Where do I file a UCC termination statement in Texas, with the county clerk or the Secretary of State?

Plain-English summary

The Texas Secretary of State asked the Attorney General a filing-mechanics question that arose out of a big change in the law. In 1999 the Legislature substantially revised chapter 9 of the Business and Commerce Code, the Uniform Commercial Code's secured-transactions article, including the rules about which office a creditor files a "financing statement" in to perfect a security interest. Those revisions took effect July 1, 2001. The question concerned a "pre-effective-date financing statement," meaning one filed before that July 1, 2001 date. If such a statement had been filed with the county clerk, and someone now wanted to file a statement terminating it, did the termination go to the county clerk or to the Secretary of State?

The Attorney General answered: it goes to the same office that holds the original, the county clerk, unless an initial financing statement relating to the old filing has since been filed with the Secretary of State under the revised rules. The reasoning was straightforward statutory reading. Section 9.707(e) says a pre-effective-date financing statement may be terminated "by filing a termination statement in the office in which the pre-effective-date financing statement is filed," unless a qualifying initial financing statement has been filed in the office the revised law now designates. The opinion rejected the competing view that all termination statements must go to the Secretary of State. That argument rested on reading "filing office" to mean only the Secretary of State, but subsection (e) does not even use the phrase "filing office," and in any event "filing office" is defined to mean whatever office section 9.501 designates, which still includes the county clerk for some collateral. Under the revised section 9.501, financing statements for as-extracted collateral, timber to be cut, and fixture filings are still filed with the county clerk (statements for ordinary consumer goods no longer are). So an old county-clerk filing is terminated at the county clerk.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The question turned on a transition provision (section 9.707) governing filings made around the July 1, 2001 effective date of the revised UCC Article 9, so it is now largely of historical interest; confirm the current Business and Commerce Code filing rules before relying on it.

What the opinion meant for those who asked

The Secretary of State (what the opinion held for them): The opinion confirmed the office's own reading: a termination statement for a pre-July-2001 financing statement originally filed with the county clerk belongs with the county clerk, not the Secretary of State, absent a later qualifying filing with the Secretary of State.

County clerks and their associations (what the opinion held for them): The opinion held that county clerks remained the correct office to receive terminations of the pre-effective-date filings they had originally accepted, consistent with the position taken by the Texas Association of Counties and the County and District Clerk's Association.

Creditors, lenders, and filing agents (what the opinion held for them): The opinion told them to look to where the original pre-2001 statement was filed: terminate it in that same office, unless a new initial financing statement relating to it had been filed with the Secretary of State under revised Article 9.

Common questions

I filed a UCC-1 with my county clerk before July 2001. Where do I file the termination?
The opinion concluded the termination statement goes to the same county clerk's office, unless an initial financing statement relating to the old filing has since been filed with the Secretary of State under the revised rules.

Doesn't everything go to the Secretary of State now?
Not for these older filings. The opinion rejected the view that every termination must go to the Secretary of State, because section 9.707(e) ties the termination to "the office in which the pre-effective-date financing statement is filed," and the county clerk remains a designated filing office for certain collateral.

What kinds of filings still go to the county clerk?
Under the revised section 9.501, financing statements for as-extracted collateral, timber to be cut, and fixture filings are still filed with the county clerk. Consumer-goods financing statements, which used to go to the county clerk, no longer do.

Why does this even come up?
Because the 2001 revision moved many filings from county clerks to the Secretary of State, the law needed a transition rule for statements already on file. Section 9.707 is that rule, and this opinion read it to keep terminations with the office that holds the original.

Background and statutory framework

The Uniform Commercial Code's secured-transactions article, codified at chapter 9 of the Business and Commerce Code, governs the perfection and regulation of security interests in personal property and fixtures. Tex. Bus. & Com. Code Ann. §§ 9.101-.709 (Vernon Supp. 2002). The Legislature substantially revised chapter 9 in 1999, including the rules on which office financing statements must be filed in, effective July 1, 2001. Act of May 17, 1999, 76th Leg., R.S., ch. 414, § 1.01, 1999 Tex. Gen. Laws 2639, 2700; id. § 3.01, 1999 Tex. Gen. Laws 2639, 2747. A "pre-effective-date financing statement" is one filed before that date. Tex. Bus. & Com. Code Ann. § 9.707(a) (Vernon Supp. 2002).

