1. How does the Effective Financing Statements (EFS) central filing system differ from the existing filing system for Uniform Commercial Code (UCC) security interests?
The existing filing system for the filing of UCC security interests is governed by Article 9 of the UCC. The central filing system serves an entirely different purpose. It establishes a system to give notice of security interests in farm products only for purposes of complying with § 1324 of the Food Security Act of 1985 (FSA)
2. Is the financing statement that we file for a UCC priority able to be amended in order to use one statement for both the UCC and the central filing system?
Financing statements filed under the UCC should not be amended or touched in any way. The EFS central filing system is parallel to and separate and distinct from the central indexing system for the UCC. The central filing system affects only the rights between a lender and a buyer of farm products and, of course, the seller.
3. What is an Effective Financing Statement (EFS)?
An EFS is a statement signed by a secured party and a debtor giving notice of a security interest in Nebraska farm products.
4. What information is included on an EFS?
EFS information includes: name and address of the secured party; name and address of the debtor or debtors; Social Security number(s), Taxpayer Identification number(s), or unique approved identifier of the debtor(s); description of the farm product subject to the security interest; name of each county in Nebraska where the farm product is produced or located; crop year covered unless each year’s crop of the farm product in question is to be subject to the particular security interest; and further details of the farm product subject to a security interest, if necessary to distinguish it from other quantities of such product owned by the same person, but not subject to the particular security interest.
5. Where is an EFS filed?
Beginning July 1, 1999, all new original EFS filings are to be made with the Secretary of State
6. How long is an EFS filing effective?
An EFS filing under the central filing system is good for a period of five years from the date of filing, however the law requires that if there is a substantial change, an amendment must be filed within 90 days setting forth that change.
7. Who signs an EFS?
An original EFS which is “paper filed” must be signed, authorized, or otherwise authenticated by the debtor. An original EFS which is filed electronically is not required to include the debtor’s signature.
8. Can an EFS be continued?
Yes, an EFS may be continued in the same manner as you continue a financing statement under the UCC system by filing a continuation statement (Form EFS-3) within the six-month period prior to the five-year anniversary date of the filing or effectiveness of the EFS.
Beginning July 1, 1999, an EFS filed on or before July 1, 1999, that has not lapsed on or before July 1, 1999, must be continued by the filing of a continuation statement in the office of the Secretary of State within the six-month period prior to the five-year anniversary date of the original EFS filing.
9. Who signs an EFS continuation statement?
An EFS continuation must be signed, authorized, or otherwise authenticated by the secured party to continue the effectiveness of the original EFS filing. An EFS continuation statement is not required to include the debtor’s signature.
10. May an EFS be amended?
Yes, an EFS may be amended by filing a properly signed, authorized, or otherwise authenticated amendment (Form EFS-2), identifying the EFS to be amended and how the EFS is amended.
11. Who signs an EFS amendment?
An amendment must be executed in the same manner as an EFS (i.e. An original EFS which is “paper filed” must be signed, authorized, or otherwise authenticated by the debtor). An amendment which is filed electronically is not required to include the debtor’s signature.
12. Does an amendment extend the five-year effectiveness of an EFS?
No.
13. What do if you there are more debtors than space on an EFS, and likewise, if there are more specific crops and species of livestock than the space permits?
EFS instructions state that if there is not enough room for any portion of the EFS, attach a sheet of paper the same size as the EFS with the additional information. An additional filing fee is charged for extra pages.
14. Where is the place to file an EFS when: (a) crops are produced in counties other than the county of the debtor’s residence; or (b) debtor is an out-of-state resident producing crops in Nebraska?
Beginning July 1, 1999, in either case referred to above, the filing would be made with the Secretary of State.
15. Is the Nebraska EFS central filing system effective for Nebraska producers who produce crops out-of-state?
No, the law of the state where the crops or commodities are produced applies (e.g., a Nebraska resident customer who produces farm products in Kansas will be bound by Kansas law and only pre-notification may be used to protect your interest).
16. May more than one farm product be listed on a single EFS?
Yes, an EFS may include more than one farm product.
17. What if a particular farm product subject to a security interest is not included in the list of farm products?
The central filing system is applicable only to enumerated farm products in § 52-1308 and if the product is not listed, an EFS cannot be filed for that product. Pre-notification is the only alternative available to protect the security interest.
18. Is it permissible to mail an EFS and waiver statement to a bank customer rather than requiring the customer to physically visit the bank?
An EFS and waiver may be mailed for signature. Although the law does not prohibit signing documents at any location, a banker may be concerned with whether or not the bank has the actual signature of the parties. Caution – an EFS must be signed exactly like the financing statement and the note. Do not accept “Mrs. John Jones” for “Vanessa Jones” or a similar type name. The document should be witnessed by a disinterested party for later proof should the legality of the instrument be dependent upon a witness.
19. What is the “master list”?
The master list is a compilation of all EFS’s filed with the Secretary of State. It is organized according to farm product and arranged within each product in alphabetical order by the last name of the individual debtor(s), in numerical order according to the Social Security or Taxpayer Identification Number(s), geographically by county of production and by crop year. The list contains all the information included on EFS’s.
20. To whom are copies of portions of the master list mailed?
Buyers of farm products, commission merchants and selling agents may register with the Secretary of State to receive copies of portions of the master list. When registering, such persons indicate the farm products in which they have an interest, limited by county or crop year if so desired.
21. What is the organization of the portions of the master list mailed to registrants?
The registrant, when filing with the Secretary of State, indicates whether the list should be arranged in alphabetical order by debtor or numerically by the debtor’s Social Security or IRS Taxpayer Identification Number.
22. How long is registration effective?
Registration is effective for one year.
23. May non-registrants access the system?
Persons who have not registered may request confirmation of the existence of an EFS from any County Clerk, or after July 1, 1999, from the Secretary of State.
24. On which customers should an EFS be filed?
An EFS should be filed on each customer that pledges farm products and/or livestock as security for a loan.
25. What is a termination statement?
A termination statement is a notice signed by the creditor identifying the EFS to be terminated and stating that the EFS is to be removed from the master list (Form EFS-3).
26. When is a termination statement required?
Whenever there are no outstanding secured obligations and no commitment to make advances, the secured party, on written demand by the debtor, must file a notice of termination of an EFS with the Secretary of State.
27. May a lender avoid the requirement of filing a termination statement?
Yes, but the lender must have previously provided the debtor with notice of right to receive a “notice of lapse” of the EFS and obtain a waiver of the requirement to file a termination statement.
28. Must a waiver of filing a termination statement be signed when the EFS is signed?
No, but for convenience, it is appropriate to obtain the waiver at the outset of the lending relationship. This waiver allows the debtor to avoid the expense of filing the termination statement. Absent such waiver, there is an obligation on behalf of the lender within ten days of final payment of all secured obligations to re-notify the customer of the right to have a termination or lapse statement filed. If such filing is not made within ten days of request by the debtor, the secured lender is liable for a penalty of $100 plus any loss caused by the failure to send the notice of lapse.
29. Is it necessary to file a new EFS on all old customers or just on new customers?
As mentioned above, the central filing system is a separate and distinct system from the central indexing system that involves UCC financing statements. It is necessary that EFS’s be filed on all old customers that borrow on a farm
30. Does an EFS cover farm machinery?
No. The central filing system and EFS covers only farm products involving specific commodities and species of livestock.