Public Act 097-0836
 
HB5190 EnrolledLRB097 16765 JLS 62044 b


  
    AN ACT concerning business.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  


 
    Section 5. The Uniform Commercial Code is amended  by 
changing Sections 9-510 and 9-516 and  by adding Section 9-501.1 
as follows:
 
    (810 ILCS 5/9-501.1 new)
    Sec. 9-501.1. Fraudulent records.
    (a) No person shall cause to be communicated to the filing 
office for filing a false record the person knows or reasonably 
should know:
        (1) is not authorized or permitted under Section 9-509, 
    9-708, or 9-808 of this Article;
        (2) is not related to a valid existing or potential 
    commercial or financial transaction, an existing 
    agricultural or other lien, or a judgment of a court of 
    competent jurisdiction; and
        (3) is filed with the intent to harass or defraud the 
    person identified as debtor in the record or any other 
    person.
    (b) A person who violates subsection (a) is guilty of a 
Class A misdemeanor for a first offense and a Class 4 felony 
for a second or subsequent offense.
    (c) A person who violates subsection (a) shall be liable in 
a civil action to each injured person for:
        (1) the greater of the actual damages caused by the 
    violation or up to $10,000 in lieu of actual damages;
        (2) reasonable attorney's fees;
        (3) court costs and other related expenses of bringing 
    an action, including reasonable investigative expenses; 
    and
        (4) in the discretion of the court, exemplary damages 
    in an amount determined by the court or jury.
    (d) A person identified as debtor in a filed record the 
person believes was caused to be communicated to the filing 
office in violation of subsection (a) may, under penalty of 
perjury, file with the Secretary of State an affidavit to that 
effect. The Secretary of State shall adopt and make available a 
form affidavit for use under this Section.
    (e) Upon receipt of an affidavit filed under this Section, 
or upon administrative action by the Secretary of State, the 
Secretary of State shall communicate to the secured party of 
record on the record to which the affidavit or administrative 
action relates and to the person that communicated the record 
to the filing office, if different and known to the office, a 
request for additional documentation supporting the 
effectiveness of the record. The Department of Business 
Services of the Office of the Secretary of State and the Office 
of the General Counsel shall review all such documentation 
received within 30 days after the first request for additional 
documentation is sent. The Secretary of State may terminate the 
record effective 30 days after the first request for additional 
documentation is sent if it has a reasonable basis for 
concluding that the record was communicated to the filing 
office in violation of subsection (a).
    The Secretary of State may initiate an administrative 
action under the first paragraph of this subsection (e) with 
regard to a filed record if it has reason to believe, from 
information contained in the record or obtained from the person 
that communicated the record to the filing office, that the 
record was communicated to the filing office in violation of 
subsection (a). The Secretary of State may give heightened 
scrutiny to a record that indicates that the debtor is a 
transmitting utility or that indicates that the transaction to 
which the record relates is a manufactured-home transaction or 
a public-finance transaction.
    (f) The Secretary of State shall not charge a fee to file 
an affidavit under this Section and shall not return any fee 
paid for filing a record terminated under this Section.
    (g) The Secretary of State shall promptly communicate to 
the secured party of record a notice of the termination of a 
record under subsection (e). A secured party of record that 
believes in good faith that the record was not communicated to 
the filing office in violation of subsection (a) may file an 
action to require that the record be reinstated by the filing 
office. A person that communicated a record to the filing 
office that the filing office rejected in reliance on Section 
9-516(b)(3.5), who believes in good faith that the record was 
not communicated to the filing office in violation of Section 
9-516(b)(3.5), may file an action to require that the record be 
accepted by the filing office.
    (h) If a court or tribunal in an action under this Section 
determines that a record terminated under this Section or 
rejected in reliance on Section 9-516(b)(3.5) should be 
reinstated or accepted, the court or tribunal shall provide a 
copy of its order to that effect to the Secretary of State. On 
receipt of an order reinstating a terminated record, the 
Secretary of State shall refile the record along with a notice 
indicating that the record was refiled pursuant to this Section 
and its initial filing date. On receipt of an order requiring 
that a rejected record be accepted, the Secretary of State 
shall promptly file the record along with a notice indicating 
that the record was filed pursuant to this Section and the date 
on which it was communicated for filing. A rejected record that 
is filed pursuant to an order of a court or tribunal shall have 
the effect described in Section 9-516(d) for a record the 
filing office refuses to accept for a reason other than one set 
forth in Section 9-516(b).
    (i) A terminated record that is refiled under subsection 
(h) is effective as a filed record from the initial filing 
date. If the period of effectiveness of a refiled record would 
have lapsed during the period of termination, the secured party 
may file a continuation statement within 30 days after the 
record is refiled and the continuation statement shall have the 
same effect as if it had been filed during the 6-month period 
described in Section 9-515(d). A refiled record shall be 
considered never to have been ineffective against all persons 
and for all purposes except that it shall not be effective as 
against a purchaser of the collateral that gave value in 
reasonable reliance on the absence of the record from the 
files.
    (j) Neither the filing office nor any of its employees 
shall incur liability for the termination or failure to 
terminate a record under this Section or for the refusal to 
accept a record for filing in the lawful performance of the 
duties of the office or employee.
    (k) This Section does not apply to a record communicated to 
the filing office by a regulated financial institution or by a 
representative of a regulated financial institution except 
that the Secretary of State may request from the secured party 
of record on the record or from the person that communicated 
the record to the filing office, if different and known to the 
office, additional documentation supporting that the record 
was communicated to the filing office by a regulated financial 
institution or by a representative of a regulated financial 
institution. The term "regulated financial institution" means 
a financial institution subject to regulatory oversight or 
examination by a State or federal agency and includes banks, 
savings banks, savings associations, building and loan 
associations, credit unions, consumer finance companies, 
industrial banks, industrial loan companies, insurance 
companies, investment companies, investment funds, installment 
sellers, mortgage servicers, sales finance companies, and 
leasing companies.
    (l) If a record was communicated to the filing office for 
filing before the effective date of this Section and its 
communication would have constituted a violation of subsection 
(a) if it had occurred on or after the effective date of the 
Section: (i) subsections (b) and (c) are not applicable; and 
(ii) the other subsections of this Section are applicable.
 



