October 30, 1995
Mr. John Holleman Register of Deeds Hall of Justice PO Box 20639 Winston-Salem, NC 27120-0639
RE: Advisory Opinion, Acceptability of Computer-Generated Forms for UCC Filings; N.C.G.S. §§215-9,401-402
Dear Mr. Holleman:
You have asked our opinion whether certain computer generated forms (UCC-11 Financing Statement, UCC-3 Financing Statement Change, and UCC-11 Financing Statement Request for Information or Copies) are sufficient under N.C.G.S. § 25-9-402 and should be accepted for filing by Registers of Deeds in North Carolina.
You have received these forms from a financial institution which makes a substantial number of loans in Forsyth County and throughout the State of North Carolina and which has implemented a program to replace preprinted paper forms, traditionally used in loan transactions, with documents that are generated by a personal computer system ("PC Generated Forms"). Forms that have been replaced are UCC-1 Financing Statements, UCC-3 Financing Statement Change and UCC-11 Request for Information of Copies. These forms are currently carbon-paper forms in five parts, completion of which generally require entering the information by means of a typewriter. These PC Generated UCC Forms are substantially similar to the carbon-paper UCC Financing Statements that are currently in use. Currently, three copies of the standard carbonpaper forms are sent to the appropriate filing offices, with the creditor retaining the debtor copy and the secured party copy to be distributed. As a substitution therefore, three copies of the PC Generated UCC forms will be sent to each office where filing is required by the North Carolina Uniform Commercial Code, generally the Office of the Secretary of State and/or the Office of the Register of Deeds in the County where the collateral is located, or where the debtor is doing business.
Under current North Carolina law, in order to perfect a security interest from subsequently acquired rights of third parties, the secured party must file a financing statement in the county of the debtor’s residence and, in the case of land on which crops are growing, or are to be grown, in the county where the land is located. N.C.G.S. § 25-9-401.
A financing statement is sufficient if it is signed by the debtor and the secured party, gives the name and an address of the secured party from which information concerning the security interest may be obtained, gives the name and a mailing address of the debtor, and contains a statement indicating the types, or describing the items, of collateral. When the financing statement covers crops growing or to be grown, or timber minerals or the like, or goods which are to become fixtures, the statement must also contain a description of the real estate concerned and the name of the record owner or record lesses thereof. If products of collateral are claimed, it must be so stated. N.C.G.S. § 25-9-402(1)(2) and (3). A financing statement substantially complying with these requirements is effective even though it contains minor errors which are not seriously misleading. N.C.G.S. § 25-9-402(9).
The Official Comment accompanying N.C.G.S. § 25-9-402(1) explains that this section adopts a system of notice filing: What is required to be filed is not, as under chattel mortgage and conditional sales acts, the security agreement itself, but only a simple notice which may be filed before the security interest attaches or thereafter. The notice itself indicates merely that the secured party who has filed may have a security interest in the collateral described. Further inquiry from the parties concerned will be necessary to disclose the complete state of affairs. Section 9-208 provides a statutory procedure under which the secured party, at the debtor’s request, may be required to make disclosure.
The Official Comment accompanying N.C.G.S. § 25-9-402 sets out a form which, if substantially followed, will comply with the requirements for a financing statement. Evans v. Everette, 279
N.C. 352, 183, S.E.2d 109 (1971). We have compared the "PC Generated" financing statement forms with the financing statement form set out in N.C.G.S. § 25-9-402(3) and have determined that they satisfy the basic requirements of N.C.G.S. § 25-9-402(1). Accordingly, when properly filled in and executed, they should be accepted for filing by Registers of Deeds in North Carolina.
In addition, those using these forms should note that although the Code contemplates the execution of two separate writings, it does not prohibit the combination of a security agreement and financing statement. Although the financing statement need only be "a skeletonic statement" that the parties intend to engage in future transactions, which may never be consummated,
- N.C.G.S.
- § 25-9-402(1) specifically provides that " a copy of the security agreement is sufficient as a financing statement" if it contains the required information and is signed by both parties. A financing statement may also serve as a security agreement if it meets the requirements of
- N.C.G.S.
- § 25-9-105(1)(h) and N.C.G.S. § 25-9-203(1)(b). This is the consensus of both opinion writers and commentators on the Code. Evans v. Everette, supra.
John R. McArthur Chief Counsel