UCC Document Community

Final thought - whatever service you use, make sure you're searching under all possible name variations for the debtor. I've seen too many deals where someone only searched the exact name on the credit application and missed liens filed under the legal entity name or with different punctuation.

I'm new to equipment financing but went through something similar recently in California. The stress is real when you're worried about missing liens! One thing that helped me was creating a checklist of all the entity name variations upfront and making sure whatever service I used could confirm they searched each one specifically. Also learned the hard way to always ask for sample search reports before committing - you can tell a lot about their thoroughness from how they format and organize the results. The legitimate services are usually happy to show you examples of their work.

Another consideration for your Ohio solar deal - make sure you're clear on the debtor entity. If the borrower is an LLC or corporation, even small variations in the legal name can cause issues. I've seen UCC-1s get rejected because the filing had "ABC Solar LLC" when the actual registered name was "ABC Solar, LLC" (note the comma). For a $385k deal, I'd recommend pulling a current Secretary of State certificate to confirm the exact legal name before filing. Also, if there are any pending name changes or mergers, you'll want to account for that in your filings.

One more thing to consider for your Ohio solar deal - check if your borrower has any existing real estate mortgages on the warehouse property. If they do, you'll want to coordinate with the mortgage lender to make sure there's no conflict over the solar panels. Some mortgage documents have "dragnet" clauses that automatically cover fixtures added to the property, which could create competing security interests. I had a deal where the bank's existing mortgage language was broad enough to arguably cover our solar installation, so we had to get a subordination agreement worked out. It's better to identify this upfront than discover it during a default situation. You might also want to consider requiring the borrower to get lender consent for the solar installation if their mortgage requires it for property modifications.

Thanks everyone for the detailed explanations - this thread really cleared up my confusion! Based on what you've all shared, I think our firm's current approach might actually be fine for perfection purposes since we're filing UCC-1s properly, but we definitely need to revise our notification procedures to better protect our payment rights. It sounds like we should be more proactive about notifying account debtors, especially on larger deals where collection issues could be costly. I'm going to review our standard forms to make sure our notification language meets the requirements outlined in the official comment, and probably implement more systematic notification procedures going forward. Really appreciate the practical insights from everyone who's dealt with these same interpretation challenges.

This discussion has been incredibly helpful! I'm dealing with a similar situation in my practice where we handle both equipment financing and factoring arrangements. One additional consideration I'd add is that for equipment financing specifically, you might want to coordinate your notification timing with any progress payment schedules in the underlying contracts. We've found that notifying account debtors right after equipment delivery but before the first payment is due gives you maximum protection while minimizing disruption to the business relationship between your debtor and their customer. Also worth noting that some account debtors will request verification of the assignment before redirecting payments, so having your documentation package ready can speed up the process significantly.

Bottom line for your situation: your bank will file a UCC-1 financing statement to perfect their security interest (lien) in your equipment. When they say 'filing a lien' they mean 'filing a UCC-1 to create a perfected lien.' Just different ways of describing the same protective mechanism for their $350K loan.

As someone who just went through this with our manufacturing equipment loan, I can confirm the confusion is real! What helped me was thinking of it this way: the UCC-1 filing IS how they create the lien on personal property like equipment. It's not UCC filing OR lien filing - the UCC-1 IS the lien filing system for movable assets. Your bank will definitely use a UCC-1 for that $350K machinery. Just make sure you review the draft before they file it to catch any errors in your company name or equipment description. Those mistakes can be expensive to fix later with amendment filings.

Just to add - if you're ever dealing with actual accession situations, remember that UCC 9-335 has priority rules that can affect your security interest. But like others said, doesn't sound like your situation.

Great discussion here! As someone who's dealt with similar confusion, I'd recommend focusing on practical terminology rather than getting caught up in legal technicalities. For equipment financing like your printing press situation, think of it this way: you want your security interest to cover not just what exists today, but anything that gets added, attached, or becomes part of the equipment later. The magic words are usually "including all additions, accessions, attachments, parts, and accessories." This catches both true legal accessions (rare in equipment deals) and the more common scenario of components being added over time. Your lender's attorney can fine-tune the language, but broad coverage is definitely the way to go here.