(a) Subject to Subsection (b) of this section, a financing statement is sufficient only if it:

(1) provides the name of the debtor;

(2) provides the name of the secured party or a representative of the secured party; and

(3) indicates the collateral covered by the financing statement.

(b) Except as otherwise provided in Subsection (b) of Section 55-9-501 NMSA 1978, to be sufficient a financing statement that covers as-extracted collateral or timber to be cut, or that is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy Subsection (a) of this section and also:

(1) indicate that it covers this type of collateral;

(2) indicate that it is to be filed for record in the real property records;

(3) provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage pursuant to the laws of this state if the description were contained in a record of the mortgage of the real property; and

(4) if the debtor does not have an interest of record in the real property, provide the name of a record owner.

(c) A record of a mortgage is effective, from the date it is filed for record, as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if:

(1) the record indicates the goods or accounts that it covers;

(2) the goods are or are to become fixtures related to the real property described in the record or the collateral is related to the real property described in the record and is as-extracted collateral or timber to be cut;

(3) the record satisfies the requirements for a financing statement in this section but:

(A) the record need not indicate that it is to be filed for record in the real property records; and

(B) the record sufficiently provides the name of a debtor who is an individual if it provides the individual name of the debtor or the surname and first personal name of the debtor, even if the debtor is an individual to whom Paragraph (4) of Subsection (a) of Section 55-9-503 NMSA 1978 applies; and

(4) the record is duly recorded.

(d) A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.

History: 1978 Comp., § 55-9-502, enacted by Laws 2001, ch. 139, § 73; 2013, ch. 137, § 12; 2015, ch. 54, § 5.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

1. Source. Former section 9-402(1), (5), (6).

2. "Notice Filing." This section adopts the system of "notice filing." What is required to be filed is not, as under pre-UCC chattel mortgage and conditional sales acts, the security agreement itself, but only a simple record providing a limited amount of information (financing statement). The financing statement may be filed before the security interest attaches or thereafter. See subsection (d). See also section 9-308(a) (contemplating situations in which a financing statement is filed before a security interest attaches).

The notice itself indicates merely that a person may have a security interest in the collateral indicated. Further inquiry from the parties concerned will be necessary to disclose the complete state of affairs. Section 9-210 provides a statutory procedure under which the secured party, at the debtor's request, may be required to make disclosure. However, in many cases, information may be forthcoming without the need to resort to the formalities of that section.

Notice filing has proved to be of great use in financing transactions involving inventory, accounts, and chattel paper, because it obviates the necessity of refiling on each of a series of transactions in a continuing arrangement under which the collateral changes from day to day. However, even in the case of filings that do not necessarily involve a series of transactions (e.g., a loan secured by a single item of equipment), a financing statement is effective to encompass transactions under a security agreement not in existence and not contemplated at the time the notice was filed, if the indication of collateral in the financing statement is sufficient to cover the collateral concerned. Similarly, a financing statement is effective to cover after-acquired property of the type indicated and to perfect with respect to future advances under security agreements, regardless of whether after-acquired property or future advances are mentioned in the financing statement and even if not in the contemplation of the parties at the time the financing statement was authorized to be filed.

3. Debtor's Signature; Required Authorization. Subsection (a) sets forth the simple formal requirements for an effective financing statement. These requirements are: (1) The debtor's name; (2) the name of a secured party or representative of the secured party; and (3) an indication of the collateral.

Whereas former section 9-402(1) required the debtor's signature to appear on a financing statement, this article contains no signature requirement. The elimination of the signature requirement facilitates paperless filing. (However, as PEB Commentary No. 15 indicates, a paperless financing statement was sufficient under former article 9.) Elimination of the signature requirement also makes the exceptions provided by former section 9-402(2) unnecessary.

The fact that this article does not require that an authenticating symbol be contained in the public record does not mean that all filings are authorized. Rather, section 9-509(a) entitles a person to file an initial financing statement, an amendment that adds collateral, or an amendment that adds a debtor only if the debtor authorizes the filing, and section 9-509(d) entitles a person other than the debtor to file a termination statement only if the secured party of record authorizes the filing. Of course, a filing has legal effect only to the extent it is authorized. See section 9-510.

