Also known as:termination statements · UCC termination statement
Written by attorneys · grounded in primary & secondary sources — see below
An amendment of a financing statement that indicates either that it is a termination statement or that the identified financing statement is no longer effective. Filing the termination statement causes the related financing statement to cease being effective.
Sources & Authorities
How it applies
Common Examples
2
Consumer Goods Payoff Triggers Filing Duty
Tara Tran purchased household appliances on credit from Twin Rivers Bank and granted a security interest in the goods. Twin Rivers Bank filed a financing statement covering the consumer goods. After Tara paid the loan in full with no further advances owed, she sent a signed demand for a termination statement. Twin Rivers Bank failed to cause the filing of the termination statement within the required period, leaving the financing statement of record and clouding her title when she later sought to sell the appliances.
Termination Filing Ends Effectiveness
Travis Tate granted Threshold Capital a security interest in business equipment and Threshold Capital filed a financing statement. After the debt was satisfied, Threshold Capital caused a termination statement to be filed. A later creditor searched the records and relied on the termination to extend new credit without regard to the prior filing. The termination rendered the original financing statement ineffective as to the equipment.
Put it into practice
Test Yourself
10
Practice Questions5
· 8 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Course Outlines
Study Supplements
AEG Liquidation Trust v. Toobro N.Y. LLC252 B.R. 404 (Bankr. S.D.N.Y. 2000)
Common questions
Frequently Asked
4
When must a secured party file a termination statement without a debtor demand?+
A secured party must cause the filing of a termination statement without demand when the financing statement covers consumer goods and there is no longer any secured obligation or commitment to give value. The duty arises automatically upon satisfaction of the debt in consumer-goods transactions.
Supporting sources
What is the effect of filing a termination statement on the financing statement?+
Upon filing, the financing statement to which the termination statement relates ceases to be effective. Searchers may thereafter treat the financing statement as lapsed for priority and notice purposes.
Supporting sources
What remedy is available if a secured party fails to file a required termination statement?+
The debtor may recover actual damages plus a statutory penalty of five hundred dollars when the secured party fails to file or send a termination statement as required. The penalty applies even without proof of actual loss in many jurisdictions.
Does a termination statement affect a security interest perfected by control rather than by filing?+
No. A termination statement addresses only the effectiveness of a filed financing statement. Control arrangements require a separate signed release from the secured party to the bank and are not cleared by filing a termination statement.
Supporting sources
Secured TransactionsValidity of security agreements and rights of parties (§ 9-201, et seq.) · Collateral in secured party’s possession (§§ 9-207, 9-208)UBEFoundational