    (810 ILCS 5/9-510)



    Sec. 9-510. Effectiveness of filed record. 

    (a) Filed record effective if authorized.  A filed record is 
effective
only to the extent that it was filed by a person that 
may file it under Section
9-509.

    (b) Authorization by one secured party of record.  A record

authorized by one secured party of record does not affect the 
financing
statement
with respect to another secured party of 
record.

    (c) Continuation statement not timely filed.  A 
continuation
statement that is not filed within the six-month 
period prescribed by Section
9-515(d) is ineffective.

    (d) A filed record ceases to be effective if the filing 
office terminates the record pursuant to Section 9-501.1. 
(Source: P.A. 91-893, eff. 7-1-01.)

 



    (810 ILCS 5/9-516)



    Sec. 9-516. What constitutes filing; effectiveness of 
filing. 

    (a) What constitutes filing.  Except as otherwise provided 
in
subsection (b), communication of a record to a filing office 
and tender of the
filing
fee or acceptance of the record by the 
filing office constitutes filing.

    (b) Refusal to accept record; filing does not occur.  Filing 
does
not occur with respect to a record that a filing office 
refuses to accept
because:


        (1) the record is not communicated by a method or 
    medium
of communication authorized by the filing office;


        (2) an amount equal to or greater than the applicable 
    filing
fee is not tendered;


        (3) the filing office is unable to index the record 
    because:


            (A) in the case of an initial financing statement, 
        the
record does not provide a name for the debtor;


            (B) in the case of an amendment or correction

        statement, the record:


                (i) does not identify the initial financing

            statement as required by Section 9-512 or 9-518, as 
            applicable; or


                (ii) identifies an initial financing statement

            whose effectiveness has lapsed under Section 
            9-515; or

                (iii) identifies an initial financing 
            statement which was terminated pursuant to Section 
            9-501.1; 

            (C) in the case of an initial financing statement 
        that
provides the name of a debtor identified as an 
        individual or an amendment that
provides a name of a 
        debtor identified as an individual which was not 
        previously
provided in the financing statement to 
        which the record relates, the record does not
identify 
        the debtor's last name;


            (D) in the case of a record filed or recorded in 
        the
filing office described in Section 9-501(a)(1), 
        the record does not provide a
sufficient description of 
        the real property to which it relates; or


            (E) in the case of a record submitted to the filing 
        office described in Section 9-501(a)(1), the filing 
        office has reason to believe, from information 
        contained in the record or from the person that 
        communicated the record to the office, that: (i) if the 
        record indicates that the debtor is a transmitting 
        utility, the debtor does not meet the definition of a 
        transmitting utility as described in Section 
        9-102(a)(81); (ii) if the record indicates that the 
        transaction relating to the record is a 
        manufactured-home transaction, the transaction does 
        not meet the definition of a manufactured-home 
        transaction as described in Section 9-102(a)(54); or 
        (iii) if the record indicates that the transaction 
        relating to the record is a public-finance 
        transaction, the transaction does not meet the 
        definition of a public-finance transaction as 
        described in Section 9-102(a)(67); 9-501(b), the 
        debtor does not meet the definition of a transmitting 
        utility as described in Section 9-102(a)(80);
        (3.5) in the case of an initial financing statement or 
    an amendment, if the filing office believes in good faith 
    that the record was communicated to the filing office in 
    violation of Section 9-501.1(a); a document submitted for 
    filing is being filed for the purpose of defrauding any 
    person or harassing any person in the performance of duties 
    as a public servant;


        (4) in the case of an initial financing statement or an

    amendment that adds a secured party of record, the record 
    does not provide a
name
and mailing address for the secured 
    party of record;


        (5) in the case of an initial financing statement or an

    amendment that provides a name of a debtor which was not 
    previously provided in
the financing statement to which the 
    amendment relates, the record does not:


            (A) provide a mailing address for the debtor;


            (B) indicate whether the debtor is an individual or 
        an
organization; or


            (C) if the financing statement indicates that the

        debtor is an organization, provide:


                (i) a type of organization for the debtor;


                (ii) a jurisdiction of organization for the

            debtor; or


                (iii) an organizational identification number

            for the debtor or indicate that the debtor has 
            none;


        (6) in the case of an assignment reflected in an 
    initial
financing statement under Section 9-514(a) or an 
    amendment filed under Section
9-514(b), the record does not 
    provide a name and mailing address for the assignee;
or


        (7) in the case of a continuation statement, the record 
    is not
filed within the six-month period prescribed by 
    Section 9-515(d).

    (c) Rules applicable to subsection (b).  For purposes of 
subsection
(b):


        (1) a record does not provide information if the filing 
    office
is unable to read or decipher the information; and


        (2) a record that does not indicate that it is an 
    amendment or
identify an initial financing statement to 
    which it relates, as required by
Section
9-512, 9-514, or 
    9-518, is an initial financing statement.

    (d) Refusal to accept record; record effective as filed 
record.  A
record that is communicated to the filing office with 
tender of the filing fee,
but
which the filing office refuses 
to accept for a reason other than one set forth
in
subsection 
(b), is effective as a filed record except as against a 
purchaser of
the
collateral which gives value in reasonable 
reliance upon the absence of the
record
from the files.

    (e) The Secretary of State may refuse to accept a record 
for filing under subdivision (b)(3)(E) or (b)(3.5) only if the 
refusal is approved by the Department of Business Services of 
the Secretary of State and the General Counsel to the Secretary 
of State.

(Source: P.A. 95-446, eff. 1-1-08.)

 

    Section 99. Effective date. This Act takes effect upon 
becoming law.