Law other than this article, including the law with respect to ratification of past acts, generally determines whether a person has the requisite authority to file a record under this article. See section 1-103. However, under section 9-509(b), the debtor's authentication of (or becoming bound by) a security agreement ipso facto constitutes the debtor's authorization of the filing of a financing statement covering the collateral described in the security agreement. The secured party need not obtain a separate authorization.

Section 9-625 provides a remedy for unauthorized filings. Making an unauthorized filing also may give rise to civil or criminal liability under other law. In addition, this article contains provisions that assist in the discovery of unauthorized filings and the amelioration of their practical effect. For example, section 9-518 provides a procedure whereby a person may add to the public record a statement to the effect that a financing statement indexed under the person's name was wrongfully filed, and section 9-509(d) entitles any person to file a termination statement if the secured party of record fails to comply with its obligation to file or send one to the debtor, the debtor authorizes the filing, and the termination statement so indicates. However, the filing office is neither obligated nor permitted to inquire into issues of authorization. See section 9-520(a).

4. Certain Other Requirements. Subsection (a) deletes other provisions of former section 9-402(1) because they seem unwise (real-property description for financing statements covering crops), unnecessary (adequacy of copies of financing statements), or both (copy of security agreement as financing statement). In addition, the filing office must reject a financing statement lacking certain other information formerly required as a condition of perfection (e.g., an address for the debtor or secured party). See sections 9-516(b) and 9-520(a). However, if the filing office accepts the record, it is effective nevertheless. See section 9-520(c).

5. Real-Property-Related Filings. Subsection (b) contains the requirements for financing statements filed as fixture filings and financing statements covering timber to be cut or minerals and minerals-related accounts constituting as-extracted collateral. A description of the related real property must be sufficient to reasonably identify it. See section 9-108. This formulation rejects the view that the real property description must be by metes and bounds, or otherwise conforming to traditional real-property practice in conveyancing, but, of course, the incorporation of such a description by reference to the recording data of a deed, mortgage, or other instrument containing the description should suffice under the most stringent standards. The proper test is that a description of real property must be sufficient so that the financing statement will fit into the real property search system and be found by a real property searcher. Under the optional language in subsection (b)(3), the test of adequacy of the description is whether it would be adequate in a record of a mortgage of the real property. As suggested in the legislative note, more detail may be required if there is a tract indexing system or a land registration system.

If the debtor does not have an interest of record in the real property, a real-property-related financing statement must show the name of a record owner, and section 9-519(d) requires the financing statement to be indexed in the name of that owner. This requirement also enables financing statements covering as-extracted collateral or timber to be cut and financing statements filed as fixture filings to fit into the real property search system.

6. Record of Mortgage Effective as Financing Statement. Subsection (c) explains when a record of a mortgage is effective as a financing statement filed as a fixture filing or to cover timber to be cut or as-extracted collateral. Use of the term "record of a mortgage" recognizes that in some systems the record actually filed is not the record pursuant to which a mortgage is created. Moreover, "mortgage" is defined in section 9-102 as an "interest in real property," not as the record that creates or evidences the mortgage or the record that is filed in the public recording systems. A record creating a mortgage may also create a security interest with respect to fixtures (or other goods) in conformity with this article. A single agreement creating a mortgage on real property and a security interest in chattels is common and useful for certain purposes. Under subsection (c), the recording of the record evidencing a mortgage (if it satisfies the requirements for a financing statement) constitutes the filing of a financing statement as to the fixtures (but not, of course, as to other goods). Section 9-515(g) makes the usual five-year maximum life for financing statements inapplicable to mortgages that operate as fixture filings under section 9-502(c). Such mortgages are effective for the duration of the real property recording.

