Bill > HB5377

This bill amends the Texas Business & Commerce Code to address fraudulent financing statements, which are legal documents filed in secured transactions that contain false or groundless information. The bill increases the potential liability for filing such statements from $5,000 to $10,000 and expands the persons who can seek damages. It introduces a new process where a person identified as a debtor in a potentially improper financing statement can file an affidavit with the filing office to challenge the statement, which will trigger a termination of the financing statement. The bill establishes a detailed procedure for how such challenges will be processed, including notifications to secured parties, potential court actions, and provisions for reinstating financing statements if they are found to have been properly filed. The bill also specifies that these new provisions do not apply to financing statements filed by regulated lending institutions, which are defined to include banks, credit unions, mortgage companies, and other financial entities subject to regulatory oversight. Additionally, the bill makes minor technical amendments to ensure consistency with the new provisions regarding continuation of financing statements. The bill is set to take effect on September 1, 2025, providing time for stakeholders to understand and prepare for the new regulations.