November 4, 1977

Mr. Charles P. Schroyer 
Hughes County State's Attorney 
Post Office Box 8 
Pierre, South Dakota 57501

Official Opinion No. 77-92

UCC continuation statements (SDCL 57-38-13, -14)

Dear Mr. Schroyer:

You have requested an official opinion interpreting the following statutes relating to continuation statements: 
    
57-38-13. A filed financing statement which states a maturity date of the obligation secured of five years or less is effective until such maturity date and thereafter for a period of sixty days. Any other filed financing statement is effective for a period of five years from the date of filing. The effectiveness of a filed financing statement lapses on the expiration of such sixty-day period after a stated maturity date or on the expiration of such five-year period, as the case may be, unless a continuation statement is filed prior to the lapse.  Upon such lapse the security interest becomes unperfected.  A filed financing statement which states that the obligation secured is payable on demand is effective for five years from the date of filing. 
    
57-38-14. A continuation statement may be filed by the secured party 
     (1)  within six months before and sixty days after a stated maturity date of five years or less, and 
     (2)  otherwise within six months prior to the expiration of the five-year period specified in § 57-38-13. 
    
Any such continuation statement must be signed by the secured party, identify the original statement by file number and state that the original statement is still effective.  Upon timely filing of the continuation statement, the effectiveness of the original statement is continued for five years after the last date to which the filing was effective whereupon it lapses in the same manner as provided in § 57-38-13 unless another continuation statement is filed prior to such lapse.  Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the original statement.  Unless a statute on disposition of public records provides otherwise, the filing officer may remove a lapsed statement from the files and destroy it.

The specific question you have asked is:

QUESTION: 

What is the beginning date for purposes of computing the five year period during which a continuation statement is effective?

In my opinion the answer to your question is found in the following portions of the above cited statutes: 
    
57-38-13. The effectiveness of a filed financing statement lapses on the expiration of such sixty-day period after a stated maturity date or on the expiration of such five-year period, as the case may be, unless a continuation statement is filed prior to the lapse.  . . . 
    
57-38-14. Upon timely filing of the continuation statement, the effectiveness of the original statement is continued for five years after the last date to which the filing was effective. . . . (Emphasis added.)

Therefore, the continuation statement becomes effective and the five year period begins to run from the date on which the original financing statement or prior continuation statement would lapse if the continuation statement were not timely filed.  The fact that the continuation statement may be filed up to six months prior to the lapsed date has no relevance to the date on which it becomes effective.  It merely provides the creditor ample time in which to file and thereby maintain his perfected status for an additional five years.

The answer to your question is: 
    
(1)  If the financing statement states a maturity date of five years or less it is effective for sixty days after the maturity date.  The continuation statement becomes effective only upon the expiration of the sixty-day period. 
    
(2)  If the financing statement does not meet the criteria of (1), it lapses five years from the date of filing and the continuation statement becomes effective on that date.  The same time frame applies if a second continuation statement is filed.

Respectfully submitted,

William J. Janklow
Attorney General

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