SB3813 Summary

• Establishes new Section 9-501.1 of the Uniform Commercial Code to prohibit filing false financing records that are unauthorized, unrelated to valid transactions, or filed with intent to harass or defraud.

• Criminalizes violations as a Class A misdemeanor for first offense and Class 4 felony for subsequent offenses; creates civil liability for injured parties including up to $10,000 in damages, attorney's fees, court costs, and investigative expenses.

• Allows debtors to file affidavits with the Secretary of State alleging fraudulent records; requires the Secretary of State to request supporting documentation within 30 days and may terminate records if reasonable basis exists to conclude violation occurred.

• Permits secured parties or filers to challenge terminations or rejections of records by filing court actions to require reinstatement or acceptance; refiled records are effective from original filing date but do not bind purchasers who gave value in reasonable reliance on the record's absence.

• Exempts records filed by regulated financial institutions from the fraud provisions but allows the Secretary of State to request documentation of their status; applies to pre-effective date records only for administrative remedies, not criminal or civil penalties.