UCC Document Community

One more thought - even if you can't perfect a security interest based on the oral agreement, getting written documentation now might help establish your creditor position for bankruptcy purposes if it comes to that. A documented debt with some security features is better than an undocumented one, even if the security interest isn't perfect. But definitely talk to someone who specializes in secured transactions about your specific situation and state law.

This is a really tough situation, and I feel for you dealing with this stress. Based on what everyone's saying here, it sounds like your first priority should be getting some kind of written acknowledgment from the borrower ASAP, even if it's not perfect. Since they're still making some payments (even if late), they might be willing to work with you on documentation if you approach it as trying to formalize the arrangement rather than creating new obligations. I'd suggest drafting something simple that acknowledges the existing loan and security arrangement, and see if they'll sign it - maybe even offer some payment flexibility in exchange for getting the documentation sorted out. The key is acting while you still have some leverage and before the situation gets worse.

One more thing to consider - make sure you coordinate with your title company if you're doing a fixture filing. They'll need to know about it for any future real estate transactions involving the property.

Jackie, you're absolutely right to be concerned about this. Based on what you've described, those HVAC units are definitely fixtures now and your standard UCC-1 probably won't provide adequate security. I'd recommend filing a fixture filing immediately - yes, you're past the 20-day window for automatic priority, but you'll still get protection against future interests. Before filing, do a quick search of the real estate records to see if any mortgages or liens have been recorded since the equipment was installed 8 months ago. Even if there have been recordings, the fixture filing is still worth doing for future protection. Make sure your collateral description specifically identifies the HVAC units and includes a proper legal description of the real estate. You can keep your existing UCC-1 in place too - it might cover any components that aren't considered fixtures.

I've encountered this UCC 1-207/UCC 1-308 nonsense a few times in my practice. What's particularly frustrating is that these borrowers often get very confrontational when you try to explain that their "research" is wrong. I've learned it's easier to just let them include the language and move forward - as everyone has confirmed, it has zero legal effect on your security interest. The Secretary of State will process it normally, your lien is perfected, and you maintain all your Article 9 remedies. Sometimes I wonder if we should start charging extra for the time spent explaining why sovereign citizen legal theories don't actually work!

As someone relatively new to secured transactions, this thread has been incredibly educational! I had a client mention UCC 1-207/UCC 1-308 language last week and I wasn't sure what to make of it. Now I understand it's just sovereign citizen mythology with no legal effect. One question though - should I be concerned about any borrowers who insist on this language being more likely to default or cause other problems down the line? Is there a correlation between believing in UCC 1-207/UCC 1-308 theories and other problematic behaviors in commercial relationships?

For what it's worth, I've found that paying close attention to the filing details upfront saves way more money than trying to find cheaper states. Getting it right the first time is key.

Thanks everyone for the input. Sounds like the fee increases are pretty universal and we just need to adjust our budgets accordingly. At least we're all dealing with the same issues.

Consider this a learning opportunity to implement proper UCC portfolio management. Document your current process gaps, quantify the potential exposure from lapsed filings, and present a business case for investing in proper tracking tools. Management usually pays attention when you can show them the dollar amount at risk from administrative failures.

This thread is a goldmine of practical advice! As someone who just started managing our bank's UCC portfolio (inherited from a retiring colleague with zero documentation), I'm realizing we might be in the same boat. Reading about Lena's Iowa situation and the comments about automated tools like Certana.ai has me thinking we need to do an immediate audit. Our predecessor kept everything in his head apparently, and now I'm discovering we have UCC filings going back 6+ years with no systematic tracking whatsoever. The regulatory risk point that DeShawn mentioned is particularly concerning - our next exam is scheduled for Q3 and I'd hate to have this come up as a finding. Thanks everyone for sharing your experiences and solutions, this is exactly the kind of real-world guidance you don't get in compliance manuals.