One of the most common mistakes made by secured parties is registering their security using an incorrect name for the debtor. If the name of the debtor is wrong when security is registered, then subject to very few exceptions, the lessor’s or secured party’s security interest is unperfected, and in an insolvency the secured party will lose its security in the asset to all secured creditors properly perfected.

Further complicating the issue, the debtor’s French name must also be included in the financing statement, if the debtor uses a French name in its articles. This rule is strictly enforced, and is the most common reason that secured parties’ interests become unperfected. Note that in western provinces, French names need not be included.

A “correct” name must also include a debtor’s middle name or middle initial, if it has one, and failure to include this information can also be fatal to a secured party’s interest.

It is important to remember that a driver’s license is not proof of an individual’s legal name, and should never be relied on to confirm a debtor’s name for the purposes of registering security. The legislation in some provinces is very specific with respect to the proper documents that must be used to confirm a debtor’s name.

If for some reason the debtor’s name is unclear, it is prudent to register using multiple iterations of its name to ensure that this relatively minor item does result in the secured party being unperfected.

Lesson Learned: Always confirm the name of your debtor using the appropriate documents, determine if there are any French names and register the name correctly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.