CBA Publications >> CBA Regulatory Compliance Bulletin >> Vol 2003 No.15
December 17, 2003

Vol 2003 No. 15 December 17, 2003

Bill Makes Technical Changes to Commercial Lending Rules

A new California law, SB 283, effects technical changes to various laws governing commercial lending. Section 9521 (with a conforming change to Section 12194 of the Government Code) is amended to prevent the Secretary of State from refusing to accept a form of a financing statement that does not include a space for a debtor or guarantor's social security number. The standard national form does include spaces for the SSN of a debtor.

Note that, under existing law (Civil Code Section 1798.85), a person is prohibited from publishing an SSN, or printing an individual's SSN on a document mailed to the individual. Because this bill allows (without mandating) the Secretary of State to accept financing statements without an individual's SSN, it removes any doubt whether continuing to print the number on a financial statement comes within the required-by-law exception.

Section 9309(14) is added to the Commercial Code to permit a security interest taken in an individual's right to payment of winnings in a lottery or other game of chance to be perfected when attached, that is, without the filing of a financing statement or the taking of other action.

Section 5907 is amended to clarify that the Commercial Code determines the perfection of a lien on vehicles or boats deemed to be inventory, and not the Vehicle Code.

Finally, Section 9321 is amended to define the term, "licensee in ordinary course of business," which is used in this section. This section provides that such a licensee takes its rights under a nonexclusive license free of a security interest in the general intangible created by a licensor even if the security interest is perfected and the licensee knows of its existence.