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Remember that after attachment occurs, your security interest is effective against the debtor. But to beat other creditors, you need perfection through filing. Priority generally goes by first-to-file rule, so don't delay your UCC-1 filing once everything is signed.
No specific deadline, but priority is determined by filing order. If another creditor files first, they could beat you even if your security agreement was signed first.
Ethan Wilson
•So file as soon as possible after closing. Got it.
Noah Ali
I learned the hard way that the UCC definition of security interest is broader than most people think. It includes any interest in personal property that secures payment - could be traditional loans, lease-purchase agreements, consignments in some cases, etc. Don't assume it only applies to obvious loan transactions.
Noah Ali
•UCC Article 9 covers some consignments if they meet certain criteria. The definitions are broader than people expect.
Ethan Wilson
•Fortunately our deal is a straightforward equipment loan, but good to know the scope is wider than I realized.
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One thing to watch out for with DCF security agreement forms is that they sometimes include after-acquired property clauses. Make sure your UCC-1 collateral description covers that if it's relevant to your deal. Something like 'all equipment now owned or hereafter acquired' language.
Good catch. After-acquired property is easy to forget but really important for ongoing business relationships.
Yes, this deal does involve some future equipment purchases so I'll make sure to include that language.
Just to add another perspective - I've found that being too generic in the collateral description can sometimes cause problems down the road if there are disputes about what's actually covered. You want to be broad enough to avoid errors but specific enough that it's clear what you're claiming. It's a delicate balance.
Omar Farouk
•That's a fair point. I guess it depends on the specific situation and what kind of collateral you're dealing with.
I think referencing the security agreement by date strikes the right balance. It's specific enough to identify the collateral but doesn't require you to repeat all the details in the UCC filing.
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Been lurking on this thread and wanted to add that we've started using a two-part approach: broad collateral description on the UCC for perfection purposes, then detailed schedules in our security agreements for enforcement. Best of both worlds - clean filing, comprehensive coverage.
Smart approach. Keeps the UCC filing simple but still gives you detailed rights in your contract docs.
This is actually what most sophisticated lenders do. The UCC filing is just for notice - your real rights come from the security agreement.
Dylan Hughes
Update on this thread - I ended up refiling with a broader collateral description that doesn't reference the contract form at all. Used 'all equipment, machinery, fixtures, and personal property now owned or hereafter acquired' and it was accepted immediately. Thanks everyone for the advice, especially about keeping the UCC filing independent of the contract terms. Also going to check out that Certana tool before our next continuation comes due.
Perfect example of why simple is better with UCC filings. Complex contract references just create more opportunities for problems.
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This whole UCC filing process is way more complicated than it should be. Why can't they just have a simple system that tells you exactly what's wrong instead of these cryptic rejection codes?
Ava Williams
•Because then they'd have to actually improve their ancient computer systems. Much easier to make us guess what went wrong.
The worst part is each state has different requirements and systems. What works in one state gets rejected in another.
UPDATE: Solved it! It was indeed a debtor name issue - the LLC had amended its articles to add "and Associates" to the end of the company name three months ago. The original UCC-1 used the old name without "and Associates." Refiled with the correct current name and it was accepted within 24 hours. Thanks everyone for the guidance about checking recent entity filings!
Perfect example of why document verification tools are so valuable. Those small name changes are easy to miss but cause major headaches.
Ethan Davis
•Definitely learned my lesson about staying current with entity changes. Going to implement better procedures to catch these updates.
Luca Romano
One more thing to watch out for in New Mexico - make sure you're checking the filing dates carefully. I've seen situations where there are multiple UCC-1 filings with slight name variations that were filed on different dates, and you need to know the chronology to understand priority.
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Paolo Conti
•That's a great point. Priority can definitely get complicated when there are multiple filings with name variations.
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Amina Sow
•Also check for any amendments or assignments that might affect those priorities. The UCC search is just the starting point.
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Nia Jackson
This thread is making me realize I need to be way more thorough with my UCC searches. I usually just search the exact legal name and maybe one or two obvious variations. Sounds like I'm probably missing stuff.
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CosmicCruiser
•Exactly. I'd rather run 20 searches and find nothing than run 3 searches and miss something important.
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NebulaNova
•This is why I always budget extra time for UCC due diligence. It's too important to rush.
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