Of course, if a combined mortgage covers chattels that are not fixtures, a regular financing statement filing is necessary with respect to the chattels, and subsection (c) is inapplicable. Likewise, a financing statement filed as a "fixture filing" is not effective to perfect a security interest in personal property other than fixtures.

In some cases it may be difficult to determine whether goods are or will become fixtures. Nothing in this part prohibits the filing of a "precautionary" fixture filing, which would provide protection in the event goods are determined to be fixtures. The fact of filing should not be a factor in the determining whether goods are fixtures. Cf. section 9-505(b).

Repeals and reenactments. — Laws 2001, ch. 139, § 73 repealed former 55-9-502 NMSA 1978, as amended by Laws 1985, ch. 193, § 35, and enacted a new section, effective July 1, 2001.

The 2015 amendment, effective July 1, 2015, amended the Uniform Commercial Code, as enacted by New Mexico, to make it uniform; and in Subsection (c), Paragraph (4), after "record is", added "duly".

The 2013 amendment, effective July 1, 2013, clarified the filing rules for a mortgage as a financing statement; in Paragraph (3) of Subsection (c), in the introductory sentence, after "in this section", deleted "other than an indication" and added "but"; in Subparagraph (A) of Paragraph (3) of Subsection (c), at the beginning of the sentence, added "the record need not indicate"; and added Subparagraph (B) of Paragraph (3) of Subsection (c).

Decisions under former Section 55-9-402 NMSA 1978. — In light of the similarity of this section and former Section 55-9-402 NMSA 1978, annotations decided under former Section 55-9-402 NMSA 1978 have been included in the annotations in this section.

This section adopts system of notice filing designed to replace rigid description requirements. But, while the description requirements have been liberalized, the language of Subsection (1) (now Subsection (a)) clearly requires some specificity of description. Mogul Enters., Inc. v. Commercial Credit Bus. Loans, Inc., 1978-NMSC-081, 92 N.M. 215, 585 P.2d 1096 (decided under former law).

Language of security agreement prevails over financing statement. — In a conflict between the unsigned financing statement and the language of the security agreement the latter prevails for the reason that no security interest can exist in the absence of a security agreement, and therefore a financing statement which goes beyond the scope of the agreement has no effect to that extent. Jones & Laughlin Supply v. Dugan Prod. Corp., 1973-NMCA-050, 85 N.M. 51, 508 P.2d 1348 (decided under former law).

Need for description of property and names of parties to instrument. — With chattel mortgages, constructive notice generally is given by recording the instrument in the proper county along with designating the mortgagee and mortgagor (or assignee of mortgagor), inasmuch as ofttimes it is impractical to discover whether personal property is subject to a lien from solely the description of the personal property itself, without the name of the mortgagor. Reconstruction Fin. Corp. v. Stephens, 118 F. Supp. 565 (D.N.M. 1954) (decided under former law).

Minor errors in information does not invalidate financing statement. — A security agreement is sufficient as a financing statement if it contains all the information required of a valid financing statement, even though there are minor errors in the information. First Nat'l Bank v. Niccum (In re Permian Anchor Servs.), 649 F.2d 763 (10th Cir. 1981) (decided under former law).

Omitting debtor's address is major error. — Leaving the address of the debtor out of a financing statement is a major error. First Nat'l Bank v. Niccum (In re Permian Anchor Servs.), 649 F.2d 763 (10th Cir. 1981) (decided under former law).

Lack of the secured party's signature does not make the instrument defective within the meaning of this section. Strevell-Paterson Fin. Co. v. May, 1967-NMSC-004, 77 N.M. 331, 422 P.2d 366 (decided under former law).

"Inventory," "equipment" and "supplies" sufficient to describe collateral. — The terms "inventory," "equipment" and "supplies" are sufficient to meet the requirement that collateral must be described in general language reasonably describing the items. Waterfield v. Burnett (In re Burnett), 21 B.R. 752 (Bankr. D.N.M. 1982) (decided under former law).

