BP BHEAD INT S

AN ACT Relating to the enforcement of termination statements; and amending RCW 62A.9-404.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 62A.9-404 and 1982 c 186 s 7 are each amended to read as follows:

(1) Whenever there is no outstanding secured obligation and no commitment to make advances, incur obligations or otherwise give value, the secured party must on written demand by the debtor send the debtor, for each filing officer with whom the financing statement was filed, a termination statement to the effect that he or she no longer claims a security interest under the financing statement, which shall be identified by file number. A termination statement signed by a person other than the secured party of record must be accompanied by a separate written statement of assignment signed by the secured party of record complying with subsection (2) of RCW 62A.9-405, including payment of the required fee. If the affected secured party fails to file such a termination statement as required by this subsection, or to send such a termination statement within ten days after proper demand therefor he or she shall be liable to the debtor for ((~~one~~)) five hundred dollars, and in addition for any loss caused to the debtor by such failure.

(2) On presentation to the filing officer of such a termination statement he or she must note it in the index. If he or she has received the termination statement in duplicate, he or she shall return one copy of the termination statement to the secured party stamped to show the time of receipt thereof. If the filing officer has substituted a copy by microfilm or other photographic record of the financing statement, and of any related continuation statement, statement of assignment and statement of release, he or she may destroy the originals at any time, and shall retain the substituted microfilm or other photographic record for one year after receipt of the termination statement.

(3) There shall be no fee for filing and indexing a termination statement including sending or delivering the financing statement.

(4) If the secured party fails to file a termination statement under this section, any person whose property is subject to a secured obligation under this chapter who believes the financing statement or assignment thereof is invalid may petition the Thurston county superior court for an order, which may be granted ex parte, directing the secured party of record to appear before the court at a time no earlier than six nor later than twenty-one days following the date of service of the petition on the secured party. The secured party must then show cause, if any, why the financing statement or assignment thereof should not be stricken and other relief provided for by this section should not be granted. The petition shall state the grounds upon which relief is requested, and shall be supported by the affidavit of the petitioner or his or her attorney setting forth a concise statement of the facts upon which the motion is based. The order shall be served upon the secured party by personal service, or, if the court determines that service by mail is likely to give actual notice, the court may order that service be made by any person over eighteen years of age, who is competent to be a witness, other than a party, by mailing copies of the petition and order to the secured party at his or her last known address or any other address determined by the court to be appropriate. Two copies shall be mailed, postage prepaid, one by ordinary first class mail and the other by a form of mail requiring a signed receipt showing when and to whom it was delivered. The envelopes must bear the return address of the sender.

(5) The order shall clearly state that if the secured party fails to appear at the time and place noted, the financing statement or assignment thereof shall be stricken and released, and future filings may be enjoined unless the secured party first obtains approval of the court and that the secured party shall be ordered to pay the costs incurred by the petitioner and allowed by this section, including reasonable attorneys' fees.

(6) The clerk of the court shall assign a cause number to the petition and obtain from the petitioner a filing fee of thirty-five dollars.

(7) If, following a hearing on the matter, the court determines that the secured obligation is invalid, the court shall issue an order striking and releasing the secured obligation and awarding costs and reasonable attorneys' fees to the petitioner to be paid by the secured party and may enjoin the secured party from filing subsequent financing statements or assignments thereof unless the secured party first obtains approval of the court. If the court determines that the secured obligation is valid, the court shall issue an order so stating and may award costs and reasonable attorneys' fees to the secured party to be paid by the petitioner.