| 1 | 1 | | 89R7736 SRA-F |
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| 2 | 2 | | By: Lambert H.B. No. 5377 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | |
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| 6 | 6 | | |
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| 7 | 7 | | A BILL TO BE ENTITLED |
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| 8 | 8 | | AN ACT |
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| 9 | 9 | | relating to the filing of a fraudulent financing statement in |
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| 10 | 10 | | relation to certain secured transactions; authorizing the |
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| 11 | 11 | | imposition of a fee. |
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| 12 | 12 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 13 | 13 | | SECTION 1. Section 9.5185, Business & Commerce Code, is |
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| 14 | 14 | | amended to read as follows: |
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| 15 | 15 | | Sec. 9.5185. FRAUDULENT FILING. (a) A person may not |
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| 16 | 16 | | intentionally or knowingly present for filing or cause to be |
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| 17 | 17 | | presented for filing a financing statement that the person knows: |
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| 18 | 18 | | (1) is forged; |
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| 19 | 19 | | (2) contains a material false statement; or |
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| 20 | 20 | | (3) is groundless. |
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| 21 | 21 | | (b) A person who violates Subsection (a) is liable to a |
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| 22 | 22 | | person injured by the violation [the owner of property covered by |
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| 23 | 23 | | the financing statement] for: |
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| 24 | 24 | | (1) the greater of $10,000 [$5,000] or the [owner's] |
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| 25 | 25 | | actual damages caused by the violation; |
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| 26 | 26 | | (2) court costs; and |
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| 27 | 27 | | (3) reasonable attorney's fees. |
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| 28 | 28 | | (c) A person who violates Subsection (a) also may be |
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| 29 | 29 | | prosecuted under Section 37.101, Penal Code. |
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| 30 | 30 | | (d) An owner of property covered by a fraudulent financing |
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| 31 | 31 | | statement described in Subsection (a) also may file suit in a court |
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| 32 | 32 | | of suitable jurisdiction requesting specific relief, including, |
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| 33 | 33 | | but not limited to, release of the fraudulent financing statement. |
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| 34 | 34 | | A successful plaintiff is entitled to reasonable attorney's fees |
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| 35 | 35 | | and costs of court assessed against the person who filed the |
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| 36 | 36 | | fraudulent financing statement. If the person who filed the |
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| 37 | 37 | | fraudulent financing statement cannot be located or is a fictitious |
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| 38 | 38 | | person, the owner of the property may serve the known or unknown |
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| 39 | 39 | | defendant through publication in a newspaper of general circulation |
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| 40 | 40 | | in the county in which the suit is brought. |
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| 41 | 41 | | (e) A person identified as a debtor in a financing statement |
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| 42 | 42 | | that the person believes was not permitted to be filed under Section |
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| 43 | 43 | | 9.509, 9.708, or 9.808, or was otherwise filed in violation of |
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| 44 | 44 | | Subsection (a), may, under penalty of perjury, file an affidavit |
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| 45 | 45 | | stating the impermissibility of the statement with the filing |
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| 46 | 46 | | office in which the statement was filed. The secretary of state |
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| 47 | 47 | | shall make available a form affidavit for use under this |
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| 48 | 48 | | subsection. The filing office shall reject an affidavit filed |
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| 49 | 49 | | under this subsection if: |
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| 50 | 50 | | (1) the affidavit is incomplete; |
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| 51 | 51 | | (2) the affidavit is prohibited under Subsection (q); |
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| 52 | 52 | | or |
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| 53 | 53 | | (3) the filing office believes in good faith that the |
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| 54 | 54 | | affidavit was filed: |
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| 55 | 55 | | (A) without a reasonable basis; or |
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| 56 | 56 | | (B) with the intent to harass or defraud. |
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| 57 | 57 | | (f) On receipt of an affidavit filed under Subsection (e), |
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| 58 | 58 | | the filing office shall promptly file a termination statement with |
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| 59 | 59 | | respect to the financing statement identified in the affidavit. |
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| 60 | 60 | | The termination statement must indicate that the statement was |
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| 61 | 61 | | filed under this section. Except as provided by Subsections (i) and |
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| 62 | 62 | | (k), a termination statement filed under this subsection shall be |
