Uniform Commercial Code; Financing Statements; Security Interests; Register of Deeds

May 23, 1977

Subject:

Requested By:

Mrs. Eunice Ayers Register of Deeds Forsyth County

Questions:

(1): In order to continue the effectiveness of a UCC financing statement, when must a continuation statement be filed?
(2): When a continuation statement is properly filed, does it continue the effectiveness of the financing statement for five years from the date the continuation was filed, or for five years from the last day the continuation was filed, or for five years from the last day the original statement would have been in effect if no continuation statement had been filed?

Conclusions:

(1): A continuation statement must be filed within the six-month period prior to the last date the original financing statement would have been effective.
(2): The financing statement is continued for five years from the last date the original statement would have been effective if no continuation had been filed.

G.S. 25-9-403 provides, in part, as follows:

"(2) Except as provided in subsection (6), or in article 12 of chapter 44, a filed financing statement is effective for a period of five years from the date of filing. The effectiveness of a filed, financing statement lapses on the expiration of the five-year period unless a continuation statement is filed prior to the lapse. . . .

(3) A continuation statement may be filed by the secured party within six months prior to the expiration of the five-year period specified in subsection (2). . . . Upon timely filing of the continuation statement, the effectiveness of the original statement is continued for five years after the last date to which the filing was effective whereupon it lapses in the same manner as provided in subsection (2) unless another continuation statement if filed prior to such lapse. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the original statement. . . ."

In order to continue the effectiveness of a financing statement, G.S. 25-9-403(3) requires the "timely filing" of a continuation statement. As stated in the statute, the period for timely filing begins six months prior to the expiration of the original financing statement and ends at the expiration of the original statement. Therefore, a continuation statement must be filed within the six-month period prior to the expiration of the original filed financing statement to continue the effectiveness of that financing statement. A continuation statement filed at any other time is of no effect. See In re Callahan, 396 F. Supp. 785 (D.N.J. 1975); Op. Atty. Gen. Iowa, 12 UCC Rep. 1251 (1973); Op Atty. Gen. Ohio No. 79-025, 14 UCC Rep. 860 (1974). Furthermore, because the statute requires that succeeding continuation statements must be filed "in the same manner," such succeeding continuation statements must be filed within six months prior to the expiration of the extended original financing statement. Registers of Deeds should consider refusing to accept continuation statements filed at improper times, so that those who file improperly will not erroneously believe that continuation has been accomplished.

G.S. 25-9-403(3) provides that "(upon) timely filing of the continuation statement, the effectiveness of the original statement is continued for five years after the last date to which the filing was effective." A financing statement is effective for five years. Therefore, the continuation statement takes effect at the expiration of the five-year period, and extends the original statement for an additional five years. Succeeding continuation statements, timely filed (see above), continue the effectiveness of the original statement for additional five-year periods. See Op Atty. Gen. Ohio, No. 74-025, 14 UCC Rep 860 (1974); Op Atty. Gen. Mich. No. 4800, 13 UCC Rep 971 (1973).

Rufus L. Edmisten Attorney General

Alan S. Hirsch Assistant Attorney General