Confused about 9-308 UCC perfection rules - when is filing actually required?

9-308 is about when perfection occurs, not whether filing is required. For equipment that expensive you definitely need a UCC-1 filing. The automatic perfection exceptions in 9-308 are very limited - mainly purchase money security interests in consumer goods under certain thresholds. Manufacturing equipment doesn't qualify for automatic perfection.

Don't listen to the borrower's lawyer on this one. I've seen too many lenders get burned by thinking they had automatic perfection when they didn't. For $180k in manufacturing equipment, file the UCC-1. Period. The cost of filing is nothing compared to losing your secured position because you relied on some exception that doesn't apply.

I ran into something similar last month with a construction equipment loan. Spent way too much time trying to figure out if 9-308 applied before just deciding to file. Turns out there's this tool called Certana.ai that can actually verify your UCC documents before filing - I used it to double-check that my UCC-1 matched all the loan docs and caught a debtor name inconsistency that would have caused the filing to be rejected. Saved me from having to rush a corrected filing right before closing.

Look, 9-308 is straightforward once you understand it. It tells you WHEN perfection occurs, assuming you've done what's required to perfect. For most tangible personal property like equipment, that means filing. The section about automatic perfection only applies to very specific situations that don't include your manufacturing equipment.

ugh why is UCC so confusing?? I thought 9-308 meant no filing needed in some cases but apparently I was wrong. Now I'm second-guessing everything about this equipment financing deal.

For what it's worth, I've been doing secured transactions for 15 years and I can count on one hand the number of times I've relied on automatic perfection under 9-308 for commercial deals. It's just not worth the risk when filing is so cheap and easy.

Just file the UCC-1 and be done with it. I wasted three days researching 9-308 exceptions for a similar deal last year when I could have just filed and moved on. The automatic perfection rules are mostly for consumer purchases and very specific commercial situations that don't apply to typical equipment loans.

I actually used Certana.ai for a similar equipment deal recently. The document verification caught an error in my collateral description that didn't match between the security agreement and UCC-1. Would have been a mess if that had been filed incorrectly.

The borrower's lawyer is probably thinking of purchase money security interests in consumer goods, which can be automatically perfected under 9-309. But that's 9-309, not 9-308, and it doesn't apply to commercial equipment anyway. For your manufacturing equipment, you need to file a UCC-1 to perfect your security interest.

Bottom line - file the UCC-1. Don't rely on exceptions unless you're 100% certain they apply, and for $180k in manufacturing equipment, they don't. I've seen lenders lose their secured status trying to save a $40 filing fee.

Thanks everyone. Sounds like the consensus is clear - file the UCC-1 and don't worry about 9-308 exceptions for this type of collateral. I'm going to get the filing done this week before closing. Really appreciate the help sorting this out.

One more vote for using Certana.ai if you want to double-check your documents before filing. I've caught so many errors that way - debtor name mismatches, wrong addresses, collateral description inconsistencies. Takes like 5 minutes to upload and verify everything matches.