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| 63 | 63 | | effective until the 30th day after the date the statement is filed. |
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| 64 | 64 | | (g) On the same day that the filing office files a |
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| 65 | 65 | | termination statement under Subsection (f), the office shall send |
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| 66 | 66 | | to each secured party of record identified in the financing |
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| 67 | 67 | | statement a notice that the termination statement has been filed. |
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| 68 | 68 | | The notice shall be sent by certified mail, return receipt |
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| 69 | 69 | | requested, to the mailing address provided for the secured party of |
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| 70 | 70 | | record in the financing statement. |
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| 71 | 71 | | (h) A secured party of record identified in a financing |
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| 72 | 72 | | statement for which a termination statement has been filed under |
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| 73 | 73 | | Subsection (f) may bring an action against the person who filed the |
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| 74 | 74 | | affidavit under Subsection (e) seeking a determination of whether |
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| 75 | 75 | | the person who filed the financing statement was entitled to file |
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| 76 | 76 | | the statement. An action under this subsection shall have priority |
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| 77 | 77 | | on the court's calendar and shall proceed by expedited hearing. The |
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| 78 | 78 | | action shall be brought in the district court in the county where |
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| 79 | 79 | | the filing office in which the financing statement was filed is |
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| 80 | 80 | | located. An action under this subsection must be filed not later |
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| 81 | 81 | | than the 60th day after the date on which the termination statement |
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| 82 | 82 | | becomes effective. |
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| 83 | 83 | | (i) In an action brought under Subsection (h), a court may |
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| 84 | 84 | | order, in appropriate circumstances, preliminary relief, including |
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| 85 | 85 | | an order preventing the termination statement from taking effect or |
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| 86 | 86 | | directing a party to take action to prevent the termination |
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| 87 | 87 | | statement from taking effect. If the court issues an order under |
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| 88 | 88 | | this subsection, and the filing office receives a certified copy of |
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| 89 | 89 | | the order before the termination statement takes effect: |
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| 90 | 90 | | (1) the termination statement may not take effect; and |
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| 91 | 91 | | (2) the filing office shall promptly file an amendment |
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| 92 | 92 | | to the financing statement indicating that an order has prevented |
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| 93 | 93 | | the termination statement from taking effect. |
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| 94 | 94 | | (j) If an order issued under Subsection (i) to prevent the |
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| 95 | 95 | | termination statement from taking effect ceases to be effective due |
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| 96 | 96 | | to a subsequent order or final judgment of a court, and the filing |
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| 97 | 97 | | office receives a certified copy of the subsequent order or final |
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| 98 | 98 | | judgment: |
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| 99 | 99 | | (1) the termination statement shall immediately |
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| 100 | 100 | | become effective on receipt of the certified copy by the filing |
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| 101 | 101 | | office; and |
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| 102 | 102 | | (2) the filing office shall promptly file an amendment |
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| 103 | 103 | | to the financing statement indicating that the termination |
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| 104 | 104 | | statement is effective. |
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| 105 | 105 | | (k) If a court determines in an action brought under |
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| 106 | 106 | | Subsection (h) that the financing statement was filed by a person |
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| 107 | 107 | | entitled to file the statement, and the filing office receives a |
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| 108 | 108 | | certified copy of the court's final judgment or order before the |
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| 109 | 109 | | termination statement takes effect: |
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| 110 | 110 | | (1) the termination statement may not take effect; and |
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| 111 | 111 | | (2) the filing office shall promptly remove the |
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| 112 | 112 | | termination statement and any amendments filed under Subsection (i) |
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| 113 | 113 | | from its public records. |
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| 114 | 114 | | (l) If a court determines in an action brought under |
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| 115 | 115 | | Subsection (h) that the financing statement was filed by a person |
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| 116 | 116 | | entitled to file the statement, and the filing office receives a |
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| 117 | 117 | | certified copy of the court's final judgment or order after the |
