How long does a financing statement last before it lapses?

A financing statement lasts for five years before it lapses. Under the Uniform Commercial Code (UCC), specifically within the context of secured transactions, a financing statement must be filed to provide notice of a security interest in specific collateral. This five-year duration is key for creditors and debtors alike, as it establishes a clear timeframe for the effectiveness of the notice.

After the five-year period, if no continuation statement is filed, the financing statement becomes ineffective, which means that the secured party may lose its priority in the collateral if another creditor files a financing statement for the same collateral. This highlights the importance of being proactive about renewing financing statements to maintain a perfected security interest.

While the other choices present varying lengths of time, they do not align with the established rules regarding financial statements. The five-year period is consistent with UCC guidelines and is fundamental knowledge for anyone involved in secured transactions.