Filing Instructions
Secured Transaction Terminology
Security interest is an interest in personal property or fixtures that secures payment or performance of an obligation. The term also includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Chapter 9.
Secured party is:
- a person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;
- a person that holds an agricultural lien;
- a consignor;
- a person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold;
- a trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for, or
- a person that holds a security interest arising under Section 2.401, 2.711(c), 2A.508(e), 4.210, or 5.118, Texas Business and Commerce Code.
- a person having an interest, other than a security interest or other lien, in the collateral whether or not the person is an obligor;
- a seller of accounts, chattel paper, payment intangibles, or promissory notes; or
- a consignee.
Security agreement is the agreement between the secured party and the debtor that creates or provides for the security interest.
Collateral refers to the items of property in which a security interest or agricultural is granted by the debtor.
Perfection occurs when the steps required under the UCC are taken by the secured party in order that the security interest will be valid against creditors. (See Sections 9.202 & 9.308, Texas Business and Commerce Code)
Conflicting security interests refers to the condition when two or more secured parties have perfected security interests in the same collateral.
Priority is the term used to describe the superior rank of a security interest. Rank is assigned using the FIFO principle; first in first out.
Subordination is an agreement between holders of conflicting security interests whereby the secured party with the superior security interest subordinates its interest to the secured party that would otherwise acquire an inferior priority position.
Purchase money security interest can be obtained if all conditions under Section 9.103 and 9.322, Texas Business and Commerce Code, have been met. Allows secured party to obtain a superior security interest in specific assets without regard to the existence of conflicting security interests.
Where to File
To be effective, a financing statement must be filed in the proper filing office in order to provide notice to third parties. The proper place to file a financing statement depends generally upon the nature, use, and location of collateral provided as security. The place of filing is either:
- a state of organization if the organization is registered with a state;
- state of the chief executive office if the organization is unregistered and has more than one place of business; or
- state where an individual resides in the case of an individual or sole proprietor.
In most cases, financing statements are filed at the close of a secured transaction. However, it is advisable to file financing statements and perform a search on the debtor to discover existing filings by other creditors before the loan closing. A financing statement should be filed on property located in Texas by the secured party with:
- a Texas county clerk where a filing is required with for the filing or recording of a mortgage on the related real property if:
- the collateral is as-extracted collateral or timber to be cut; or
- the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; otherwise in all other cases;
- the Texas secretary of state.
General Instructions for Filing with the Texas Secretary of State
- Please type or laser-print all forms. Be sure that all information is completely legible. Read all instructions. Fill in form very carefully; mistakes may have important legal consequences. Follow instructions completely. If you have questions, consult your attorney. Filing officer cannot give legal advice.
- The filing officer receives Filing Office Copy of all forms and Search Request Copy for the (UCC1, UCC1Ad, and UCC1AP forms).
Upon acceptance, the form will be stamped with the name of the filing officer, date and hour of filing and a consecutive file number. An acknowledgment copy will be returned to the filer, along with an acknowledgment letter detailing what was indexed into the Filing Officer’s indexing system.
A financing statement amendment (UCC3) may not relate to more than one initial financing statement number unless the filing complies with provisions for master assignment and amendment.
Combination of Documents
Multiple UCC filings and requests for information submitted in a single envelope should be accompanied with a letter of instruction outlining the desired order of processing. In absence of specific processing instructions, same debtor information requests will not be processed when the related UCC1 document cannot be filed.
Filing Dates
All documents are filed as of the date of receipt by the Agency. If a document is found deficient and returned, the filing date upon resubmission will be the date the corrected document is received.
Acknowledgments
For a paper or paper-based UCC document, the Agency will send to said filer or remitter an image of the record of the UCC document showing the file number assigned to it and the date and time of filing.
For UCC documents not filed in paper or paper-based form the Agency will communicate to the filer or remitter the information in the filed document, the file number assigned to it and the date and time of filing.
Returning Documents Not Filed
When a document is not accepted for filing, the document(s) will be returned to the remitter with a letter stating the reason for refusal. The Agency may return the check(s) to the remitter along with the rejected document(s).
Documents Filed in the Offices of the County Clerks
Pursuant to Chapter 9, Subchapter G, Texas Business & Commerce Code, county clerks are to record terminations on financing statements that were recorded in the county clerk’s office prior to July 1, 2001. All other types of amendment filings would require the filing of a financing statement in the Office of the Secretary of State. Documents pertaining to real estate records are to be filed in the Office of the County Clerk. Please obtain legal advice prior to filing documents in the Office of the County Clerk. County clerks may charge additional statutory fees. Contact the county clerk’s office in the applicable county for current fee schedule.