Section 9.707(e), the transition provision, allows such a statement to be terminated "by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial financing statement that satisfies Section 9.706(c) has been filed in the office specified by the law of the jurisdiction governing perfection." Tex. Bus. & Com. Code Ann. § 9.707(e) (Vernon Supp. 2002). The opinion applied the standard rule that a statute is construed as written, giving effect to legislative intent drawn first from the plain and common meaning of the words. Morrison v. Chan, 699 S.W.2d 205, 208 (Tex. 1985); Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 892 (Tex. 2000); Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 484 (Tex. 1998); Cail v. Service Motors, Inc., 660 S.W.2d 814, 815 (Tex. 1983). Reading subsection (e) in the context of the whole statute, Bridgestone/Firestone, Inc. v. Glyn-Jones, 878 S.W.2d 132, 133 (Tex. 1994), the opinion noted that "filing office," defined in section 9.102(a)(37) as an office designated in section 9.501, still includes the county clerk for as-extracted collateral, timber to be cut, and fixture filings, even though consumer-goods statements no longer go there. Tex. Bus. & Com. Code Ann. §§ 9.102(a)(37), 9.501 (Vernon Supp. 2002); compare id. with Act of May 21, 1985, 69th Leg., R.S., ch. 914, §§ 3, 4, 1985 Tex. Gen. Laws 3081, 3082 (former section 9.401). It therefore concluded that a termination of a county-clerk filing belongs with the county clerk.

Citations

Statutory provisions:

• Tex. Bus. & Com. Code Ann. §§ 9.101-.709 (Vernon Supp. 2002)
• Tex. Bus. & Com. Code Ann. § 9.707(a), (e) (Vernon Supp. 2002)
• Tex. Bus. & Com. Code Ann. § 9.706 (Vernon Supp. 2002)
• Tex. Bus. & Com. Code Ann. § 9.501 (Vernon Supp. 2002)
• Tex. Bus. & Com. Code Ann. § 9.102(a)(37) (Vernon Supp. 2002)
• Act of May 17, 1999, 76th Leg., R.S., ch. 414, § 1.01, 1999 Tex. Gen. Laws 2639
• Act of May 17, 1999, 76th Leg., R.S., ch. 414, § 3.01, 1999 Tex. Gen. Laws 2747
• Act of May 21, 1985, 69th Leg., R.S., ch. 914, §§ 3, 4, 1985 Tex. Gen. Laws 3081

Cases:

• Morrison v. Chan, 699 S.W.2d 205 (Tex. 1985)
• Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887 (Tex. 2000)
• Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482 (Tex. 1998)
• Cail v. Service Motors, Inc., 660 S.W.2d 814 (Tex. 1983)
• Bridgestone/Firestone, Inc. v. Glyn-Jones, 878 S.W.2d 132 (Tex. 1994)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0486
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2002/jc0486.pdf

Original opinion text

Best-effort transcription from the official scanned PDF. Minor errors may remain, and two short mid-opinion passages marked [. . .] were not recoverable from the source extraction; the linked PDF is authoritative.

OFFICE OF THE ATTORNEY GENERAL - STATE OF TEXAS
JOHN CORNYN

March 27, 2002

The Honorable Gwyn Shea
Texas Secretary of State
P.O. Box 12697, Capitol Station
Austin, Texas 78711

Opinion No. JC-0486

Re: Whether a financing statement terminating a "pre-effective-date financing statement" should be filed with the Secretary of State or the county clerk (RQ-0449-JC)

Dear Secretary Shea:

The Uniform Commercial Code - Secured Transactions, codified at chapter 9 of the Business and Commerce Code, see TEX. BUS. & COM. CODE ANN. §§ 9.101-.709 (Vernon Supp. 2002) (the "Act"), provides for the perfection and regulation of security interests in personal property and fixtures. See id. The Act was substantially revised in 1999, including the provisions establishing the office in which financing statements must be filed to perfect security interests in the various types of personal property and fixture collateral. See Act of May 17, 1999, 76th Leg., R.S., ch. 414, § 1.01, 1999 Tex. Gen. Laws 2639, 2700. The revised provisions became effective July 1, 2001. See id. § 3.01, 1999 Tex. Gen. Laws at 2747.

