Full Text of HB5190 97th General Assembly
HB5190eng 97TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning business.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Uniform Commercial Code is amended by | 5 | | changing Sections 9-510 and 9-516 and by adding Section 9-501.1 | 6 | | as follows: | 7 | | (810 ILCS 5/9-501.1 new) | 8 | | Sec. 9-501.1. Fraudulent records. | 9 | | (a) No person shall cause to be communicated to the filing | 10 | | office for filing a false record the person knows or reasonably | 11 | | should know: | 12 | | (1) is not authorized or permitted under Section 9-509, | 13 | | 9-708, or 9-808 of this Article; | 14 | | (2) is not related to a valid existing or potential | 15 | | commercial or financial transaction, an existing | 16 | | agricultural or other lien, or a judgment of a court of | 17 | | competent jurisdiction; and | 18 | | (3) is filed with the intent to harass or defraud the | 19 | | person identified as debtor in the record or any other | 20 | | person. | 21 | | (b) A person who violates subsection (a) is guilty of a | 22 | | Class A misdemeanor for a first offense and a Class 4 felony | 23 | | for a second or subsequent offense. |
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| 1 | | (c) A person who violates subsection (a) shall be liable in | 2 | | a civil action to each injured person for: | 3 | | (1) the greater of the actual damages caused by the | 4 | | violation or up to $10,000 in lieu of actual damages; | 5 | | (2) reasonable attorney's fees; | 6 | | (3) court costs and other related expenses of bringing | 7 | | an action, including reasonable investigative expenses; | 8 | | and | 9 | | (4) in the discretion of the court, exemplary damages | 10 | | in an amount determined by the court or jury. | 11 | | (d) A person identified as debtor in a filed record the | 12 | | person believes was caused to be communicated to the filing | 13 | | office in violation of subsection (a) may, under penalty of | 14 | | perjury, file with the Secretary of State an affidavit to that | 15 | | effect. The Secretary of State shall adopt and make available a | 16 | | form affidavit for use under this Section. | 17 | | (e) Upon receipt of an affidavit filed under this Section, | 18 | | or upon administrative action by the Secretary of State, the | 19 | | Secretary of State shall communicate to the secured party of | 20 | | record on the record to which the affidavit or administrative | 21 | | action relates and to the person that communicated the record | 22 | | to the filing office, if different and known to the office, a | 23 | | request for additional documentation supporting the | 24 | | effectiveness of the record. The Department of Business | 25 | | Services of the Office of the Secretary of State and the Office | 26 | | of the General Counsel shall review all such documentation |
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| 1 | | received within 30 days after the first request for additional | 2 | | documentation is sent. The Secretary of State may terminate the | 3 | | record effective 30 days after the first request for additional | 4 | | documentation is sent if it has a reasonable basis for | 5 | | concluding that the record was communicated to the filing | 6 | | office in violation of subsection (a). | 7 | | The Secretary of State may initiate an administrative | 8 | | action under the first paragraph of this subsection (e) with | 9 | | regard to a filed record if it has reason to believe, from | 10 | | information contained in the record or obtained from the person | 11 | | that communicated the record to the filing office, that the | 12 | | record was communicated to the filing office in violation of | 13 | | subsection (a). The Secretary of State may give heightened | 14 | | scrutiny to a record that indicates that the debtor is a | 15 | | transmitting utility or that indicates that the transaction to | 16 | | which the record relates is a manufactured-home transaction or | 17 | | a public-finance transaction. | 18 | | (f) The Secretary of State shall not charge a fee to file | 19 | | an affidavit under this Section and shall not return any fee | 20 | | paid for filing a record terminated under this Section. | 21 | | (g) The Secretary of State shall promptly communicate to | 22 | | the secured party of record a notice of the termination of a | 23 | | record under subsection (e). A secured party of record that | 24 | | believes in good faith that the record was not communicated to | 25 | | the filing office in violation of subsection (a) may file an | 26 | | action to require that the record be reinstated by the filing |
