Lien Searching of Indexes with Mixed Lien Types — Why Uncovering Name Variations is the KeyUCC
One effect of Revised Article 9 and its implementation has been to better clarify and standardize naming conventions for entering debtor names onto a financing statement. These conventions are not only a guide to successful completion of the forms in order to perfect a security interest, but also to successful searching for financing statements in the indexes in which they are filed.
But what about searching indexes that include other lien types which are mixed in with financing statements, other lien types like Federal and State tax liens? How do Revised Article 9’s naming conventions affect the searching of those lien types?
A key issue to digest in answering that question is this: when filing tax liens, taxing agencies—including the IRS—are not held to the same naming standards that secured parties are held to with financing statements. The result is that debtor name variations on tax liens enter into and exist in the searchable indexes at these filing offices, and while an exact name search may not uncover their existence, their effectiveness nevertheless remains and the potential threat to a secured party’s perfected security interest from these Federal tax liens with debtor name variations is very real. Case law has been pretty clear about that.
So what does all of this mean for any searcher, like a secured party looking to qualify the credit worthiness of a potential new customer, who is searching indexes which include mixed lien types?
It means the need to uncover name variations in order to locate any and all potential liens, remains a very high priority to successfully completing a search in these indexes, no matter what Revised Article 9 clarified and standardized with regards to its naming conventions for financing statements. Tax liens are not governed by Revised Article 9’s naming conventions, but the need to locate them and uncover name variations to accomplish this has never been more important.
When searching, be sure to utilize a search engine which provides tools that assist in uncovering name variations. In many cases that means contracting with a professional search firm to either conduct the searches on your behalf or to provide a proprietary search engine so you can conduct the searches yourself—but with a search engine that actually helps you find the liens filed under some name variation.