How to Avoid a "Seriously Misleading" Filing
Most small business owners have some experience poking around the Minnesota Secretary of State’s website. Searching for relevant forms regarding corporate status, financing statements and many other filings can be challenging in and of itself. Keeping up with the nuances of these forms can be downright maddening, even to the folks who construct the regulations!
A relatively new wrinkle (Minn.Stat. 336.9-503 subd. 4) to filing security interests in Minnesota was adopted by the legislature in July 2013. The purpose of the change was to create more certainty when trying to ascertain who holds a security interest in collateral when the debtor is an individual.
The new language for individuals to be named on financing statements reads as follows:
A financing statement sufficiently provides the name of the debtor if the debtor is an individual to whom this state has issued a driver's license or state identification card that has not expired, only if the financing statement provides the name of the individual, which is indicated on the driver's license or state identification card.
If this state has issued to an individual more than one driver's license or state identification card of a kind described in subsection the one that was issued most recently is the one to which subsection refers.
Simply put, the amendment means you must be absolutely certain you have the debtor’s correct name as it appears on their most recent (unexpired) driver’s license to be sure you are properly filed. Prior to this change the code was more forgiving, stating that a financing statement was sufficient so long as it supplied the name of the debtor and was not “seriously misleading.”
The amendment has not produced any major litigation within the first year of the change, however there are plenty of questions surrounding the new law. Although making a mistake in a filing can be amended, if it is not caught in time serious consequences may result. Be sure your business has competent representation when dealing with the intricacies of all the filings at the Secretary of State. Feel free to contact us with any questions your business may have.