HB 2256
In CommitteeHouse
Unauthorized UCC filings
Concerning termination of unauthorized Uniform Commercial Code filings.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill creates a new administrative process for debtors to request removal of financing statements they believe were filed without their authorization. It allows the Department of Licensing to terminate such filings after notifying creditors and waiting 30 days, without requiring court action. It also updates existing rules to reinforce that financing statements must be authorized and clarifies how long records must be kept after termination.
- Debtors can submit a sworn, notarized affidavit to the Department of Licensing requesting removal of a financing statement they claim was filed without authorization.
- The affidavit must include the financing statement’s file number, names and addresses of involved parties, and a statement that the filing was not authorized and does not reflect a mutual agreement on a security interest.
- After receiving the affidavit, the Department of Licensing must notify all secured parties (creditors) and wait 30 days before filing an administrative termination statement.
- Once filed, the administrative termination becomes effective immediately and removes the financing statement from public record — bypassing the usual 1-year retention period for lapsed filings.
- The Department of Licensing may adopt rules to carry out the new process, and the remedy is in addition to existing legal options for debtors (e.g., lawsuits under RCW 62A.9A-513 or 62A.9A-518).
- Clarifies that financing statements can only be filed if the debtor authorized them (e.g., via a signed security agreement), reinforcing existing authorization rules.
Who is affected
- Debtors who are subjects of unauthorized financing statements — People who believe a financing statement (a public record used to secure debt with property) was filed against them without their permission or knowledge may use this new process to request its removal.
- Secured parties (creditors/lenders) — Creditors or lenders who have filed financing statements may receive a notice and have 30 days to respond before a financing statement is removed administratively.
- Department of Licensing — This agency administers the Uniform Commercial Code (UCC) filing system in Washington and will be responsible for accepting affidavits, notifying parties, and processing administrative terminations.
- Businesses that regularly file UCC financing statements — People or businesses who file UCC financing statements regularly (e.g., banks, equipment lenders, small businesses) will need to understand the new process for contesting or responding to unauthorized termination requests.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Creates a low-barrier, non-judicial path for individuals to challenge unauthorized financing statements — protecting debtors from fraudulent or erroneous public liens that could damage credit, hinder housing/employment, and violate due process rights, especially for victims of identity theft or clerical errors.
Rights & LibertiesPeopleRef: Sec. 1(a)-(b), Sec. 2(a)(1)By enabling swift removal of unauthorized liens, the bill helps prevent wrongful property encumbrances that could block home purchases, refinancing, or lead to foreclosure — directly aiding low- and middle-income homeowners and renters at risk of housing instability.
HousingPeopleRef: Sec. 1(c)(2), Sec. 3(b)Reduces financial harm from erroneous public records — unauthorized financing statements can trigger collection calls, credit score drops, and denial of loans; this process offers a fast, low-cost remedy without requiring legal representation or court fees.
FinancialPeopleRef: Sec. 1(a), Sec. 2(a)(1)Sole proprietors and micro-businesses that rely on UCC filings for equipment loans gain a practical tool to correct errors — reducing risk of losing collateral due to administrative mistakes or third-party fraud, supporting small business continuity.
Business & EmploymentPeopleRef: Sec. 1(f), Sec. 2(f)Accelerated removal of false liens reduces stress, anxiety, and potential safety risks for victims of identity theft or predatory filing practices — especially important for vulnerable populations like seniors or low-income households.
Public SafetyPeopleRef: Sec. 1(c)(2), Sec. 3(b)
Potential Concerns (5)
The process allows debtors to request removal of financing statements based on a sworn affidavit, but does not require creditors to prove authorization before the 30-day window expires — potentially enabling fraudulent or mistaken claims to be processed without full adversarial review, risking erroneous removal of valid liens and undermining contractual certainty.
Rights & LibertiesPeopleRef: Sec. 1(c)(2), Sec. 2(a)(1), Sec. 2(f)Secured parties (especially small lenders and businesses) must monitor DOL notifications and respond within 30 days to contest unauthorized termination requests — imposing administrative burden and legal risk on small creditors who may lack legal resources to contest each claim, potentially discouraging small-dollar lending.
Business & EmploymentLean peopleRef: Sec. 1(c)(1), Sec. 2(f)The bill shortens the standard 1-year retention period for lapsed financing statements to 60 days after administrative termination, reducing the window for creditors to recover or dispute — this may increase disputes and litigation over time as parties lose access to timely records, straining local court resources.
Local GovernmentLean peopleRef: Sec. 3(b)While not directly related to public safety, the expedited removal of financing statements without judicial oversight could facilitate identity theft or fraud if debtors falsely claim non-authorization — though the notarization and perjury penalty provide some deterrence, the process lacks pre-termination verification, increasing risk of misuse.
Public SafetyPeopleRef: Sec. 1(d), Sec. 3(b)The bill preserves existing legal remedies (e.g., lawsuits under RCW 62A.9A-513/518), but the existence of this administrative shortcut may discourage creditors from pursuing more robust legal remedies, potentially weakening enforcement of legitimate security interests and reducing confidence in UCC filing reliability.
Business & EmploymentLean peopleRef: Sec. 1(f)
Who Is Most Affected
Low- and middle-income individuals who are subjects of unauthorized financing statements (e.g., due to identity theft or clerical error) benefit significantly — they gain a fast, low-cost administrative remedy to clear their records and protect credit access, housing, and employment opportunities.
Small lenders, equipment financiers, and credit unions face increased administrative burden and risk of losing valid liens without full judicial review — though they retain legal recourse, the 30-day window may be insufficient for complex disputes, disproportionately impacting resource-constrained creditors.
The Department of Licensing gains new responsibilities but minimal fiscal impact; staff will need training and system updates, but the process is designed to be administrative, not judicial — this expands DOL’s role in civil dispute resolution without significant cost, potentially straining resources during early implementation.
Businesses that regularly file UCC financing statements (e.g., banks, equipment leasing companies) will need to adjust internal workflows to respond to administrative termination requests — while large firms can absorb costs, small lenders may face disproportionate compliance burdens, especially if challenged liens are frequent.
Identity theft victims and low-income households benefit most — they lack resources to fight false liens through courts and are most vulnerable to credit damage, housing loss, and employment barriers; this bill directly addresses those inequities.