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
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
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.
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The case of Harbouredge Mortgage v Powell is a classic example whereby a secured party registered a financing statement which contained an error in the debtor's name, and therefore lost their claim as a secured creditor.
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