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Indicates Matter Stricken
Indicates New Matter
S. 795
STATUS INFORMATION
General Bill
Sponsors: Senators Thomas, Leventis, Anderson and Sheheen
Document Path: l:\council\bills\bbm\10840mm05.doc
Introduced in the Senate on April 27, 2005
Currently residing in the Senate Committee on Judiciary
Summary: Liens, securities, penalties for filing a fraudulent statement
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number
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4/27/2005 Senate Introduced and read first time SJ-7
4/27/2005 Senate Referred to Committee on Judiciary SJ-7
5/9/2005 Senate Referred to Subcommittee: Gregory (ch), Elliott,
Anderson, Ritchie, Cleary
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO AMEND SECTION 36-9-501, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO FILING A FINANCING STATEMENT IN THE APPROPRIATE FILING OFFICE TO PERFECT A SECURITY INTEREST, SO AS TO PROVIDE FOR CRIMINAL PENALTIES FOR FILING A FINANCING STATEMENT THAT IS FRAUDULENT OR THAT IS FOR THE PURPOSE OF HINDERING, HARASSING, OR INTERFERING WITH ANOTHER PERSON OR ENTITY, AND TO PROVIDE, FURTHER, FOR A CIVIL CAUSE OF ACTION AGAINST THE FILER; TO AMEND SECTION 36-9-516, RELATING TO EFFECTIVENESS OF A FILING, SO AS TO INCLUDE REJECTION BY THE SECRETARY OF STATE UPON DETERMINATION THAT THE FILING IS FOR A FRAUDULENT OR OTHERWISE IMPROPER PURPOSE, DOES NOT FALL WITHIN THE SCOPE OF CHAPTER 9 FILINGS, OR SHOWS THE SAME PERSON AS DEBTOR AND CREDITOR; TO AMEND SECTION 36-9-518, RELATING TO CORRECTION OF THE WRONGFUL FILING OF A FINANCING STATEMENT, SO AS TO PROVIDE FOR CANCELLATION OF A FINANCING STATEMENT FOR FRAUDULENT OR OTHER IMPROPER PURPOSES; AND TO AMEND SECTION 36-9-520, RELATING TO ACCEPTANCE AND REFUSAL TO ACCEPT A FILING, SO AS TO PROVIDE FOR THE APPEAL OF A SECRETARY OF STATE'S REJECTION OR CANCELLATION OF A WRONGFULLY FILED RECORD.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 36-9-501 of the 1976 Code is amended by adding:
"(c) A person may not knowingly or intentionally file with the filing office as provided in subsections (a) or (b) a false or fraudulent financing statement or a financing statement filed for the purpose of hindering, harassing, or wrongfully interfering with another person or entity. In addition to another penalty provided by law, a violation of this subsection is a felony punishable by imprisonment for not more than five years or a fine of not more than two thousand five hundred dollars, or both. If the person is convicted of the violation, the court may find that the financing statement is ineffective, may order the filing office to terminate or purge the financing statement, and may order restitution to an aggrieved party.
(d) If a person files with the filing office pursuant to subsections (a) or (b) a false or fraudulent financing statement or a financing statement filed for the purpose of hindering, harassing, or wrongfully interfering with another person or entity, a debtor named in that financing statement may file an action against the person that filed the financing statement seeking appropriate equitable relief or damages including, but not limited to, an order declaring the financing statement ineffective, ordering the filing office to terminate or purge the financing statement, and awarding reasonable attorney fees."
SECTION 2. Section 36-9-516(b) of the 1976 Code is amended to read:
"(b) 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 36-9-512 or 36-9-518, as applicable; or
(ii) identifies an initial financing statement whose effectiveness has lapsed under Section 36-9-515;
(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; or
(D) in the case of a record filed or recorded in the filing office described in Section 36-9-501(a)(1), the record does not provide a sufficient description of the real property to which it relates;
(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 36-9-514(a) or an amendment filed under Section 36-9-514(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 36-9-515(d);
(8) in the case of a record presented for filing at the Office of the Secretary of State, the Secretary of State determines that the record is not created pursuant to this chapter or is otherwise intended for an improper purpose, such as to defraud, hinder, harass, or otherwise wrongfully interfere with a person; or
(9) in the case of a record presented for filing at the Office of the Secretary of State, the same person or entity is listed as both debtor and secured party, the collateral described is not within the scope of this chapter, or that the record is being filed for a purpose other than a transaction that is within the scope of this chapter."
SECTION 3. Section 36-9-518 of the 1976 Code is amended by adding:
"(d) In the case of a correction statement alleging that a previously filed record was filed wrongfully and that it should have been rejected pursuant to Section 36-9-516(b)(8) or (9), the Secretary of State, without undue delay, shall determine if the contested record was filed wrongfully and should have been rejected. To determine if the record was filed wrongfully, the Secretary of State may require the person filing the correction statement and the secured party to provide additional relevant information requested by the Secretary of State including an original or a copy of a security agreement that is related to the record. If the Secretary of State finds that the record was filed wrongfully and should have been rejected pursuant to Section 36-9-516(b)(8) or (9), the Secretary of State shall cancel the record and it is void and of not effect."
SECTION 4. Section 36-9-520 of the 1976 Code is amended by adding:
"(e)(1) If the Secretary of State refuses to accept a record for filing pursuant to Section 36-9-516(b)(8) or (9) or cancels a wrongfully filed record pursuant to Section 36-9-518(d) the secured party may file an appeal within thirty days after the refusal or cancellation in the Administrative Law Court consistent with the Administrative Law Court rules.
(2) The Administrative Law Court's final decision may be appealed as in accordance with Administrative Law Court rules."
SECTION 5. This act takes effect upon approval by the Governor.
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