(1) The Department has power to issue regulations only as provided in this section.

(2) Regulations may prescribe filing fees not to exceed the reasonable estimation of costs necessary to operate the filing office.

(a) Regulations may prescribe the fee for filing of a notice.

(b) Regulations may prescribe the fee for filing of a certified search report.

(c) There shall be no fee for filing a notice of the interest of a lien holder.

(d) There shall be no fee for a search of filing office records.

(e) There shall be no fee for any other services of the filing office.

(3) Regulations may prescribe the means by which fees authorized by this chapter may be paid.

Source: PL 14-34 § 40.

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code.

The Department shall adopt an electronic form for the submission of notice of the interest of a lien holder. The notice of the interest of a lien holder shall be limited to identification of the lien holder, identification of the person owing payment or performance to the lien holder, and a description of movable property against which the lien holder claims a right, in the same manner as provided in this chapter for the filing of a notice of a security interest.

Source: PL 14-34 § 41.

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code.

(1) A notice is a public record.

(2) Indexes and other records created by the filing office with respect to notices, in any form or medium, are public records.

(3) Any person has a right to inspect and make copies of the records of the filing office.

Source: PL 14-34 § 42.

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code.

(1) An initial notice is sufficient if it:

(a) identifies the debtor and provides a mailing address;

(b) identifies the secured party or an agent of the secured party and a mailing address; and

(c) describes the collateral covered by the notice, as provided in section 1006 of this title. In addition, a notice must provide a description of the relevant real property if it covers timber to be cut, minerals to be extracted, or fixtures. A description of real property need only reasonably describe the real property, and need not satisfy the requirements of a description necessary to create a mortgage in real property or to establish ownership rights in real property.

(2) A person is entitled to file an initial notice only if the debtor authorizes the filing in a signed writing. The debtor’s authorization need not be contained in the notice.

(3) By signing a security agreement, a debtor authorizes the filing of an initial notice covering the collateral described in the security agreement, and proceeds of the collateral, whether or not the security agreement expressly covers proceeds.

(4) A notice may be filed before a security agreement is concluded or before a security interest attaches to collateral.

(5) A notice substantially complying with the requirements of this chapter is effective, even if it is insufficient under this section, unless the insufficiency makes the notice seriously misleading. A notice that insufficiently provides the name of the debtor is seriously misleading.

Source: PL 14-34 § 43.

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code.

(1) A notice sufficiently provides the name of the debtor when:

(a) the debtor is a natural person and a citizen of the Federated States of Micronesia and the notice contains the name of the person as it appears on the records of the Social Security Administration;

(b) the debtor is a natural person and not a citizen of the Federated States of Micronesia and the notice contains the name of the person as it appears on the person’s passport and identifies the country that issued the passport;

(c) the debtor is a corporation organized under law enacted by the Federated States of Micronesia or a state of the Federated States of Micronesia, and the notice contains the name of the debtor as shown on the registry established by that law;

(d) the debtor is a foreign corporation qualified to do business under law enacted by the Federated States of Micronesia or a state of the Federated States of Micronesia and the notice provides the name of the debtor as shown in the registry established under that law;

(e) the debtor is a foreign corporation not registered under the law enacted by the Federated States of Micronesia or any state of the Federated States of Micronesia, and the notice contains the name of the debtor as shown on the appropriate registry in the country where the foreign corporation is organized.

(2) A notice that sufficiently provides the name of the debtor is not rendered ineffective by the presence or absence of a trade name or other name of the debtor. A notice that provides only the debtor’s trade name does not sufficiently provide the name of a debtor.

(3) A notice may provide the name of more than one debtor and the name of more than one secured party.

(4) The failure to indicate on a notice that a person is an agent of the secured party does not affect the sufficiency of a notice.

Source: PL 14-34 § 44.

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code.

(1) A filed notice remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest continues, even if the secured party has actual or constructive knowledge of or consents to the disposition.

(2) If a debtor changes its name so that a filed notice becomes seriously misleading, the notice is effective to perfect a security interest in collateral acquired by the debtor before or within four months after the change. The notice is effective to perfect a security interest in collateral acquired by the debtor more than four months after the change only if an amendment to the notice is filed within four months of the change to correct the name.

