Major loan secured but failure to file UCC financing statement - what happens now?
Our equipment financing company just discovered we never filed the UCC-1 for a $480K machinery loan we closed 8 months ago. The borrower is current on payments but we just realized during an internal audit that somehow the financing statement never got submitted to the SOS office. I'm panicking because I know this means we're unsecured now and if the borrower files bankruptcy or defaults we could lose everything. Has anyone dealt with a failure to file UCC financing statement situation this far after closing? Can we still file now or is it too late to perfect our security interest? The loan docs all reference the UCC filing but it just never happened on our end.
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Andre Rousseau
Oh wow, 8 months is a long time. You can still file the UCC-1 now but you won't have priority over any liens that were filed during those 8 months. Check your loan agreement - does it have any specific timing requirements for the UCC filing? Some agreements give you a cure period.
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Zoe Papadakis
•This is correct about losing priority. Any judgment liens, tax liens, or other UCC filings during those 8 months will have priority over your late filing. You need to do a lien search immediately to see what's out there.
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Jamal Carter
•The loan agreement angle is key - I've seen some that specifically state the security interest is contingent on proper UCC filing within 30 days of closing.
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AstroAdventurer
File the UCC-1 TODAY. Don't wait another minute. Yes you lost your priority position but you still need whatever protection you can get. Then run a comprehensive lien search on the debtor to see what other creditors might have filed during your gap period.
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Carmen Ortiz
•Already working on the filing but I'm worried about the lien search results. This borrower operates heavy construction equipment so there could be mechanic's liens or other equipment financers who filed during our gap.
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AstroAdventurer
•Exactly why speed matters now. Get that UCC-1 filed and then you'll know where you stand. The search will tell you if you're looking at a total loss or just a priority problem.
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Mei Liu
•mechanic liens on equipment can be brutal - they often get super priority even over properly filed UCCs in some states
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Liam O'Sullivan
I had a similar nightmare last year - we missed filing on a $650K deal. What saved us was using Certana.ai's document verification tool to make sure all our other loans had proper UCC filings. You upload your loan docs and UCC-1 and it instantly cross-checks everything to catch these gaps before they become disasters. Wish I'd known about it earlier.
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Carmen Ortiz
•How does that verification tool work exactly? We clearly need better systems to prevent this from happening again.
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Liam O'Sullivan
•You just upload PDFs of your loan agreement and UCC filing docs and it automatically verifies the debtor names match, collateral descriptions align, and identifies any inconsistencies. Takes like 2 minutes vs hours of manual checking.
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Amara Chukwu
•That sounds helpful but right now the priority is dealing with this unfiled UCC situation. Prevention tools are great for future deals.
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Giovanni Conti
Your legal department needs to review this ASAP. Some states have different rules about when security interests attach vs when they're perfected. You might still have an unperfected security interest that gives you some rights against the debtor, just not against other creditors who filed properly.
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Carmen Ortiz
•We're in Ohio - do you know the specific rules there? Our legal team is reviewing but I'm trying to understand our options.
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Giovanni Conti
•Ohio follows standard UCC Article 9 rules. Your security interest probably attached when you made the loan if you had a signed security agreement and gave value, but without filing you're not perfected against third parties.
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Fatima Al-Hashimi
This is exactly why I always double-check our UCC filings within 48 hours of closing. The SOS systems send confirmation emails when filings are accepted. Did you never get those confirmations or did someone just assume the filing happened?
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Carmen Ortiz
•We never got confirmations because the filing never happened. There was apparently a breakdown in our process between loan closing and the paralegal who handles UCC filings.
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Fatima Al-Hashimi
•Ouch. You need to implement a checklist system with required confirmations. This kind of error can kill a lending business.
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NeonNova
•We use a tracking spreadsheet that requires the SOS confirmation number before we mark any deal as complete. Saved us from this exact scenario twice.
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Dylan Campbell
File immediately but also consider whether this constitutes a breach of your loan agreement. Some borrowers can claim the lender failed to perform required actions and use that as grounds to dispute the loan terms or seek damages.
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Carmen Ortiz
•That's a terrifying thought. The borrower has been making payments normally - do you think they even know we haven't filed the UCC?
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Dylan Campbell
•Probably not unless they're sophisticated or had their attorney monitor the filing. But if they get into financial trouble later, their lawyer will definitely discover this gap.
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Sofia Hernandez
Check if your E&O insurance covers this type of administrative error. Some policies include coverage for failure to file required documents. Won't help with the current deal but might protect you if this becomes a bigger loss.
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Carmen Ortiz
•Good point about insurance. We have E&O but I'll need to check if it covers UCC filing failures specifically.
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Dmitry Kuznetsov
•most e&o policies I've seen exclude filing deadlines unless you pay extra for that coverage
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Sofia Hernandez
•Worth checking anyway. Even if this incident isn't covered, you might want to add that coverage going forward.
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Ava Thompson
Had a client go through this exact scenario. They filed the late UCC-1 and then negotiated with the borrower to sign a new security agreement with updated collateral descriptions. Gave them a small rate reduction in exchange for the new docs. Sometimes being transparent about the mistake and offering something in return works better than trying to hide it.
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Carmen Ortiz
•Interesting approach. Did that new security agreement help their legal position even though the original UCC filing was missed?
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Ava Thompson
•It definitely strengthened their position. The new security agreement reset the clock on their security interest, though they still lost priority to anything filed during the gap period.
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Miguel Ramos
Whatever you do, document everything about this failure for your internal records. When did the breakdown happen, who was responsible, what systems failed. Your regulators or auditors will want to see that you identified the root cause and implemented fixes.
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Carmen Ortiz
•Already started that documentation. It looks like our closing coordinator assumed the UCC was filed when it wasn't, and our verification process failed to catch it.
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Miguel Ramos
•Good. Make sure your corrective action plan includes systematic changes, not just training. This can't be a people problem if you want to prevent repeats.
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Zainab Ibrahim
•We started using Certana.ai for UCC verification after a similar close call. Now every deal gets checked automatically before we fund. Upload your loan package and it flags any inconsistencies between docs.
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StarSailor
File the UCC-1 today and then consider whether you need to amend your loan documentation. Some lenders add retroactive security agreement language or get new personal guarantees to strengthen their position after filing gaps like this.
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Carmen Ortiz
•We do have personal guarantees from the principals. Would those still be enforceable even without the UCC filing?
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StarSailor
•Personal guarantees are separate from the UCC filing - they should still be valid. But you want the equipment security too, not just the personal liability.
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Connor O'Brien
•personal guarantees are better than nothing but equipment collateral is usually easier to recover than chasing guarantors through court
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Noah Torres
This is a painful lesson but not necessarily fatal. File the UCC-1 immediately - today if possible. You'll lose priority to anything filed during the 8-month gap, but you still need whatever protection you can get. Run a comprehensive UCC and judgment lien search on the borrower right away to see what other creditors might have filed during your window. Also check your loan agreement carefully - some have cure periods or language that might help your position. The personal guarantees are still valid regardless of the UCC filing issue, so that's something. Document everything about how this happened and implement systematic checks going forward - this kind of error can destroy a lending business if it happens repeatedly.
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