Banking & Finance Law Report

Tag Archives: financing

Lending License Required for Real Estate Commission Financing

In a triumph of substance over form, on August 22, 2013, the Tenth Appellate District Court of Appeals disregarding self-serving labels and further clarified the distinction between a loan and a sale of accounts receivable in Fenway Financial, LLC dba Commission Express v. Greater Columbus Realty, LLC dba Keller Williams Greater Columbus Realty, LLC, No. 12AP-291. To cut to the chase, the Court found that regardless of the buzz words used, leaving the seller of an account receivable with the risk of collectability is a key factor in characterizing a transaction as a loan, not as a sale, and may implicate state loan licensing requirements and other statutes, including provisions dealing with the scope of UCC Article 9.…

Update – UCC Search Logic: Can Secured Creditors Be Too Careful?

Last year (October 23, 2009) we posted on the topic of UCC search logic in light of the bankruptcy case of In re EDM Corporation 2009 Westlaw 367773 (Bankr.D.Neb.). In the bankruptcy court, the first-filing lender lost its priority because it had filed a UCC-1 financing statement with the debtor name listed as “EDM Corporation d/b/a EDM Equipment,” which was not located by the two later-filing lenders when doing a search on “EDM Corporation,” which was the debtor’s true legal name. The bankruptcy court held that the financing statement was “seriously misleading” and rearranged the priority accordingly.

Under Revised 9-506(a), errors or omissions in a filed financing statement are of no consequence unless they render the financing statement “seriously misleading.” Revised 9-506(c) provides that if a search in the filing office using the filing office’s standard search logic would disclose the financing statement, then it is not “seriously misleading,” even if it fails to provide the precise name of the debtor as required under Revised 9-503(a).

This case was recently taken up on appeal to 8th Circuit Bankruptcy Appellate Panel (In re EDM Corporation, 2010 WL 1929772 (8th Cir. BAP May 14, 2010)). The appellate panel noted that …