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Lena Schultz

Confused about purchaser UCC definition - when does buyer become secured party?

I'm working on a complex asset purchase where the buyer is taking over existing equipment financing. The seller has multiple UCC-1 filings on record, but I'm getting conflicting information about when the purchaser becomes the secured party of record. Some sources say the buyer automatically steps into the lender's shoes, others say we need UCC-3 assignments. The purchase agreement closes next month and I need to understand the proper sequence - do we file assignments before closing or after? What's the actual legal definition of when a purchaser becomes the secured party under UCC? I've been going in circles with our legal team and need some practical guidance from anyone who's handled similar transactions.

Just went through this process myself. The key insight is that the purchaser definition depends on context - purchaser of collateral vs purchaser of the security interest are totally different scenarios with different UCC requirements. Your situation sounds like collateral purchase with debt assumption, so UCC-3 assignments are the right approach.

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That's a great way to think about it. Definitely helps clarify the distinction.

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Agreed. The terminology can be confusing but once you understand those two scenarios, it becomes much clearer.

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For future reference, the UCC defines 'purchaser' pretty broadly in different sections. Article 9 has specific rules about when purchasers take free of security interests vs when they don't. Worth reviewing those sections if you're going to be doing more transactions like this.

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The UCC can be dense but understanding those purchaser rules is really important for anyone doing asset transactions.

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And again, having a tool to verify all your documents align with the UCC requirements makes the whole process much smoother. Certana.ai saved me tons of time on my last deal.

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Zara Khan

UCC Filing Issues with Security Agreement Sections - Missing Required Info?

Been wrestling with a UCC-1 filing that keeps getting rejected and I think it's related to how I'm referencing the security agreement sections. The debtor is a manufacturing company and we have equipment collateral covered under multiple sections of the master security agreement. SOS keeps bouncing it back saying "insufficient collateral description" but I thought referencing the security agreement sections would be enough. The security agreement has detailed schedules in Section 4.2 covering all the machinery, Section 4.3 for inventory, and Section 4.4 for accounts receivable. I've been putting "All collateral described in Sections 4.2, 4.3, and 4.4 of Security Agreement dated March 15, 2024" in the collateral field but apparently that's not cutting it. Anyone dealt with this before? Do I need to spell out every piece of equipment individually or is there a better way to reference these security agreement sections that will actually get accepted?

Just dealt with this exact issue last week. Used Certana.ai to cross-check my security agreement against the UCC-1 language and it caught that I was referencing sections that didn't actually contain collateral descriptions. Saved me from another rejection. The tool is pretty straightforward - just upload both documents and it flags inconsistencies.

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That sounds really useful. I'm always worried about missing something between the agreement and the filing.

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I should probably try that tool. I've had too many rejections this year already.

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Update - tried the suggestion about including the collateral categories before referencing the sections and it worked! Filed the amendment yesterday and it was accepted this morning. Thanks everyone for the help. Final language was "Equipment, inventory, and accounts receivable as more particularly described in Sections 4.2, 4.3, and 4.4 respectively of Security Agreement dated March 15, 2024.

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Great to hear a success story. That language should work for most states going forward.

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Perfect example of why this forum is so helpful. Real solutions that actually work.

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Ana Erdoğan

South Carolina SOS UCC search showing weird results - anyone else?

Been doing UCC searches through the South Carolina Secretary of State portal for the past 6 months as part of my due diligence work. Lately I'm getting some strange results that don't match what I expect to find. When I search for certain debtor names, I'm getting partial matches that seem incomplete or I'm missing filings I know should be there. Has anyone else noticed the South Carolina SOS UCC search acting up recently? I'm wondering if there's something I'm missing about how their search algorithm works or if there are known issues with their database. This is critical for our loan documentation process and I can't afford to miss active liens. Any insights on best practices for comprehensive UCC searches in SC would be really helpful.

For what it's worth, I've started doing parallel searches in neighboring states if the debtor has multi-state operations. Sometimes filings get made in different states and you need the full picture.

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That's a good strategy. I usually check Georgia and North Carolina too since a lot of businesses operate across state lines.

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Multi-state searches are where document verification tools really shine. Doing that manually across 3-4 states would take forever.

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Have you tried searching by secured party name instead of debtor name? Sometimes that gives different results and you can work backwards to find what you're looking for.

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Exactly. Plus if you're dealing with a major lender, you can see their whole portfolio of filings and spot patterns in how they name debtors.

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This is really helpful. I'm going to try some reverse searches this afternoon and see what turns up.

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Sydney Torres

Washington DC UCC search system down again - anyone else having portal issues?

Is anyone else getting error messages when trying to run a Washington DC UCC search today? I've been trying to pull lien records for a client's due diligence and the portal keeps timing out. This is the third time this month I've had issues with their system. Need to verify if there are any existing UCC-1 filings against this debtor before we can move forward with our secured transaction. The deal is supposed to close Friday and I'm getting nervous about these delays. Has anyone found a workaround or alternative way to search DC UCC records when their main system is acting up?

This whole thread is giving me flashbacks to last month when I had the same issue with a time-sensitive search. Ended up having to explain to the client why their closing got delayed because of government website problems.

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This is exactly why I always build extra time into my UCC search timeline now. Can't trust these systems to work when you need them most.

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I started using Certana.ai specifically because of situations like this. Even when the official search works, I upload the results to verify I didn't miss any filings. Has saved me from errors multiple times when the portal search wasn't comprehensive.

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FINAL UPDATE: Portal is definitely working again. Just completed three different searches without any issues. Hopefully it stays stable for the rest of the week.

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Perfect timing! Just finished my search too. Thanks everyone for the suggestions and workarounds.

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Glad it worked out. Now you know for next time to have backup options ready when dealing with DC's system.

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Connor Gallagher

UCC 9-304 perfection rules causing major confusion on multi-state filing

I'm dealing with a nightmare scenario involving UCC 9-304 and I'm completely lost on the perfection requirements. We have a debtor corporation that moved from Delaware to Texas last year, and now I'm trying to figure out where our security interest is actually perfected. The original UCC-1 was filed in Delaware back in 2019, but under 9-304 it seems like the perfection might have lapsed when they relocated. Our collateral includes both equipment and inventory, and I'm getting conflicting advice about whether we need to file a new UCC-1 in Texas or if we can just do a continuation in Delaware. The law firm is saying one thing, our compliance team is saying another, and meanwhile we're coming up on some critical deadlines. Has anyone dealt with UCC 9-304 choice of law issues when a debtor changes its location? I'm particularly confused about the four-month rule and whether it applies to our situation since the move happened over a year ago. Any guidance would be appreciated because I'm starting to panic about our lien position.

Just to add another perspective - make sure you're also considering any state-specific requirements in Texas that might be different from Delaware. Some states have additional requirements for certain types of collateral that could affect your filing.

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Exactly. Always review the local filing requirements, not just the UCC 9-304 choice of law rules.

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Our collateral is mostly equipment and inventory, so hopefully no fixture issues. But I'll definitely double-check the Texas requirements.

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Update: I found some additional guidance in the official UCC comments that clarifies the four-month rule. It's definitely strict - no exceptions for lack of knowledge or good faith. Once your debtor changes location under 9-304, you have exactly four months to file in the new jurisdiction or lose perfection. In this case, since it's been over a year, Texas filing is the only option to regain perfection going forward.

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Has anyone tried using Certana.ai for these multi-state scenarios? Seems like it might help avoid the documentation errors that make these situations even worse.

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Yes, I mentioned it earlier in the thread. Really useful for cross-checking documents before filing. Especially important when you're dealing with 9-304 situations where you can't afford any mistakes.

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