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Minnesota Office of the Secretary of State

  1. What is an "in-lieu-of" form?
    Under the Uniform Commercial Code, Revised Article 9 (RA9) as proposed to the various states, an "in-lieu-of" filing is a UCC-1 form (in Minnesota, the national UCC-1 form, available at http://iaca.org/ is mandatory) that also contains additional information as set forth in the answer to question 4, below. 

  2. Why does it exist?
    The theory behind the in-lieu-of is that you cannot amend or continue a filing in one jurisdiction when it was originally filed in another jurisdiction, so instead you start a new thread of filings in the new jurisdiction using the UCC-1 form that refers back to the past filings related to the goods in question.

    Under RA9, central filing is mandated. In other states, that means that there will be no relationship between the state and the county filing offices or the filings previously made at those offices. Also, filings are being transferred in many cases from one state to another, as the location of filing under the new law is the state of incorporation rather than the state where the asset is located. Thus, it is necessary to alert searchers that prior filings existed, and to provide a cross-reference to the location where the prior filing was made, so that the searcher may search in that jurisdiction and retrieve those filings as well. 

    Minnesota's satellite office system and back file image conversion meet some of the policy goals of the in-lieu-of process, but for the sake of uniformity, we are following the national policy of requiring this form whenever a filing is being 'transferred' from another jurisdiction and we are interpreting the prior county filings as being in another jurisdiction. The fact that we are administratively consolidating the records together on our central filing system does not make the prior county filings any less in "another jurisdiction" than in any other state, so the in-lieu-of is required just as it is in the other states implementing RA9.

  3. Who must use an in-lieu-of form?
    An in-lieu-of form must be filed for any UCC-1 filing in Minnesota that was not originally filed in the Office of the Minnesota Secretary of State prior to July 1, 2001, and which is now being continued, amended or terminated.

  4. What must be in an in-lieu-of form?
    An in-lieu-of form must be filed on a national UCC-1 form, available at : http://iaca.org/.
    All of the fields necessary for the filing of a UCC-1 must be completed. To be effective to 'continue' the prior filing, an in-lieu-of form must meet all of the effectiveness standards for a UCC-1 and must contain additional information as set forth in UCC RA9 section 9-706(c ). The in-lieu-of form must:
    1. identify the old financing statement by:
      1. indicating the office in which the financing statement was filed;
      2. provide the dates of filing and file numbers, if any, of the old financing statement;
      3. provide the date of the most recent continuation statement filed with respect to the financing statement prior to July 1, 2001.
    2. indicate that the old financing statement remains effective as of the filing of the in-lieu-of form

  5. What happens if an in-lieu-of form is filed that does not include all of the information needed for a proper in-lieu-of form?
    Because the in-lieu-of form is on a UCC-1 form, there are two possibilities. The form may be delinquent to the extent of not meeting the 'in-lieu-of' form standards, or it may be further delinquent such that it does not meet the standards for filing an initial financing statement.
    1. If the in-lieu-of does not meet the standards for a UCC-1 initial financing statement filing, and it has a defect that is a ground for rejection under the UCC Rules, part 8280.0080, it should be rejected. The rejection will bring to the attention of the customer that they have serious defects in their filing. Interestingly enough, the lack of 'in-lieu-of' information or any portion thereof is not a reason for rejection.
    2. If the in-lieu-of form meets the UCC-1 initial financing statement standards and there is no grounds for rejection, but the in-lieu-of form does not contain all the information to be effective as an in-lieu-of form, then the document is to be filed and indexed the usual way. In a sense, this is a more dangerous situation for the customer, because the document is filed, not rejected, so there will be no symptom that there is a problem, but when they get to court to enforce their lien, the court may find that through filing an ineffective in-lieu-of, and then letting the effective old statement lapse before filing any effective in-lieu-of, they have lost their priority (although the UCC-1 aspect of this filing will reestablish the priority at the later time of this failed in-lieu-of UCC-1 filing).

  6. How long will in-lieu-of forms be used?
    The in-lieu-of form will be used until all the old financing statements have lapsed under the old law under which they were originally filed (in which case they should have either lapsed or been continued by filing 'in-lieu-of' statements), or until June  30, 2006, whichever comes earlier.

  7. What is the fee for an "in-lieu-of" form?
    $20, same as for all other Minnesota filings. You can theoretically do multiple in-lieu-of filings on one UCC-1 in-lieu-of form, for multiple fees, but the multiple prior financing statements referenced in the one in-lieu-of form need to cover the same debtors, secured parties and collateral in order to really work. For the most efficient and effective processing, it is preferable to file a separate in-lieu-of form for each separate pre-effective-date financing statement you wish to amend, terminate or ‘continue.’

  8. If I had a financing statement on file in a Minnesota county or in another state before June 30, 2001, can I do any transaction on the old filing after July 1, 2001 without using the 'in-lieu-of' form?
    No. To be assured of an effective filing, before doing anything with a filing from either out of state or that was originally a county filing, the customer should file an in-lieu of. Under Code section 9-707(c), they can change the prior information in one of three ways:
    1. right on the in-lieu-of; (one fee)
    2. file in-lieu-of and in the same envelope, file a UCC-3 (two fees)*
    3. file an in-lieu-of and later file a UCC-3 (two fees)

      * Because you must include the filing number of the UCC-1 (in-lieu-of) on the UCC-3, this could be difficult (unless you file in person) as that number will not be assigned until the in-lieu-of is processed, making it nearly impossible for that number to be stated in box 1a of the UCC-3 as required by law and rule.

      If the filing was originally made at the MN OSS, they do not need to file an in-lieu-of form and can just file a UCC-3 (one fee).

      However, we have no authority to turn down a UCC-3 that may be offered to us, as long as they give us a number from the old filing with which to connect it up. Again, as in the case of the defective in-lieu-of, the document will not be rejected, thus there will be no notice of any defect to the customer, but the courts may later find their amendment, continuation or termination to be ineffective. Customers should be very careful.

  9. How long does an in-lieu-of form last?
    An in-lieu-of form is a UCC-1, and therefore it has a five year lifespan. However, that is from the date of the filing of the in-lieu-of, so that may throw off the usual five year cycles as calculated form the date of the original filing which may be five, ten or more years ago. Example:  Original filing filed in Wright County on September 23, 1996. In lieu of filed in the central filing system (doesn't matter where) on August 1, 2001. That filing will need to be continued during the six-months prior to August 1, 2006, not the six months prior to September 23, 2006. So the filing date on the in-lieu-of is VERY important to the customer.

  10. Termination of a filing originally made in a Minnesota county prior to July 1, 2001.
    If you wish to terminate a filing originally made in a Minnesota county prior to July 1, 2001, the safest course is to file an in-lieu-of for the financing statement in question and then file the termination. There may or may not be other ways to effect a termination, but the above method is a safe-harbor (assuming the termination and in-lieu-of filings meet all other RA9 requirements).

Please Note:  This information is provided for informational purposes only and should not be considered legal advice.  Neither the office of the Secretary of State nor any satellite office of the Minnesota Central Filing System provides legal advice or services.  Consult your legal advisor or an attorney.

Fax: (651) 215-1009
E-mail: ucc.dept@state.mn.us

Last updated: 8/7/2009 12:44:45 PM