filing office by a regulated financial institution or by a
25representative of a regulated financial institution except
26that the Secretary of State may request from the secured party

 

 

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1of record on the record or from the person that communicated
2the record to the filing office, if different and known to the
3office, additional documentation supporting that the record
4was communicated to the filing office by a regulated financial
5institution or by a representative of a regulated financial
6institution. The term "regulated financial institution" means
7a financial institution subject to regulatory oversight or
8examination by a State or federal agency and includes banks,
9savings banks, savings associations, building and loan
10associations, credit unions, consumer finance companies,
11industrial banks, industrial loan companies, insurance
12companies, investment companies, investment funds, installment
13sellers, mortgage servicers, sales finance companies, and
14leasing companies.
15    (l) If a record was communicated to the filing office for
16filing before the effective date of this Section and its
17communication would have constituted a violation of subsection
18(a) if it had occurred on or after the effective date of the
19Section: (i) subsections (b) and (c) are not applicable; and
20(ii) the other subsections of this Section are applicable.
 
21    (810 ILCS 5/9-510)
22    Sec. 9-510. Effectiveness of filed record.
23    (a) Filed record effective if authorized. A filed record is
24effective only to the extent that it was filed by a person that
25may file it under Section 9-509.

 

 

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1    (b) Authorization by one secured party of record. A record
2authorized by one secured party of record does not affect the
3financing statement with respect to another secured party of
4record.
5    (c) Continuation statement not timely filed. A
6continuation statement that is not filed within the six-month
7period prescribed by Section 9-515(d) is ineffective.
8    (d) A filed record ceases to be effective if the filing
9office terminates the record pursuant to Section 9-501.1.
10(Source: P.A. 91-893, eff. 7-1-01.)
 
11    (810 ILCS 5/9-516)
12    Sec. 9-516. What constitutes filing; effectiveness of
13filing.
14    (a) What constitutes filing. Except as otherwise provided
15in subsection (b), communication of a record to a filing office
16and tender of the filing fee or acceptance of the record by the
17filing office constitutes filing.
18    (b) Refusal to accept record; filing does not occur. Filing
19does not occur with respect to a record that a filing office
20refuses to accept because:
21        (1) the record is not communicated by a method or
22    medium of communication authorized by the filing office;
23        (2) an amount equal to or greater than the applicable
24    filing fee is not tendered;
25        (3) the filing office is unable to index the record

 

 

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1    because:
2            (A) in the case of an initial financing statement,
3        the record does not provide a name for the debtor;
4            (B) in the case of an amendment or correction
5        statement, the record:
6                (i) does not identify the initial financing
7            statement as required by Section 9-512 or 9-518, as
8            applicable; or
9                (ii) identifies an initial financing statement
10            whose effectiveness has lapsed under Section
11            9-515; or
12                (iii) identifies an initial financing
13            statement which was terminated pursuant to Section
14            9-501.1;
15            (C) in the case of an initial financing statement
16        that provides the name of a debtor identified as an
17        individual or an amendment that provides a name of a
18        debtor identified as an individual which was not
19        previously provided in the financing statement to
20        which the record relates, the record does not identify
21        the debtor's last name;
22            (D) in the case of a record filed or recorded in
23        the filing office described in Section 9-501(a)(1),
24        the record does not provide a sufficient description of
25        the real property to which it relates; or
26            (E) in the case of a record submitted to the filing

 

 

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1        office described in Section 9-501(a)(1), the filing
2        office has reason to believe, from information
3        contained in the record or from the person that
4        communicated the record to the office, that: (i) if the
5        record indicates that the debtor is a transmitting
6        utility, the debtor does not meet the definition of a
7        transmitting utility as described in Section
8        9-102(a)(81); (ii) if the record indicates that the
9        transaction relating to the record is a
10        manufactured-home transaction, the transaction does
11        not meet the definition of a manufactured-home
12        transaction as described in Section 9-102(a)(54); or
13        (iii) if the record indicates that the transaction
14        relating to the record is a public-finance
15        transaction, the transaction does not meet the
16        definition of a public-finance transaction as
17        described in Section 9-102(a)(67); 9-501(b), the
18        debtor does not meet the definition of a transmitting
19        utility as described in Section 9-102(a)(80);
20        (3.5) in the case of an initial financing statement or
21    an amendment, if the filing office believes in good faith
22    that the record was communicated to the filing office in
23    violation of Section 9-501.1(a); a document submitted for
24    filing is being filed for the purpose of defrauding any
25    person or harassing any person in the performance of duties
26    as a public servant;

 

 

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1        (4) in the case of an initial financing statement or an
2    amendment that adds a secured party of record, the record
3    does not provide a name and mailing address for the secured
4    party of record;
5        (5) in the case of an initial financing statement or an
6    amendment that provides a name of a debtor which was not
7    previously provided in the financing statement to which the
8    amendment relates, the record does not:
9            (A) provide a mailing address for the debtor;
10            (B) indicate whether the debtor is an individual or
11        an organization; or
12            (C) if the financing statement indicates that the
13        debtor is an organization, provide:
14                (i) a type of organization for the debtor;
15                (ii) a jurisdiction of organization for the
16            debtor; or
17                (iii) an organizational identification number
18            for the debtor or indicate that the debtor has
19            none;
20        (6) in the case of an assignment reflected in an
21    initial financing statement under Section 9-514(a) or an
22    amendment filed under Section 9-514(b), the record does not
23    provide a name and mailing address for the assignee; or
24        (7) in the case of a continuation statement, the record
25    is not filed within the six-month period prescribed by
26    Section 9-515(d).

 

 

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1    (c) Rules applicable to subsection (b). For purposes of
2subsection (b):
3        (1) a record does not provide information if the filing
4    office is unable to read or decipher the information; and
5        (2) a record that does not indicate that it is an
6    amendment or identify an initial financing statement to
7    which it relates, as required by Section 9-512, 9-514, or
8    9-518, is an initial financing statement.
9    (d) Refusal to accept record; record effective as filed
10record. A record that is communicated to the filing office with
11tender of the filing fee, but which the filing office refuses
12to accept for a reason other than one set forth in subsection
13(b), is effective as a filed record except as against a
14purchaser of the collateral which gives value in reasonable
15reliance upon the absence of the record from the files.
16    (e) The Secretary of State may refuse to accept a record
17for filing under subdivision (b)(3)(E) or (b)(3.5) only if the
18refusal is approved by the Department of Business Services of
19the Secretary of State and the General Counsel to the Secretary
20of State.
21(Source: P.A. 95-446, eff. 1-1-08.)
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.".