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| 118 | 118 | | termination statement takes effect, the filing office shall |
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| 119 | 119 | | promptly file an amendment to the financing statement indicating |
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| 120 | 120 | | that the financing statement has been reinstated. |
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| 121 | 121 | | (m) A financing statement reinstated under Subsection (l) |
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| 122 | 122 | | is effective from the initial filing date and is considered to have |
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| 123 | 123 | | never been ineffective against all persons and for all purposes |
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| 124 | 124 | | except against a purchaser of the collateral described in the |
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| 125 | 125 | | financing statement who gave value in reliance on the termination |
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| 126 | 126 | | statement. |
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| 127 | 127 | | (n) If the period of effectiveness of a financing statement |
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| 128 | 128 | | reinstated under Subsection (l) would have lapsed during the period |
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| 129 | 129 | | of termination, the secured party of record may file a continuation |
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| 130 | 130 | | statement not later than the 30th day after the financing statement |
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| 131 | 131 | | is reinstated, and the continuation statement shall have the same |
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| 132 | 132 | | effect as if it had been filed during the six-month period |
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| 133 | 133 | | prescribed by Section 9.515(d). |
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| 134 | 134 | | (o) The filing office shall collect a fee for the filing of |
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| 135 | 135 | | an affidavit under Subsection (e) in an amount sufficient to |
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| 136 | 136 | | recover the cost of administering this section. The filing office |
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| 137 | 137 | | may not return a fee paid for filing a financing statement |
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| 138 | 138 | | identified in the affidavit, even if the financing statement is |
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| 139 | 139 | | subsequently reinstated. |
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| 140 | 140 | | (p) The filing office or an employee of the filing office |
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| 141 | 141 | | may not be subject to liability for the termination or amendment of |
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| 142 | 142 | | a financing statement in the lawful performance of the duties of the |
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| 143 | 143 | | filing office under this section. |
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| 144 | 144 | | (q) An affidavit may not be filed under Subsection (e) with |
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| 145 | 145 | | respect to a financing statement filed by or on behalf of a |
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| 146 | 146 | | regulated lending institution. For purposes of this subsection, |
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| 147 | 147 | | "regulated lending institution" means an entity in the business of |
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| 148 | 148 | | extending credit or acquiring, purchasing, selling, brokering, or |
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| 149 | 149 | | servicing loans or other extensions of credit that is subject to |
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| 150 | 150 | | licensure, regulatory oversight, or examination by a state or |
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| 151 | 151 | | federal agency and includes banks, savings banks, savings |
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| 152 | 152 | | associations, trust companies, building and loan associations, |
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| 153 | 153 | | savings and loan associations, credit unions, consumer finance |
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| 154 | 154 | | companies, industrial banks, industrial loan companies, insurance |
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| 155 | 155 | | companies, investment companies, investment funds, installment |
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| 156 | 156 | | sellers, mortgage companies, sales finance companies, and leasing |
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| 157 | 157 | | companies. |
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| 158 | 158 | | SECTION 2. Section 9.510(c), Business & Commerce Code, is |
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| 159 | 159 | | amended to read as follows: |
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| 160 | 160 | | (c) Except as otherwise provided by Section 9.5185(n), a [A] |
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| 161 | 161 | | continuation statement that is not filed within the six-month |
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| 162 | 162 | | period prescribed by Section 9.515(d) is ineffective. |
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| 163 | 163 | | SECTION 3. Section 9.515(d), Business & Commerce Code, is |
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| 164 | 164 | | amended to read as follows: |
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| 165 | 165 | | (d) Except as otherwise provided by Section 9.5185(n), a [A] |
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| 166 | 166 | | continuation statement may be filed only within six months before |
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| 167 | 167 | | the expiration of the five-year period specified in Subsection (a) |
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| 168 | 168 | | or the 30-year period specified in Subsection (b), whichever is |
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| 169 | 169 | | applicable. |
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| 170 | 170 | | SECTION 4. This Act takes effect September 1, 2025. |
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