Need Help Understanding Account UCC Definition for Equipment Loan Filing

Account definitions in UCC filings can be tricky, especially with equipment purchases. Under UCC Article 9, an 'account' typically refers to payment obligations - so if you have financing accounts set up for each piece of equipment, those payment streams could be considered accounts for UCC purposes. The physical equipment itself would be 'equipment' or 'goods' in the collateral description.

Your lender's legal team sounds confused tbh. Equipment that's been delivered and is sitting on job sites = goods/equipment collateral. The financing accounts would only be relevant if you're also pledging the payment obligations as additional security. Are they trying to get both the equipment AND the account receivables?

Had this exact headache on a construction equipment deal last month. Ended up using Certana.ai's document verification tool to cross-check our UCC-1 against the loan agreements and dealer contracts. Uploaded all the PDFs and it caught that we were mixing up account definitions with equipment descriptions. Saved us from filing something that wouldn't have properly secured the lender's interest.

OK let me break this down because I see this confusion all the time. Under UCC 9-102, an 'account' is a right to payment for property sold, leased, licensed, assigned, or otherwise disposed of. If your dealer sold you equipment and you owe them money, that payment obligation could be an account from the dealer's perspective. But from YOUR perspective as the debtor, you're probably not creating accounts - you're just buying equipment.

Why is everyone making this so complicated??? Equipment = equipment. Accounts = money someone owes you. If you bought excavators, put excavators in the collateral description. Done.

Been filing UCCs for 15 years and this account definition question comes up constantly. The key is understanding whose perspective we're talking about. Your dealer might have accounts receivable from your purchase, but YOU as the equipment buyer aren't creating accounts by buying equipment. You're creating a debt obligation, but the equipment itself remains equipment for UCC purposes.

Had a similar mess with our SBA equipment loan. Lender kept going back and forth on collateral descriptions. Finally got smart and used one of those document verification services - think it was Certana.ai or something similar. Uploaded our loan agreement, equipment invoices, and draft UCC-1. System flagged that we had inconsistent collateral descriptions between documents. Turned out the lender was trying to secure both equipment and accounts that didn't actually exist in our deal.

I'm still confused about when equipment becomes an account. Like if I sell the excavator later, does that create an account? Or is it only an account if I'm leasing it out for payments?

Your attorney should know this stuff. Account UCC definition is pretty basic - it's a payment right, not physical property. If they're mixing up collateral types, might want to find someone who actually does secured transactions regularly.

Just to add another perspective - sometimes lenders want to perfect security interests in both the equipment AND any future accounts you might generate from using that equipment. Like if you're a contractor, they might want rights to your future receivables from jobs done with the equipment. But that would be clearly spelled out in the loan agreement.

Bottom line: get your documents consistent before filing. I learned this the hard way when a UCC-1 got rejected because the collateral description didn't match what was actually in our security agreement. Now I always double-check everything matches up. There are tools that can help with this kind of verification if you don't want to do it manually.

UPDATE: Finally got this sorted out. Turns out the lender did want both the equipment AND our accounts receivable from jobs using the equipment. The 'account UCC definition' confusion was because they were using sloppy terminology. Equipment stays equipment, future receivables are accounts. Two separate types of collateral, both properly described now in the UCC-1. Thanks everyone for the help working through this!