(3) Except as provided for a change of debtor name under subsection (2) of this section, a notice remains effective if, after the notice is filed, a change of circumstances renders the notice seriously misleading.

Source: PL 14-34 § 45.

(1) A filed notice is effective for a period of five years after the date of filing.

(2) The effectiveness of a filed notice lapses on the expiration of the five year period unless, before the lapse, a continuation statement is filed.

(3) Upon lapse, a notice becomes ineffective and any security interest that was perfected by the notice becomes unperfected, unless the security interest is perfected without filing.

(4) If the security interest becomes unperfected upon lapse, it is deemed never to have been perfected against a prior or subsequent purchaser of the collateral for value.

Source: PL 14-34 § 46.

(1) An initial notice may be amended by one or more amendments. An amendment must:

(a) identify the initial notice by its file number;

(b) identify the secured party on the notice who authorizes the amendment;

(c) indicate that it is an amendment to the notice; and

(d) provide all of the information required of an initial notice, completely restating the notice in a manner that reflects the amended state of the notice.

(2) If an amendment adds collateral covered by a notice, or adds a debtor to a notice, it is effective if the debtor authorizes the filing in a signed writing. By signing a security agreement, a debtor authorizes the filing of an amendment, covering the collateral described in the security agreement, and proceeds of the collateral, whether or not the security agreement expressly covers proceeds.

(3) If there is more than one secured party on the notice, the amendment is effective if a secured party authorizes the filing.

(4) An amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment.

(5) An amendment that adds a debtor is effective as to the added debtor only from the date of the filing of the amendment.

(6) An amendment other than an amendment to add collateral or add a debtor is effective only if a secured party on the notice authorizes the filing of the amendment in an authenticated record.

(7) An amendment is ineffective if it purports to delete all secured parties and fails to provide the name of a new secured party, or purports to delete the names of all debtors and fails to provide the name of a debtor not previously named on the notice.

(8) If there is more than one secured party on the notice, each secured party may authorize the filing of an amendment.

(9) The filing of an amendment does not extend the period of effectiveness of a notice.

Source: PL 14-34 § 47.

(1) The period of effectiveness of a notice may be continued by filing a continuation statement that:

(a) identifies the initial notice by its file number;

(b) identifies a secured party on the notice who authorizes the continuation statement; and

(c) indicates that the effectiveness of the notice, with respect to the secured party who authorized the filing, is to be continued.

(2) A continuation statement may be filed only within six months before the expiration of the five-year period of the notice.

(a) Upon timely filing of a continuation statement, the effectiveness of the notice continues for a period of five years commencing on the day on which the notice would have become ineffective in the absence of the filing.

(b) The effectiveness of a notice is continued only with respect to the secured party who authorized the filing of the continuation statement.

(c) Upon the expiration of the new five-year period, the notice lapses with respect to the secured party unless, before the lapse, another continuation statement authorized by that secured party is filed. Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the notice.

Source: PL 14-34 § 48.

(1) The effectiveness of a notice may be terminated by filing a termination statement that:

(a) identifies the initial notice by its file number;

(b) identifies a secured party on the notice who authorizes the termination statement; and

(c) indicates that the notice is no longer effective with respect to the interest of the secured party who authorized the filing of the termination statement.

(2) Within 20 days after the secured party receives a written demand by the debtor, the secured party on a notice shall file a termination statement if:

(a) there is no outstanding secured obligation and no commitment to make an advance, incur an obligation, or otherwise give value; or

(b) the debtor did not authorize the filing of the initial notice; or

(c) the notice covers accounts or chattel paper that have been sold but as to which the account debtor or other person obligated has discharged its obligation.

(3) A termination statement effectively terminates the interest of a secured party on the notice only if the termination statement is authorized in a writing signed by that secured party. Upon the filing of an effective termination statement, the notice to which the termination statement relates becomes ineffective with respect to the authorizing secured party.

Source: PL 14-34 § 49.

(1) An initial notice, amendment, continuation statement, or termination statement is effective at the time it becomes public by means of a search of the records of the filing office as provided in this chapter.