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| 1 | | office. A person that communicated a record to the filing | 2 | | office that the filing office rejected in reliance on Section | 3 | | 9-516(b)(3.5), who believes in good faith that the record was | 4 | | not communicated to the filing office in violation of Section | 5 | | 9-516(b)(3.5), may file an action to require that the record be | 6 | | accepted by the filing office. | 7 | | (h) If a court or tribunal in an action under this Section | 8 | | determines that a record terminated under this Section or | 9 | | rejected in reliance on Section 9-516(b)(3.5) should be | 10 | | reinstated or accepted, the court or tribunal shall provide a | 11 | | copy of its order to that effect to the Secretary of State. On | 12 | | receipt of an order reinstating a terminated record, the | 13 | | Secretary of State shall refile the record along with a notice | 14 | | indicating that the record was refiled pursuant to this Section | 15 | | and its initial filing date. On receipt of an order requiring | 16 | | that a rejected record be accepted, the Secretary of State | 17 | | shall promptly file the record along with a notice indicating | 18 | | that the record was filed pursuant to this Section and the date | 19 | | on which it was communicated for filing. A rejected record that | 20 | | is filed pursuant to an order of a court or tribunal shall have | 21 | | the effect described in Section 9-516(d) for a record the | 22 | | filing office refuses to accept for a reason other than one set | 23 | | forth in Section 9-516(b). | 24 | | (i) A terminated record that is refiled under subsection | 25 | | (h) is effective as a filed record from the initial filing | 26 | | date. If the period of effectiveness of a refiled record would |
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| 1 | | have lapsed during the period of termination, the secured party | 2 | | may file a continuation statement within 30 days after the | 3 | | record is refiled and the continuation statement shall have the | 4 | | same effect as if it had been filed during the 6-month period | 5 | | described in Section 9-515(d). A refiled record shall be | 6 | | considered never to have been ineffective against all persons | 7 | | and for all purposes except that it shall not be effective as | 8 | | against a purchaser of the collateral that gave value in | 9 | | reasonable reliance on the absence of the record from the | 10 | | files. | 11 | | (j) Neither the filing office nor any of its employees | 12 | | shall incur liability for the termination or failure to | 13 | | terminate a record under this Section or for the refusal to | 14 | | accept a record for filing in the lawful performance of the | 15 | | duties of the office or employee. | 16 | | (k) This Section does not apply to a record communicated to | 17 | | the filing office by a regulated financial institution or by a | 18 | | representative of a regulated financial institution except | 19 | | that the Secretary of State may request from the secured party | 20 | | of record on the record or from the person that communicated | 21 | | the record to the filing office, if different and known to the | 22 | | office, additional documentation supporting that the record | 23 | | was communicated to the filing office by a regulated financial | 24 | | institution or by a representative of a regulated financial | 25 | | institution. The term "regulated financial institution" means | 26 | | a financial institution subject to regulatory oversight or |
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| 1 | | examination by a State or federal agency and includes banks, | 2 | | savings banks, savings associations, building and loan | 3 | | associations, credit unions, consumer finance companies, | 4 | | industrial banks, industrial loan companies, insurance | 5 | | companies, investment companies, investment funds, installment | 6 | | sellers, mortgage servicers, sales finance companies, and | 7 | | leasing companies. | 8 | | (l) If a record was communicated to the filing office for | 9 | | filing before the effective date of this Section and its | 10 | | communication would have constituted a violation of subsection | 11 | | (a) if it had occurred on or after the effective date of the | 12 | | Section: (i) subsections (b) and (c) are not applicable; and | 13 | | (ii) the other subsections of this Section are applicable.
| 14 | | (810 ILCS 5/9-510)
| 15 | | Sec. 9-510. Effectiveness of filed record.
| 16 | | (a) Filed record effective if authorized. A filed record is | 17 | | effective
only to the extent that it was filed by a person that | 18 | | may file it under Section
9-509.
| 19 | | (b) Authorization by one secured party of record. A record
| 20 | | authorized by one secured party of record does not affect the | 21 | | financing
statement
with respect to another secured party of | 22 | | record.
| 23 | | (c) Continuation statement not timely filed. A | 24 | | continuation
statement that is not filed within the six-month | 25 | | period prescribed by Section
9-515(d) is ineffective.
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| 1 | | (d) A filed record ceases to be effective if the filing | 2 | | office terminates the record pursuant to Section 9-501.1. | 3 | | (Source: P.A. 91-893, eff. 7-1-01.)
| 4 | | (810 ILCS 5/9-516)
| 5 | | Sec. 9-516. What constitutes filing; effectiveness of | 6 | | filing.
| 7 | | (a) What constitutes filing. Except as otherwise provided | 8 | | in
subsection (b), communication of a record to a filing office | 9 | | and tender of the
filing
fee or acceptance of the record by the | 10 | | filing office constitutes filing.