Your question relates to a "pre-effective-date financing statement," defined as a financing statement filed to perfect security interests in collateral prior to the July 1, 2001 effective date of the revisions. See TEX. BUS. & COM. CODE ANN. § 9.707(a), (e) (Vernon Supp. 2002). Section 9.707(e) of the Act, a transition provision, deals with the termination of a "pre-effective-date financing statement." See id. § 9.707(e). You ask whether under section 9.707(e), a financing statement to terminate a pre-effective-date financing statement originally filed with the office of the county clerk should be filed with the county clerk's office or with the office of the Secretary of State.[1] Based on the plain language of section 9.707(e) of the Act, we conclude that if a pre-effective-date financing statement was originally filed in the office of the county clerk, then a financing statement to terminate that original filing must also be filed in the county clerk's office unless an initial financing statement relating to the pre-effective-date financing statement has been filed in the office of the Secretary of State.

Section 9.707 of the Act provides in relevant part as follows:

(a) In this section, "pre-effective-date financing statement" means a financing statement filed before the revision takes effect.

(e) Whether or not the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement filed in this state may be terminated after the revision takes effect by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial financing statement that satisfies Section 9.706(c) has been filed in the office specified by the law of the jurisdiction governing perfection as provided in Subchapter C [law governing perfection and priority] as the office in which to file a financing statement.

TEX. BUS. & COM. CODE ANN. § 9.707(a), (e) (Vernon Supp. 2002) (emphasis added). Before turning to your question, we briefly consider section 9.706 of the Act,[2] referenced in subsection (e) above.

[. . .]

The confusion is "whether a termination statement terminating a pre-effective-date financing statement originally filed with the county filing officer should be filed with the county filing officer or with the Office of the Secretary of State." See id. We presume that an "initial financing statement that satisfies Section 9.706(c)" has not been filed in the situation about which you ask. See id. You suggest that the terminating statement should be filed in the office of the county clerk.[3] See id. We agree.

A statute must be construed as written and, if possible, the legislative intent ascertained from the statutory language. See Morrison v. Chan, 699 S.W.2d 205, 208 (Tex. 1985); see also Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 892 (Tex. 2000) (primary objective of statutory construction is to determine and give effect to legislature's intent). In doing so, like a court, we must look first to the plain and common meaning of the statutory words. See Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 484 (Tex. 1998). When a statute is clear and unambiguous, it is unnecessary to resort to rules of construction or extrinsic evidence to construe it. See Cail v. Service Motors, Inc., 660 S.W.2d 814, 815 (Tex. 1983). Instead, we must determine the legislative intent from the plain and ordinary meaning of the words used in the statute. See id.

[. . .]

(3) in all other cases, in the office of the Secretary of State.

Act of May 21, 1985, 69th Leg., R.S., ch. 914, §§ 3, 4, 1985 Tex. Gen. Laws 3081, 3082, amended and renumbered by Act of May 17, 1999, 76th Leg., R.S., ch. 414, § 1.01, 1999 Tex. Gen. Laws 2639, 2700 (emphasis added). See also TEX. BUS. & COM. CODE ANN. § 9.501 (Vernon Supp. 2002).

Turning back to section 9.707(e) and your question, where a financing statement to terminate a pre-effective-date financing statement must be filed depends on where the pre-effective-date financing statement was originally filed. A pre-effective-date financing statement was filed in the office of the Secretary of State or the county clerk, depending on the type of collateral in which a security interest was sought. A financing statement to terminate the pre-effective-date financing statement must be filed in the same office unless an initial financing statement has been filed in a different office pursuant to the Act's revised provisions. Accordingly, we conclude that if a pre-effective-date financing statement was originally filed in the office of the county clerk, then a financing statement to terminate that original filing must also be filed in the county clerk's office unless an initial financing statement relating to the pre-effective-date financing statement has been filed in the office of the Secretary of State.