Name only on cover of instrument not substantial compliance. — Where secured party's name appears only on cover of instrument, the secured party does not substantially comply with the necessary requirements, and such instrument is defective as a financing statement and does not give notice to the defendant of the secured party's security interest. Strevell-Paterson Fin. Co. v. May, 1967-NMSC-004, 77 N.M. 331, 422 P.2d 366 (decided under former law).

Language in financing statement fails to satisfy section. — The words "all assets . . . regardless of type or description now owned . . . or to be bought in the future . . ." in a financing statement fail to satisfy the requirements of this section. The language is too general and vague to fulfill the demand that the financing statement at least reveal "the type" of collateral. The language is misleading and does not give subsequent secured parties adequate notice of a security interest in inventory and accounts receivable. Mogul Enters., Inc. v. Commercial Credit Bus. Loans, Inc., 1978-NMSC-081, 92 N.M. 215, 585 P.2d 1096 (decided under former law).

Old security devices replaced by simplified procedures. — Under the terms of the Code, the traditional distinctions among security devices such as conditional sales contracts and chattel mortgages are not retained. The Code substitutes for such a simplified statutory procedure which applies to all transactions intended to create security interests in personal property and fixtures. 1962 Op. Att'y Gen. No. 62-01 (decided under former law).

Law reviews. — For article, "Fixtures and the Uniform Commercial Code in New Mexico," see 4 Nat. Resources J. 109 (1964).

For note, "Fixtures, Security Interests and Filing: Problems of Title Examination in New Mexico," see 8 Nat. Resources J. 513 (1968).

For comment, "New Mexico's Uniform Commercial Code in Oil and Gas Transactions," see 10 Nat. Resources J. 361 (1970).

For article, "Essential Attributes of Commercial Paper - Part I," see 1 N.M. L. Rev. 479 (1971).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 68A Am. Jur. 2d Secured Transactions § 288 et seq.

Effect of recording chattel mortgage in town or county to which the mortgagor subsequently removed, 1 A.L.R. 1662.

Omission of amount of debt in mortgage or in record thereof as affecting validity of mortgage, its operation as notice, or its coverage with respect to debts secured, 145 A.L.R. 369.

Construction and application of statutory provision respecting registration of mortgages or other liens on personal property in case of residents of other states, 10 A.L.R.2d 764.

Conflict of laws as to chattel mortgages and conditional sales of chattels, 13 A.L.R.2d 1312.

Attorney's liability for negligence in preparing or recording security document, 87 A.L.R.2d 991.

Necessity and sufficiency of notice or statement prescribed by factor's lien law, 96 A.L.R.2d 727.

Sufficiency of description in chattel mortgage as covering all property of a particular kind, 2 A.L.R.3d 839, 30 A.L.R.3d 9.

Construction and effect of UCC article 9, dealing with secured transactions, etc., 30 A.L.R.3d 9, 67 A.L.R.3d 308, 69 A.L.R.3d 1162, 76 A.L.R.3d 11, 99 A.L.R. 3d 807, 99 A.L.R.3d 1080, 100 A.L.R.3d 10, 100 A.L.R.3d 940, 7 A.L.R.4th 308, 11 A.L.R.4th 241, 90 A.L.R.4th 859, 25 A.L.R.5th 696.

Sufficiency of designation of debtor or secured party in security agreement of financing statement under UCC § 9-402, 99 A.L.R.3d 478.

Sufficiency of address of debtor in financing statement required by UCC § 9-402(1), 99 A.L.R.3d 807.

Sufficiency of address of secured party in financing statement required under UCC § 9-402(1), 99 A.L.R.3d 1080.

Sufficiency of description of collateral in financing statement under UCC §§ 9-110 and 9-402, 100 A.L.R.3d 10.

Sufficiency of secured party's signature on financing § 9-402, or security agreement under UCC § 9-402, 100 A.L.R.3d 390.

Sufficiency of debtor's signature on security agreement or financing statement under UCC §§ 9-203 and 9-402, 3 A.L.R.4th 502.

79 C.J.S. Secured Transactions § 53 et seq.