(a) A financing statement substantially satisfying the requirements of Sections 55-9-501 through 55-9-526 NMSA 1978 is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.

(b) Except as otherwise provided in Subsection (c) of this section, a financing statement that fails sufficiently to provide the name of the debtor in accordance with Subsection (a) of Section 55-9-503 NMSA 1978 is seriously misleading.

(c) If a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with Subsection (a) of Section 55-9-503 NMSA 1978, the name provided does not make the financing statement seriously misleading.

(d) For purposes of Subsection (b) of Section 55-9-508 NMSA 1978, the "debtor's correct name" in Subsection (c) of this section means the correct name of the new debtor.

History: 1978 Comp., § 55-9-506, enacted by Laws 2001, ch. 139, § 77.

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(8).

2. Errors and Omissions. Like former Section 9-402(8) [55-9-402(8) NMSA 1978], subsection (a) is in line with the policy of this Article to simplify formal requisites and filing requirements. It is designed to discourage the fanatical and impossibly refined reading of statutory requirements in which courts occasionally have indulged themselves. Subsection (a) provides the standard applicable to indications of collateral. Subsections (b) and (c), which are new, concern the effectiveness of financing statements in which the debtor's name is incorrect. Subsection (b) contains the general rule: a financing statement that fails sufficiently to provide the debtor's name in accordance with Section 9-503(a) [55-9-503(a) NMSA 1978] is seriously misleading as a matter of law. Subsection (c) provides an exception: If the financing statement nevertheless would be discovered in a search under the debtor's correct name, using the filing office's standard search logic, if any, then as a matter of law the incorrect name does not make the financing statement seriously misleading. A financing statement that is seriously misleading under this section is ineffective even if it is disclosed by (i) using a search logic other than that of the filing office to search the official records, or (ii) using the filing office's standard search logic to search a data base other than that of the filing office. For purposes of subsection (c), any name that satisfies Section 9-503(a) at the time of the search is a "correct name."

This section and Section 9-503 [55-9-503 NMSA 1978] balance the interests of filers and searchers. Searchers are not expected to ascertain nicknames, trade names, and the like by which the debtor may be known and then search under each of them. Rather, it is the secured party's responsibility to provide the name of the debtor sufficiently in a filed financing statement. Subsection (c) sets forth the only situation in which a financing statement that fails sufficiently to provide the name of the debtor is not seriously misleading. As stated in subsection (b), if the name of the debtor provided on a financing statement is insufficient and subsection (c) is not satisfied, the financing statement is seriously misleading. Such a financing statement is ineffective even if the debtor is known in some contexts by the name provided on the financing statement and even if searchers know or have reason to know that the name provided on the financing statement refers to the debtor. Any suggestion to the contrary in a judicial opinion is incorrect.

To satisfy the requirements of Section 9-503(a)(2) [55-9-503(a)(2) NMSA 1978], a financing statement must indicate that the collateral is being administered by a personal representative. To satisfy the requirements of Section 9-503(a)(3) [55-9-503(a)(3) NMSA 1978], a financing statement must indicate that the collateral is held in a trust and provide additional information that distinguishes the trust from certain other trusts. The indications and additional information are not part of the debtor's name. Nevertheless, a financing statement that fails to provide an indication or the additional information when required does not sufficiently provide the name of the debtor under Sections 9-502(a) and 9-503(a) [55-9-502(a) and 55-9-503(a) NMSA 1978], does not "substantially satisfy[ ] the requirements" of Part 5 within the meaning of this section and so is ineffective.

In addition to requiring the debtor's name and an indication of the collateral, Section 9-502(a) [55-9-502(a) NMSA 1978] requires a financing statement to provide the name of the secured party or a representative of the secured party. Inasmuch as searches are not conducted under the secured party's name, and no filing is needed to continue the perfected status of security interest after it is assigned, an error in the name of the secured party or its representative will not be seriously misleading. However, in an appropriate case, an error of this kind may give rise to an estoppel in favor of a particular holder of a conflicting claim to the collateral. See Section 1-103 [55-1-103 NMSA 1978].

3. New Debtors. Subsection (d) provides that, in determining the extent to which a financing statement naming an original debtor is effective against a new debtor, the sufficiency of the financing statement should be tested against the name of the new debtor.

Repeals and reenactments. — Laws 2001, ch. 139, § 77 repealed former 55-9-506 NMSA 1978, as enacted by Laws 1961, ch. 96, § 9-506, and enacted a new section, effective July 1, 2001.

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.

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).

Minor errors which are not seriously misleading will not invalidate a financing statement or continuation statement which otherwise is in substantial compliance with statutory requirements. NationsCredit Com. Corp. v. Camp Town, Inc., 197 B.R. 139 (Bankr. D.N.M. 1996) (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).

Security interest not unperfected when change in debtor's name not recorded. — Filed security agreement listing debtor under former corporate name did not become "seriously misleading", as referred to in Subsection (5) (now see this section), once debtor changed its name so as not to serve sufficient notice of security interest, since financing statement is sufficient even if it fails to give any name for a debtor where debtor's address and mailing address are given, and since later creditor knew of debtor's first corporate name and of first creditor's intention to advance money so that later creditor could not have been misled; consequently, first creditor's priority did not become "unperfected" for failure to file new security agreement and financing statement. In re Bud Long Chevrolet, Inc., 39 B.R. 499 (Bankr. D.N.M. 1984) (decided under former law).

Failure to identify new debtor. — Where the secured party had knowledge of the debtor's transfer of the collateral and accepted payments from the transferee on the debtor's note but never amended its financing statement to identify the transferee as the new debtor, the secured party's filing of a "continuation statement" naming the original debtor whom it knew was no longer in possession of the collateral was insufficient to preserve the security interest. Prod. Credit Ass'n v. Lane (In re Cattle Complex Corp.), 61 B.R. 526 (Bankr. D.N.M. 1986) (decided under former law).