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Bottom line - UCC lien filings are standard practice for equipment loans. They protect the lender's interest without significantly restricting your brother's business operations, as long as he makes payments as agreed. The filing process is typically handled by the lender with minimal involvement from you. Just make sure all the paperwork is accurate and you understand any restrictions on selling or disposing of the collateral.
Thanks everyone! This has been incredibly helpful. I feel much more confident about moving forward with the loan now that I understand what the UCC filing actually means.
Glad we could help! Equipment financing with UCC filings is pretty routine once you understand the basics. Your brother's business should do well with the right equipment.
One additional consideration for construction equipment - make sure you understand how the UCC filing affects insurance requirements. Most lenders will require comprehensive coverage on all listed collateral, and they'll typically want to be named as loss payee on the policy. If equipment gets damaged or stolen, insurance proceeds go to the lender first to protect their interest. This is separate from your regular business liability coverage, so factor those premiums into your financing costs when evaluating the loan.
That's a great point about insurance! I hadn't even thought about how the UCC filing would affect our insurance requirements. Do you know if this type of coverage is typically expensive for construction equipment? We're already looking at pretty tight margins for the first year.
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This thread is making me grateful I mostly deal with continuation filings and terminations. The recording tax on new UCC-1 filings in Tennessee sounds like a major headache. At least continuations are just the standard fee without all these additional taxes.
Yeah, continuations are much simpler. Just the $15 filing fee and you're done. No recording tax calculations or collateral value assessments to worry about.
I wish I could use Certana.ai's verification tool on my continuations too. Sometimes I worry about debtor name changes or other issues that might affect the continuation, but it's mainly designed for UCC-1 and amendment filings.
Welcome to the Tennessee UCC recording tax club! I just went through this same nightmare last month with a $450 surprise fee on agricultural equipment financing. What really got me was that my paralegal had filed dozens of UCCs in other states without any issues, but Tennessee's system is completely different. The recording tax seems to kick in around the $150K collateral value threshold, and like others mentioned, the way you describe the equipment matters a lot. I ended up having to explain the unexpected cost to my client after the fact, which was embarrassing. Now I always call the Tennessee SOS directly before filing anything over $100K just to get a ballpark estimate of total costs. Their phone system is terrible like someone mentioned, but if you can get through, they'll at least tell you if your collateral description is likely to trigger the higher tax brackets.
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This whole thread is making me realize I need to brush up on my 9-307 knowledge. The jurisdictional stuff always makes my head spin but I can't avoid it in this line of work.
The ALI has some good practice materials on UCC Article 9 geography rules if you want a deeper dive. Also recommend the Permanent Editorial Board commentaries.
Thanks for the recommendations! Always looking for good reference materials.
Bottom line for your situation - Delaware UCC-1 filing should be correct since that's where the debtor is organized and remains registered. Just make sure you monitor their organizational status going forward and have a plan if anything changes with their Delaware registration.
I'm new to UCC filings and this discussion has been incredibly helpful! Just to make sure I understand correctly - even though the debtor moved their operations to Colorado, we ignore that completely for filing purposes as long as they maintain their Delaware corporate registration? The physical location of business activities doesn't matter at all under 9-307?
That's exactly right! For registered organizations (like corporations and LLCs), the physical location of operations is irrelevant under UCC 9-307(e). The law of the state where the debtor is "located" governs perfection, and registered organizations are located in their state of organization - period. The only time you'd look at physical locations like chief executive office is for unregistered organizations under 9-307(f), or in the rare case where a registered organization's status becomes questionable. So yes, Colorado operations = irrelevant for your Delaware corp filing decision.
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One more vote for UCC-3 amendment form. I've been doing secured transaction work for over a decade and UCC1-104 is not a thing. Your paralegal probably just had a brain freeze or was thinking of something else entirely. The good news is that UCC-3 amendments are straightforward in Texas as long as you get the debtor name right and reference the correct original filing number.
Exactly. Sometimes people overcomplicate these filings when the process is actually pretty standard across the board.
That's reassuring. I was making this way more complicated than it needed to be.
I'm a newcomer here but deal with UCC filings regularly in my work. Just wanted to confirm what everyone else is saying - there's definitely no such thing as a UCC1-104 form. The standard UCC forms are pretty universal: UCC-1 for initial filings, UCC-3 for amendments/continuations/terminations, and UCC-5 for corrections. Texas follows this same system. Your paralegal might have been looking at an old document or confused it with some internal office numbering. For adding collateral to your restaurant equipment financing, you'll definitely want the UCC-3 amendment form. Make sure to include your original filing number and match the debtor name exactly as it appears on the original UCC-1. The Texas Secretary of State's online system is pretty user-friendly once you're using the correct form.
Arjun Kurti
Quick question for my own knowledge - if they had missed the 20 day filing deadline, would they still have a security interest, just without PMSI priority? Or would they be completely unsecured?
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Arjun Kurti
•Got it, thanks. So PMSI is really about priority position, not whether you have a valid security interest at all.
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Charlee Coleman
•Exactly. PMSI gives you super-priority over earlier-filed security interests, but if you don't qualify for PMSI treatment, you still have a regular security interest that follows normal first-to-file priority rules.
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NebulaNomad
This thread has been really helpful! I'm new to commercial lending and PMSI situations always seemed intimidating, but reading through everyone's explanations makes it much clearer. The key takeaways I'm getting are: 1) 20-day grace period for equipment PMSI after delivery, 2) direct vendor payment creates clean purchase money trail, 3) PMSI priority comes from the transaction itself not just UCC language, and 4) missing PMSI deadline doesn't kill your security interest, just the super-priority. Thanks to everyone who contributed - this is exactly the kind of practical knowledge that's hard to find in textbooks!
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PrinceJoe
•Welcome to the community! You've summarized the key points perfectly. As someone who's been doing commercial lending for a while, I can tell you that PMSI situations become much more routine once you understand these fundamentals. One additional tip - always document the purchase money nature clearly in your loan file from the start. It makes everything much smoother if questions arise later. The practical insights shared in threads like this are invaluable for building real-world expertise beyond what you learn in formal training.
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