(2) The filing office may refuse to file a record because:

(a) in the case of an initial notice, the record does not provide the name of a debtor;

(b) in the case of an amendment, the record does not provide the name of a debtor, does not provide the file number of the initial notice, or the record identifies an initial notice whose effectiveness has lapsed;

(c) in the case of a continuation statement, the record does not provide the file number of the initial notice, or was not delivered within the permitted six-month time period;

(d) in the case of a termination statement, the record does not provide the file number of the initial notice, or the record relates to an initial notice that has lapsed with respect to each secured party on the notice; or

(e) less than the full filing fee is tendered, or no arrangement has been made for the periodic payment of fees.

(3) A record that the filing office refuses to accept for a reason other than one set forth in this section is effective as a filed record except against a purchaser of the collateral that gives value in reasonable reliance upon the absence of the record from the files.

(4) If a filing office refuses to accept a record for filing, it shall promptly communicate the fact of and reason for its refusal to the person that presented the record.

(5) A notice authorized by one secured party on the notice does not affect the rights of another secured party on the notice.

(6) The failure of the filing office to index a record correctly does not affect the effectiveness of the record.

Source: PL 14-34 § 50.

(1) For each notice filed, the filing office shall:

(a) assign a unique file number in the case of an initial notice;

(b) assign a unique number to notices other than the initial notice;

(c) create a record that bears the number assigned to the filed record and the date and time of filing; and

(d) maintain the filed record for public inspection.

(2) The filing office shall index an initial notice by the name of the debtor and shall index all filed records relating to an initial notice in a manner that associates the initial notice and all filed records relating to the initial notice. For notices containing serial numbers of motor vehicles, the filing office shall maintain an index of serial numbers.

(3) The filing office shall maintain the capability to retrieve a record by the name of the debtor and by the file number assigned to the initial notice to which the record relates, and that associates an initial notice and all records relating the initial notice with one another. For notices containing the serial number of a motor vehicle, the filing office shall maintain the capability to retrieve a record by the serial number of the motor vehicle.

(4) The filing office shall maintain records of lapsed notices for a period of ten years beyond the date of lapse.

Source: PL 14-34 § 51.

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code.

(1) The filing office shall communicate the following information to any person that requests it:

(a) whether there is on file on a date and time specified by the filing office, any notice that designates a particular debtor and has not lapsed with respect to all secured parties;

(b) the file number, and the date and time of filing of each notice;

(c) the name and address of each debtor and secured party on each notice;

(d) all of the information contained in each notice.

(2) A request may be made to search the records of the filing office by any of the following criteria:

(a) the file number of a notice;

(b) the name of a debtor; or

(c) the serial number of a motor vehicle.

(3) In complying with its duty, the filing office may communicate information in any medium. However, if requested, the filing office shall communicate information by issuing a written certificate that can be admitted into evidence in the courts without extrinsic evidence of its authenticity.

Source: PL 14-34 § 52.

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code.

(1) There is established a Filing Office Revolving Fund, hereinafter referred to as the “Fund,” separate from the General Fund of the Federated States of Micronesia and all other funds.

(2) The purpose of the Fund is to establish an ongoing revolving fund to allow appropriations for, and revenues from, the filing of notices to be used for the costs of maintenance of a filing office.

(3) All future appropriations for, and revenues received from, the filing of notices shall be deposited in the Fund. Any unexpended monies in the Fund shall not revert to the General Fund nor lapse at the end of the fiscal year; provided that at the end of each fiscal year, funds in excess of 50 percent of the actual operating costs of the filing system during the fiscal year just closed shall be deposited in the General Fund.

(4) The Fund shall be administered by the Secretary of the Department of Economic Affairs. The Secretary shall, not later than 30 days after the close of each governmental fiscal year, submit a complete report of the activities and condition of the Fund for the fiscal year just closed to the President and the Congress of the Federated States of Micronesia.

(5) The Public Auditor shall audit the Fund at such times as the Public Auditor deems appropriate.

Source: PL 14-34 § 53.

Cross-reference: The statutory provisions on the Executive are found in title 2 of this code. The statutory provisions on the FSM Congress are found in title 3 of this code. The statutory provisions on the Public Auditor are found in chapter 5 of title 55 of this code.