It has been suggested that a termination statement may be filed only in the office of the Secretary of State. This interpretation is apparently premised on the view that "filing office" under the Act refers only to the office of the Secretary of State.[4] This construction and its premise disregard the legislatively adopted language of section 9.707(e). See Bridgestone/Firestone, Inc. v. Glyn-Jones, 878 S.W.2d 132, 133 (Tex. 1994) (statutory provision must be construed in context of entire statute of which it is part; every word of statute must be presumed to have been used or excluded for a purpose). Section 9.707(e) plainly states that a pre-effective-date financing statement may be terminated by filing "a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial financing statement that satisfies Section 9.706(c) has been filed." TEX. BUS. & COM. CODE ANN. § 9.707(e) (Vernon Supp. 2002) (emphasis added). Moreover, subsection (e) does not use the phrase "filing office." See id. And, in any case, the terms "filing office" do not exclusively denote the office of the Secretary of State. "Filing office," as defined in section 9.102(a)(37) of the Act, "means an office designated in Section 9.501 as the place to file a financing statement." Id. § 9.102(a)(37). Under section 9.501, the office of the county clerk is a designated place for filing certain financing statements:

(a) Except as otherwise provided in Subsection (b), if the local law of this state governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is:

    (1) the office designated for the filing or recording of a record of a mortgage on the related real property, if:

        (A) the collateral is as-extracted collateral or timber to be cut; or

        (B) the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; or

    (2) the office of the Secretary of State, in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.

(b) The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the Secretary of State. The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement that is or is to become fixtures.

Id. § 9.501 (emphasis added). Financing statements to perfect security interests in "consumer goods" are no longer filed in the office of the county clerk as they were prior to July 1, 2001. Compare id. with Act of May 21, 1985, 69th Leg., R.S., ch. 914, §§ 3, 4, 1985 Tex. Gen. Laws 3081, 3082 (former section 9.401 of Business & Commerce Code). However, financing statements to perfect security interests in "as-extracted collateral or timber to be cut" and fixture filing financing statements are still filed in the office of the county clerk.

Accordingly, we conclude that under section 9.707(e) of the Business and Commerce Code, if a pre-effective-date financing statement was originally filed in the office of the county clerk, then a financing statement to terminate that original filing must also be filed in the county clerk's office unless an initial financing statement relating to the pre-effective-date financing statement has been filed in the office of the Secretary of State in accordance with the Act's revised provisions.

SUMMARY

Under section 9.707(e) of the Business and Commerce Code, if a pre-effective-date financing statement was originally filed in the office of the county clerk, then a financing statement to terminate that original filing must also be filed in the county clerk's office unless an initial financing statement relating to the pre-effective-date financing statement has been filed in the office of the Secretary of State in accordance with the revised provisions of chapter 9 of the Business and Commerce Code.

                              JOHN CORNYN
                              Attorney General of Texas

HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN DENMON GUSKY
Chair, Opinion Committee

Sheela Rai
Assistant Attorney General, Opinion Committee

[1] See Letter from Geoffrey S. Connor, Assistant Secretary of State, to Honorable John Cornyn, Texas Attorney General (Oct. 9, 2001) (on file with Opinion Committee) [hereinafter Request Letter].

[2] Section 9.706 provides as follows: (a) The filing of an initial financing statement in the office specified in Section 9.501, as revised [county clerk for as-extracted collateral, timber to be cut, or fixture filing, otherwise Secretary of State], continues the effectiveness of a financing statement filed before the revision takes effect if: (1) the filing of an initial financing statement in that office would be effective to perfect a security interest under this chapter, as revised; (2) the pre-effective-date financing [statement is filed in the office specified by the law of the jurisdiction governing perfection]; (3) indicate that the pre-effective-date financing statement remains effective. TEX. BUS. & COM. CODE ANN. § 9.706 (Vernon Supp. 2002).

[3] A brief submitted on behalf of the Texas Association of Counties and the County & District Clerk's Association of Texas also takes this position. See Brief from Rex Hall, Associate General Counsel, Texas Association of Counties, to Honorable John Cornyn, Texas Attorney General.

[4] See TAC Brief, supra note 3, at 5 ("Those who disagree [with construction that termination statement must be filed with county clerk if pre-effective-date statement was originally filed there] appear to argue that 'the office' as used in this section, must refer to 'the filing office' . . . which is the Secretary of State.") (footnote omitted).