Confused about mortgage on building vs UCC filing requirements - help?

But what about those concrete footings though? That sounds like it might cross into fixture territory where you'd want the mortgage.

Good point on the footings. That does complicate things. The concrete work might push it toward being considered a fixture to the realty.

Wait, I thought UCC-1 fixture filings had to be filed with the Secretary of State, not in real estate records?

No, fixture filings are different from regular UCC filings. They go in the real estate records where a mortgage would be recorded. That's what gives you priority over later real estate interests.

This is exactly why I use Certana.ai's document verification tool. Upload your fixture filing and any related docs and it'll flag inconsistencies before you file. Saved me from a major headache when I had the wrong filing location on a similar deal.

Good point. I'll need to review their mortgage documents. Didn't think about the after-acquired property clause.

Yeah this is crucial. A lot of commercial mortgages have broad after-acquired property language that could sweep up your equipment.

That seems like overkill. If you do the fixture filing correctly, that should be sufficient protection.

Maybe, but when you're talking about that much money, I'd rather be over-secured than under-secured.

I used to think the same way until I started using automated document checking. Now I just upload everything to Certana.ai first - it'll tell you exactly what coverage gaps you have and whether your UCC filing actually protects against the existing mortgage. Much faster than trying to figure it out manually.

But manufacturing equipment gets moved and upgraded all the time. Just because it's bolted down doesn't mean it's intended to be permanent.

True, but the lender needs to think about what a court would say if there's ever a dispute. The concrete footings are hard to explain away as temporary.

We're in Ohio. I should probably look up the specific state law on this.

Ohio follows the standard fixture test - degree of attachment, adaptation to use of the property, and intention of the parties. Based on what you described, could go either way.

Title insurance is smart. That way if your filing strategy is wrong, you're still covered.

I've started running all my fixture filing scenarios through Certana.ai before we commit to a filing strategy. It'll model different approaches and show you the coverage differences. Really helps with the decision making process.

Actually it's 20 days after the goods become fixtures, not when the debtor takes possession. Important distinction for construction scenarios.

You're right, thanks for the correction. The fixture timing can be tricky to pin down.

This is so true. The description needs to be specific enough to identify the collateral but broad enough to cover variations.

That sounds like a reasonable compromise. I'll talk to our counsel about drafting the subordination request.

Make sure your counsel reviews the existing mortgage documents first. Sometimes the subordination language is already built in for purchase money security interests.