Lawsuits, liens, and other encumbrances

False financing statements can cloud a person’s property or credit and be used to harass them. The law strengthens deterrence, requires prompt notice to named debtors, and provides a path to terminate unauthorized filings.

What the law does ​

• Raises the maximum civil penalty for knowingly false, harassing lawsuits, liens, or encumbrances from $5,000 to $15,000.
• Treats financing statements as liens for the false-filing prohibition and separately bans filing one without a reasonable basis or legal cause.
• Requires the Secretary of State to notify a named debtor within 21 days after a financing statement is filed.
• Lets a person improperly named as a debtor submit a sworn affidavit seeking termination of the financing statement.
• Requires the filing office to terminate the statement after 30 days unless a court blocks it, while allowing the listed secured party to seek court review and reinstatement.
• Allows courts to award costs, reasonable attorney’s fees, actual damages, and up to a $5,000 penalty for a bad-faith affidavit; violators of the false-filing prohibition owe three times the debtor’s court fees.

Who it affects ​

• People and entities falsely named in lawsuits, liens, or financing statements.
• Secured parties and creditors that file financing statements.
• Public officers and employees targeted by harassing filings.
• The Secretary of State and county filing offices handling financing statements.

Context ​

Financing statements are public filings used to disclose a creditor’s security interest in property.