Lapsed Filings of Financing Statements
Occasionally, a secured creditor may find itself in a situation where a UCC financing statement has expired, and the secured party has failed to file a continuation statement. Unfortunately, the Uniform Commercial Code does not allow for any exceptions for filing a continuation statement once the original financing statement has expired.
The best that a secured party can do is to file a new UCC financing statement which will become effective from the date of filing. However, as a result of the expiration, the new filing will not relate back to the date of the original financing statement. Even if a secured creditor attempts to file a continuation statement after the original financing statement has expired, and the filing office accepts that continuation statement, this is not effective to maintain the lender’s original security interest.
In this lapse situation, fortunately for the secured creditor, no new authorization needs to be obtained from the debtor. The underlying security agreement originally obtained by the debtor will continue to provide authorization for the secured party to file the new financing statement.