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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Section 8 of the Interest Act, R.S.C. 1985, c. I-15, prohibits any "fine, penalty or rate of interest . . . that has the effect of increasing the charge on the arrears beyond the rate of interest payable on principal money not in arrears."
The Financial Consumer Agency of Canada (FCAC) issued a statement and a new compliance bulletin in response to recent news reports related to allegations that certain employees of banks were pressured to upsell to consumers to meet unrealistic sales targets and keep their jobs.
On February 24, the Supreme Court of Canada heard the appeal in Teva Canada Inc. v. Bank of Montreal. The appeal concerns who bears the loss for cheques payable to fictitious or non-existing payees, which were fraudulently issued by an employee.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).