SB 544

Present law generally requires a financing statement to be fil ed to perfect a security interest in certain collateral, and a termination statement to be filed for the financing statement in certain situations, such as when the debtor did not authorize the filing of the initial financing statement. PUBLIC OFFICIAL AS DEBTOR Present law authorizes a public official who is identified as a debtor in a filed financing statement to file a notarized affidavit, signed under penalty of perjury, which contains the uniform commercial code financing statement file number of the financing statement, the affiant's mailing address, a statement that the affiant is a public official, and a statement that the affiant believes that the filed record identifying the affiant as a debtor was filed without any reasonable basis or legal c ause, and the affiant's factual basis for why the filed record lacks any reasonable basis or legal cause. Once an affidavit is so filed with the filing office pursuant to the previous provisions, present law requires the filing office to indicate on th e Uniform Commercial Code financing statement that the underlying statement is "Contested — Under Review ."" Additionally, within three business days of receipt of an affidavit so filed, the filing office must send a copy of the affidavit, by registered or certified mail, with return receipt requested addressed to the secured party of record for the financing statement to which the affidavit relates. ADMINISTRATIVE REVIEW Within 20 business days of delivery of the affidavit to the secured party, present law authorizes a secured party who believes in good faith that their filed financing statement was filed with a reasonable basis or legal cause, to file with the filing office a petition for review by an administrative judge pursuant to the contested case procedures of the Uniform Administrative Procedures Act, accompanied by a cost bond of $200. Within three business days of the receipt of the petition for review and cost bond by the filing office, present law requires the filing office to forward the petition to the administrative procedures division of the office of the secretary of state, along with a request for a hearing. This bill revises this provision to require such office to also forward the Uniform Commercial Code financing statement that is the subject of the petition and the notarized affidavit of the public official to the administrative procedures division of the office of the secretary of state, along with a request for a hearing. Present law provides that if, following a contested c ase hearing of a petition for review is filed by a secured party under the provisions above, an administrative judge determines that there is reasonable basis or legal cause for the financing statement, the filing office must remove the "" Contested — Under Review "" indication from the Uniform Commercial Code financing statement and the effectiveness of the financing statement will be reflected as the original date of filing. This bill adds that if an administrative law judge reaches such a determination, the n the secured party must provide a copy of the determination to the filing office. However, if an administrative judge determines that the financing statement was filed without any reasonable basis or legal cause, present law provides that the filing off ice must void and remove from the public record the financing statement along with all other documents associated with the financing statement upon the administrative judge's order becoming effective and no longer subject to review pursuant to present law . This bill adds that if an administrative law judge reaches such a determination, then the public official so filing an affidavit must provide a copy of such determination to the filing office. This bill additionally provides that if the secured party se eks review of such a determination made by an administrative law judge, then the secured party must provide a copy of the petition for judicial review to the filing office within seven days of the filing of the petition."