| 11 | | (b) Refusal to accept record; filing does not occur. Filing | 12 | | does
not occur with respect to a record that a filing office | 13 | | refuses to accept
because:
| 14 | | (1) the record is not communicated by a method or | 15 | | medium
of communication authorized by the filing office;
| 16 | | (2) an amount equal to or greater than the applicable | 17 | | filing
fee is not tendered;
| 18 | | (3) the filing office is unable to index the record | 19 | | because:
| 20 | | (A) in the case of an initial financing statement, | 21 | | the
record does not provide a name for the debtor;
| 22 | | (B) in the case of an amendment or correction
| 23 | | statement, the record:
| 24 | | (i) does not identify the initial financing
| 25 | | statement as required by Section 9-512 or 9-518, as |
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| 1 | | applicable; or
| 2 | | (ii) identifies an initial financing statement
| 3 | | whose effectiveness has lapsed under Section | 4 | | 9-515; or
| 5 | | (iii) identifies an initial financing | 6 | | statement which was terminated pursuant to Section | 7 | | 9-501.1;
| 8 | | (C) in the case of an initial financing statement | 9 | | that
provides the name of a debtor identified as an | 10 | | individual or an amendment that
provides a name of a | 11 | | debtor identified as an individual which was not | 12 | | previously
provided in the financing statement to | 13 | | which the record relates, the record does not
identify | 14 | | the debtor's last name;
| 15 | | (D) in the case of a record filed or recorded in | 16 | | the
filing office described in Section 9-501(a)(1), | 17 | | the record does not provide a
sufficient description of | 18 | | the real property to which it relates; or
| 19 | | (E) in the case of a record submitted to the filing | 20 | | office described in Section 9-501(a)(1), the filing | 21 | | office has reason to believe, from information | 22 | | contained in the record or from the person that | 23 | | communicated the record to the office, that: (i) if the | 24 | | record indicates that the debtor is a transmitting | 25 | | utility, the debtor does not meet the definition of a | 26 | | transmitting utility as described in Section |
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| 1 | | 9-102(a)(81); (ii) if the record indicates that the | 2 | | transaction relating to the record is a | 3 | | manufactured-home transaction, the transaction does | 4 | | not meet the definition of a manufactured-home | 5 | | transaction as described in Section 9-102(a)(54); or | 6 | | (iii) if the record indicates that the transaction | 7 | | relating to the record is a public-finance | 8 | | transaction, the transaction does not meet the | 9 | | definition of a public-finance transaction as | 10 | | described in Section 9-102(a)(67); 9-501(b), the | 11 | | debtor does not meet the definition of a transmitting | 12 | | utility as described in Section 9-102(a)(80); | 13 | | (3.5) in the case of an initial financing statement or | 14 | | an amendment, if the filing office believes in good faith | 15 | | that the record was communicated to the filing office in | 16 | | violation of Section 9-501.1(a); a document submitted for | 17 | | filing is being filed for the purpose of defrauding any | 18 | | person or harassing any person in the performance of duties | 19 | | as a public servant;
| 20 | | (4) in the case of an initial financing statement or an
| 21 | | amendment that adds a secured party of record, the record | 22 | | does not provide a
name
and mailing address for the secured | 23 | | party of record;
| 24 | | (5) in the case of an initial financing statement or an
| 25 | | amendment that provides a name of a debtor which was not | 26 | | previously provided in
the financing statement to which the |
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| 1 | | amendment relates, the record does not:
| 2 | | (A) provide a mailing address for the debtor;
| 3 | | (B) indicate whether the debtor is an individual or | 4 | | an
organization; or
| 5 | | (C) if the financing statement indicates that the
| 6 | | debtor is an organization, provide:
| 7 | | (i) a type of organization for the debtor;
| 8 | | (ii) a jurisdiction of organization for the
| 9 | | debtor; or
| 10 | | (iii) an organizational identification number
| 11 | | for the debtor or indicate that the debtor has | 12 | | none;
| 13 | | (6) in the case of an assignment reflected in an | 14 | | initial
financing statement under Section 9-514(a) or an | 15 | | amendment filed under Section
9-514(b), the record does not | 16 | | provide a name and mailing address for the assignee;
or
| 17 | | (7) in the case of a continuation statement, the record | 18 | | is not
filed within the six-month period prescribed by | 19 | | Section 9-515(d).
| 20 | | (c) Rules applicable to subsection (b). For purposes of | 21 | | subsection
(b):
| 22 | | (1) a record does not provide information if the filing | 23 | | office
is unable to read or decipher the information; and
| 24 | | (2) a record that does not indicate that it is an | 25 | | amendment or
identify an initial financing statement to | 26 | | which it relates, as required by
Section
9-512, 9-514, or |
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| 1 | | 9-518, is an initial financing statement.
| 2 | | (d) Refusal to accept record; record effective as filed | 3 | | record. A
record that is communicated to the filing office with | 4 | | tender of the filing fee,
but
which the filing office refuses | 5 | | to accept for a reason other than one set forth
in
subsection | 6 | | (b), is effective as a filed record except as against a | 7 | | purchaser of
the
collateral which gives value in reasonable | 8 | | reliance upon the absence of the
record
from the files.
| 9 | | (e) The Secretary of State may refuse to accept a record | 10 | | for filing under subdivision (b)(3)(E) or (b)(3.5) only if the | 11 | | refusal is approved by the Department of Business Services of | 12 | | the Secretary of State and the General Counsel to the Secretary | 13 | | of State.
| 14 | | (Source: P.A. 95-446, eff. 1-1-08.)
| 15 | | Section 99. Effective date. This Act takes effect upon | 16 | | becoming law.
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