The Maine Secretary of State’s Office recently announced that it has changed the search logic used when providing certified search results. The language in their current rule 503.A.5 now states: “words and abbreviations at the end of an organization name that indicate the existence or nature of the organization are not disregarded…” This change of a single word in the Office’s Administrative Rules may appear small, but it is quite significant for both searchers and filers.
Specifically, so-called corporate indicators, such as “Corporation,” “Limited Partnership,” and “Company,” as well as the abbreviations thereof will no longer be ignored when a certified search is done. For example: A search conducted previously of the name “Big Rock Factors, Inc.,” would reveal all filings made using the exact name, as well as such variations as “Big Rock Factors, Incorporated,” “Big Rock Factors, LLC,” and “Big Rock Factors Corp.” Under the new rules, none of these variations would be found and included in the search results, thereby creating – in effect – a hidden lien.
The importance of getting the debtor name right cannot be overstated! In the case of a debtor that is a registered organization, the name of the debtor listed on the UCC-1 Financing Statement should be exactly the same as it appears on the public organic record filed in the state of formation. If by chance a filing was made with a small variation in the debtor name’s corporate ending (i.e. “Corp.” vs. “Corporation”), that filing would be revealed and included in the results if conducted prior to the October 21, 2013 change.
So what about the secured party whose previously discoverable lien (and thereby not deemed seriously misleading at the time it was filed) is now undiscoverable due to the change in official search logic? Section 9 507 (b) would appear to provide some protection:
[Information becoming seriously misleading.] Except as otherwise provided in subsection (c) and Section 9-508, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 9-506.
It would be prudent, however, for the secured party in this case to file a debtor name amendment as soon as it is aware of the incorrect name on the UCC-1. Even if we rely on Section 9 507 (b) to maintain perfection, it is in our interest to make the filing discoverable by searchers in the future using the latest iteration of the official search logic. A searcher conducting general due diligence (and aware of the possibility of previous search logic changes) will conduct or request an unofficial search to capture relevant name variations.
Last, filers and searchers should expect more state filing offices to continue to make adjustments and changes to their search logic, both with and without public notice.