UCC Document Community

Bottom line for your CNC situation: primary use = manufacturing = equipment classification. The occasional sales don't change that fundamental relationship. List as equipment and you're good to go.

Great discussion on the primary use test! One thing to add - when documenting your rationale for equipment classification, consider including a brief description in your security agreement about how the CNC machines are "used or bought for use primarily in business operations" rather than "held for sale or lease." This language mirrors the UCC definitions and can help support your classification decision if it's ever questioned. Also, for mixed-use assets like yours, some attorneys recommend including a clause that covers "all replacements, substitutions, and proceeds" to catch any scenario where equipment might temporarily shift categories.

I'm working on a similar equipment financing deal right now. These UCC 1-308 formerly 1-207 questions come up a lot but honestly they're a distraction from the real issues. Focus on debtor name accuracy, proper collateral description, and timely filing. That's what actually protects your security interest.

Hassan, you're absolutely right to be cautious about this. I've been dealing with UCC filings for over 15 years and can confirm what everyone else is saying - UCC 1-308 (formerly 1-207) has no place on UCC-1 financing statements. That provision is about preserving rights when you're compelled to perform under a contract, which isn't what's happening when you file a UCC-1. You're simply giving public notice of your security interest. Adding that language could confuse the filing office or even lead to rejection. For your $350k equipment loan, stick to the basics: exact legal name of the debtor (check their articles of incorporation), clear collateral description like "equipment and inventory," and make sure you file timely to preserve any purchase money security interest priority. Your lien perfection depends on these fundamentals, not on reservation of rights clauses that don't apply to this type of filing.

The bottom line is that your NCCS UCC statement needs to support your lender's security interest in the current equipment configuration. If there are gaps, fix them now before closing. Whether that's through documentation, amendments, or supplemental agreements depends on your specific situation. Get your attorney involved if you're unsure about the best approach.

I've been following this discussion and wanted to add something that might help - when dealing with NCCS UCC statement documentation, don't forget to check if your state has specific formatting requirements or standardized forms. Some states are very particular about how equipment specifications need to be described in the NCCS documentation, especially for manufacturing equipment like yours. Also, since you mentioned the $850K value, make sure your insurance documentation aligns with your NCCS UCC statement - lenders often cross-reference these during their review process. The last thing you want is a discrepancy between your filed collateral description and your insurance schedules that creates questions about coverage gaps.

Update - tried the revised description 'all securities accounts of debtor maintained with Charles Schwab & Co. and The Fidelity Investments, including all securities entitlements, financial assets, and other property credited to such accounts' and it was accepted! Thanks everyone for the help understanding the securities account UCC definition requirements.

Great to see this resolved! For anyone else dealing with securities account UCC issues, I've found it helpful to remember that the key is capturing three elements: (1) the account itself, (2) the securities entitlements (your rights to the securities), and (3) any other financial assets in the account like cash or money market funds. The UCC definition in 9-102(a)(49) focuses on the intermediary relationship, so naming the broker/custodian when known really helps with specificity. Also worth noting that if you're securing a revolving facility where the debtor might move accounts around, you might want broader language, but for term loans with identified accounts, the specific approach usually works better with filing offices.

Welcome to the secured lending world! The UCC system really is the backbone of how secured transactions work. Once you get comfortable with the basics, you'll start to appreciate how the system protects both lenders and borrowers by creating clear rules for priority and notice.

One practical tip as you're getting started - create a UCC filing checklist for your team. Include items like: verify debtor's exact legal name, confirm proper collateral description, double-check filing jurisdiction, and set up continuation reminders. Having a standardized process will help prevent the common mistakes everyone's mentioned here. Also, don't hesitate to reach out to the Secretary of State's UCC division if you have questions - they're usually pretty helpful with procedural issues.