UCC Document Community

Update us on how the sale goes! Article 9 dispositions can be really educational even when they're stressful. The more you do them the more comfortable you get with the process.

Diego, you're wise to be thorough with your first Article 9 disposition - the stakes are high and the requirements are complex. A few additional considerations: Make sure you're calculating the redemption amount correctly (outstanding debt plus reasonable expenses) in case the debtor surfaces at the last minute. For the manufacturing equipment, consider getting an independent appraisal to support your marketing strategy and pricing decisions - it's not required but can strengthen your commercially reasonable defense. Also, keep detailed records of the condition of the equipment when you took possession, including photos and any maintenance issues, as this affects fair market value. One thing that often gets overlooked is the timing of your UCC search - you should do a final search close to the sale date to catch any last-minute filings that might affect distribution of proceeds. The equipment market has been volatile lately, so document current market conditions for similar machinery to justify your disposition method and timeline.

One thing I'd add from my experience is to make sure you coordinate the UCC-1 filing with your loan closing timeline. I've seen deals where the subordination negotiations dragged on for weeks, but the borrower needed the equipment delivered on a specific date. Since the UCC-1 filing and subordination are separate processes, you can usually close your loan and file your UCC-1 right away, then execute the subordination agreement as a post-closing item with a reasonable deadline (like 30-60 days). This keeps the deal moving while giving everyone time to work through the subordination details. Just make sure this approach is acceptable to all parties upfront and document it in your loan commitment. The key is not letting perfect be the enemy of good when it comes to getting your security interest perfected and the borrower's financing in place.

Great thread - this really highlights how UCC filing and subordination get conflated when they're completely different processes. From a practical standpoint, I always tell my team to think of it as two parallel tracks: Track 1 is perfecting your security interest through proper UCC-1 filing (which is mandatory for enforceability), and Track 2 is negotiating payment priority through subordination agreements (which is optional but often required by senior lenders). The critical mistake I see people make is holding up Track 1 waiting for Track 2 to be resolved. Your $120K equipment financing deal should move forward with UCC-1 filing immediately - that blanket lien from their primary lender doesn't prevent you from filing, it just means you need to work out the priority arrangement separately. File your UCC-1 now, get your security interest perfected, then let the lawyers handle the subordination paperwork. Don't let subordination negotiations delay your perfection - I've seen too many deals where another creditor swooped in during extended negotiations and filed first.

Bottom line - you need to resolve this before any continuation deadlines hit. I'd recommend: 1) Pull all corporate records for each entity name, 2) Contact the secured party for clarification, 3) Review any UCC-3 amendments that might clarify the intended debtors, 4) If still unclear, consider filing protective continuations against all name variations to preserve priority while you sort it out.

I'm just getting started in UCC practice and this thread is incredibly helpful! Question for the group - when you're doing Secretary of State searches across multiple jurisdictions like this, is there a preferred order to search in? Should I start with the state where the business appears to be operating, or the state of incorporation? And are there any red flags in the corporate records that would immediately tell me I'm dealing with filing errors versus legitimate separate entities?

Bottom line for your compliance audit: UCC liens don't expire in the sense of automatically disappearing. They lose their legal effectiveness after 5 years without continuation, but they remain on public records until terminated. Your institution has obligations to file terminations when underlying debts are satisfied. Focus on getting those terminations filed to protect both your institution and your borrowers.

One additional consideration for your audit - make sure you're documenting the rationale for each termination decision. We create a simple log showing the original filing date, loan satisfaction date, and reason for termination (loan paid off, collateral released, etc.). This documentation has been invaluable during regulatory examinations, as examiners want to see that you have a systematic process for UCC management, not just ad-hoc cleanups. Also, if you find any filings where you're unsure about the loan status, it's better to research thoroughly before filing a termination - incorrectly terminating an active lien can create serious legal issues.

Just to add another verification option - I started using Certana.ai after making an embarrassing mistake on a fixture filing where I mixed up the legal property description. Now I upload all my fixture filing documents before submission and it catches those kinds of errors. The peace of mind is worth it, especially on larger commercial deals like yours.

Thanks everyone for the detailed responses - this is incredibly helpful! Just to clarify my situation: our debtor does own the manufacturing facility (not leasing), and the HVAC units are definitely being permanently installed with concrete mounting and full electrical integration. Based on what you've all said, it sounds like I definitely need to go the fixture filing route rather than a standard UCC-1. A few follow-up questions: 1) Do I need to get the legal property description from the county recorder's office, or can I use what's on the deed? 2) For the $340K loan amount, are there any additional requirements or just the standard fixture filing process? 3) Should I file this concurrently with closing or can I do it a few days before? Really appreciate this community - fixture filings always made me nervous but you've all helped clarify the key requirements!