Request By:
Mr. Bremer Ehrler
Jefferson County Clerk
Courthouse
Louisville, Kentucky 40202
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
In connection with the filing of a financing statement and then later a continuation statement, KRS 355.9-403(3) reads:
"A continuation statement may be filed by the secured party (a) within six (6) months before and sixty (60) days after a stated maturity date of five (5) years or less, and (b) otherwise within six (6) months prior to the expiration of the five (5) year period specified in subsection (2). Any such continuation statement must be signed by the secured party, identify the original statement by file number and date filed and state that the original statement is still effective. Upon timely filing of the continuation statement, the effectiveness of the original statement is continued for five (5) years after the last late to which the filing was effective whereupon it lapses in the same manner as provided in subsection (2) unless another continuation statement is filed prior to such lapse. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the original statement. Unless a statute on disposition of public records provides otherwise, the filing officer may remove a lapsed statement from the files and destroy it."
Your basic question is: When does a continuation statement become effective?
The effective period of an original financing statement is shown schematically: Maturity DateEffectiveLapses5 years or lessUntil maturity + 60 daysOn expirationof 50 daysany other or5 years from date ofexpiration ofpayable on demandfiling5 years
Under KRS 355.9-403(2), upon such lapse, the securily agreement becomes unperfected. However, the lapse can be prevented where a continuation statement is filed prior to the lapse.
Under KRS 355.9-403(3), a continuation statement, where the financing statement involves a maturity date of 5 years or less, may be filed by the secured party within 6 months before and 60 days after the said maturity date. In the second category, where the financing statement involves a maturity date other than 5 years or less, the secured party may file a continuation statement within 6 months prior to the expiration of the 5 year period mentioned above.
The answer to your basic question is that upon the timely filing of a continuation statement, as described under the above two categories, "the effectiveness of the original statement is continued for 5 years after the last date to which the filing was effective, " whereupon it lapses in the same manner as provided in subsection (2), above. (Emphasis added). The practical effect of the above quoted provision of KRS 355.9-403(3) is that the timely filed continuation statement becomes effective upon "the last date to which the filing (of the original financing statement) was effective. " (Emphasis added). If the continuation statement would become effective only "after" the last date to which the filing of the original financing statement was effective, there would be a fatal lapse.
It is true that even in the case of a financing statement of 5 years or less, a continuation of effectiveness is for 5 years after the last date to which the filing of the financing statement was effective.
Here, in construing KRS 355.9-403(3), we must be guided by the explicit and plain meaning of the language used. H.O. Hurley Co. v. Martin, 267 Ky. 182, 101 S.W.2d 657 (1937).
Under this construction, a second continuation statement, in order to be timely, must be filed, in connection with either of the two major categories, at least by the last date to which the filing of the first continuation statement was effective. This simply means that the second continuation statement must be filed prior to the lapse of the first one. The point to remember here is that a timely continuation statement extends a financing statement for 5 years as a uniform policy.