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"West Virginia Modifies As-Extracted Collateral Filing Requirements"
A new law passed by the West Virginia legislature and signed by the governor on April 1, 2014, clarifies that a secured party's lien on as-extracted collateral will last as long as a deed of trust, filed as a financing statement covering as-extracted collateral, remains enforceable. The new law, Senate Bill 572, was introduced by the banking industry and goes into effect June 6, 2014.
The impact of the new law is one of the topics that will be discussed by Bowles Rice, LLP, at the Secured Loan Documentation seminar sponsored by the West Virginia Bankers Association on Wednesday, April 30, at the Bridgeport Conference Center at Charles Pointe, in Bridgeport, West Virginia. For more information and/or to register, visit Secured Loan Documentation or contact Donna Atkinson at firstname.lastname@example.org or 304-343-8838.
Under the West Virginia Uniform Commercial Code, as-extracted collateral consists of (a) oil, gas, coal, or other minerals subject to a security interest that attaches upon extraction, and (b) accounts arising out of the sale at the wellhead or minehead of oil, gas, coal, or other minerals.
The West Virginia Uniform Commercial Code provides, in section 9-502(c), that a recorded deed of trust is effective as a financing statement covering as-extracted collateral. Before the new law, however, a related provision, section 9-515(g), provided that a recorded deed of trust remains effective as a financing statement covering as-extracted collateral for only five years.
Under the old law, lenders were concerned that they might have to re-record their deeds of trust on as-extracted collateral every five years or file separate UCC financing statements that must be continued every five years. One leading authority on the subject commented that this likely was a drafting error made by the national drafters of the Uniform Commercial Code adopted in West Virginia.
With the passage of Senate Bill 572, a lender's lien on as-extracted collateral will remain valid for as long as the deed of trust is valid. Senate Bill 572 was designed to be a conforming amendment only, and not a substantive amendment, to the West Virginia Uniform Commercial Code. The new law ensures that the Uniform Commercial Code is consistent in both language and application.
Should you require more information, please feel free to contact Sandra M. Murphy, Esq. or Julia A. Chincheck, Esq. of Bowles Rice LLP at (304) 347-1100.