How specific should my description of collateral in UCC-1 be for equipment lease?

For equipment financing like this, you generally want to strike a balance. I usually go with something like "All machinery, equipment, and fixtures now owned or hereafter acquired by Debtor and located at [specific address], including but not limited to the equipment described in Schedule A attached hereto." Then attach the detailed equipment list as Schedule A. This gives you both the broad coverage and the specific identification. Most filing offices will accept reasonable attachments.

Wait, are you sure you need all that detail? I thought UCC-1 collateral descriptions just needed to "reasonably identify" the collateral. For equipment, I usually just put "All equipment, machinery, and fixtures" and call it a day. Never had any problems with that approach.

Been doing equipment financing for 15 years and here's what I've learned: the description of collateral in UCC-1 needs to be specific enough that a third party could identify what you're claiming, but not so specific that you accidentally exclude something. For your CNC equipment, I'd recommend: "All manufacturing equipment, machinery, machine tools, and related accessories and attachments now owned or hereafter acquired by Debtor, including without limitation the equipment described in the attached Schedule A, together with all additions, accessions, replacements, and substitutions thereof." This covers you if they add equipment later or replace broken parts.

ugh this is exactly why I hate UCC filings. Every state seems to have different ideas about what's "sufficient" for collateral descriptions. I filed one last year that got rejected because apparently "all equipment" wasn't specific enough, but then I've seen filings with even vaguer language that went through fine. How are we supposed to know what will work??

One thing to watch out for - make sure your UCC-1 collateral description doesn't conflict with what's in your security agreement. I've seen deals where the UCC was broader than the security agreement or vice versa, and that created issues later when they tried to enforce. Also double-check that you're covering all the collateral types you need. With manufacturing equipment, don't forget about software licenses if any of the machines come with proprietary software.

For what it's worth, I think you're overthinking this. Just put "All equipment and machinery now owned or hereafter acquired by Debtor" and be done with it. The UCC-1 is just notice filing anyway - the real specifics are in your security agreement. If someone wants to know exactly what collateral you have, they can request a copy of the security agreement from the debtor.

Make sure you get the location right too! If the equipment is going to be moved to a different location after installation, you need to think about whether to include the current location, future location, or both in your description of collateral in UCC-1. Also, some lenders want serial numbers included in the UCC-1 filing itself, not just in an attachment. Check with your client about their preferences.

Here's what I do for equipment deals like yours: 1. Start with a broad category ("All manufacturing equipment and machinery") 2. Add location specificity ("located at [address]") 3. Include the specific equipment reference ("including the equipment described in Schedule A") 4. Add the standard expansion language ("together with all additions, accessories, etc.") 5. Include future acquisitions language ("now owned or hereafter acquired") This approach has worked well for me across multiple states and I've never had a rejection based on collateral description.

Don't forget to consider whether any of this equipment might be considered fixtures! If the CNC machines are going to be permanently attached to the building foundation or utilities, you might need to do a fixture filing instead of or in addition to a regular UCC-1. Fixture filings have different requirements and usually need to be filed in the real estate records too.

Whatever you do, make sure you proofread everything carefully! I once had a UCC-1 rejected because I typo'd "machinery" as "machinary" in the collateral description. Such a stupid mistake but it held up the whole closing.

Just wanted to add one more consideration - timing. Since you mentioned closing is next week, make sure you check the processing times for UCC-1 filings in your state. Some states have same-day or 24-hour processing for online filings, but others can take 3-5 business days. If you're cutting it close, you might want to call the filing office to confirm processing times. Nothing worse than having a closing delayed because the UCC-1 didn't get processed in time for the title company or lender to verify the filing. Also, once you file, make sure to get the file-stamped copy immediately for your closing documents. Most lenders want to see the actual filed UCC-1 with the file stamp and date before they'll fund.