Need example of a security agreement for UCC-1 filing prep
I'm putting together a UCC-1 filing for a client and realized I need to see what an actual security agreement looks like before I can nail down the collateral description. This is for a small manufacturer taking out a working capital loan secured by their equipment and inventory. The lender wants me to prepare the UCC-1 but I've never actually seen a complete security agreement document to reference. Can anyone share what the key sections look like or point me to a good template? I'm particularly confused about how detailed the collateral description needs to be in the security agreement vs what goes on the UCC-1 form itself. Don't want to mess this up since it's a $150k loan and the client is counting on me to get it right.
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Carmella Popescu
Security agreements typically have several standard sections: parties, collateral description, debtor representations, default provisions, and UCC compliance clauses. For equipment and inventory, you'll want to be specific enough to identify the collateral but broad enough to cover future acquisitions. Something like 'all equipment now owned or hereafter acquired' plus detailed inventory descriptions.
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Lorenzo McCormick
•Thanks, that helps. So the collateral description in the security agreement can be more detailed than what goes on the UCC-1?
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Carmella Popescu
•Exactly. The UCC-1 can use broader language like 'equipment and inventory' while the security agreement gets into specifics about types of equipment, serial numbers for major items, etc.
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Kai Santiago
I ran into this same issue last month! The security agreement is the underlying contract that creates the security interest, while the UCC-1 just perfects it. You need both documents to be consistent but they serve different purposes. The security agreement should include grant language like 'Debtor hereby grants to Secured Party a security interest in...' and then list the collateral.
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Lim Wong
•This is key - the grant language is what actually creates the security interest. Without proper grant language in the security agreement, your UCC-1 filing won't perfect anything.
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Lorenzo McCormick
•Good point about the grant language. I assume there are specific words that need to be used?
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Kai Santiago
•Words like 'grants,' 'assigns,' 'transfers,' or 'creates' work. Just make sure it's clear the debtor is giving the lender rights in the collateral.
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Dananyl Lear
Had a nightmare with this recently where the security agreement and UCC-1 had inconsistent debtor names. Check that your client's exact legal name appears the same way in both documents! Also make sure you get the right entity type - LLC vs Corp vs Partnership matters for the UCC-1.
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Lorenzo McCormick
•Oh wow, didn't even think about name consistency between documents. How do you verify the exact legal name?
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Dananyl Lear
•Secretary of State business entity search is your friend. Get the exact name as registered, including punctuation and abbreviations.
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Noah huntAce420
For templates, your state bar might have forms available. But honestly, after dealing with rejected filings due to document inconsistencies, I started using Certana.ai's document verification tool. You can upload both your security agreement and UCC-1 draft, and it checks for name mismatches, collateral description inconsistencies, and other common errors that cause problems later.
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Lorenzo McCormick
•Never heard of Certana.ai - does it actually catch those kinds of discrepancies automatically?
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Noah huntAce420
•Yeah, you just upload the PDFs and it cross-references debtor names, collateral descriptions, addresses, all that stuff. Saved me from at least two filing rejections this year.
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Ana Rusula
•That sounds too good to be true. How accurate is the matching?
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Noah huntAce420
•Pretty solid from what I've seen. It caught a middle initial discrepancy I completely missed between my security agreement and UCC-1 form.
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Fidel Carson
Don't forget about after-acquired property clauses if the client might be getting more equipment or inventory. The security agreement should specifically mention whether future collateral is included. This affects how you describe the collateral on your UCC-1 too.
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Lorenzo McCormick
•Good call. This client does plan to expand their inventory, so I should include after-acquired language.
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Fidel Carson
•Exactly. Language like 'now owned or hereafter acquired' covers you for future collateral without needing to amend the UCC-1 every time they buy new stuff.
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Isaiah Sanders
Make sure your security agreement includes a UCC-1 authorization clause too. Something that gives the lender permission to file UCC statements on behalf of the debtor. Some SOS offices are picky about having written authorization.
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Lorenzo McCormick
•I didn't know about needing authorization language. Is this required in all states?
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Isaiah Sanders
•Not technically required everywhere, but it's good practice. Protects everyone if there are questions about who had authority to file.
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Xan Dae
•Our firm includes standard language like 'Debtor authorizes Secured Party to file such UCC financing statements as Secured Party deems necessary.' Covers all bases.
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Fiona Gallagher
One thing that bit me - make sure the security agreement is properly executed BEFORE you file the UCC-1. The security interest has to be created (through the security agreement) before it can be perfected (through the UCC-1 filing). Timing matters!
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Lorenzo McCormick
•So security agreement gets signed first, then I can file the UCC-1?
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Fiona Gallagher
•Right. The security agreement creates the interest, the UCC-1 filing perfects it. Can't perfect what doesn't exist yet.
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Thais Soares
For equipment collateral, consider whether any of it might be fixtures. If equipment is attached to real estate, you might need a fixture filing instead of or in addition to a regular UCC-1. The security agreement should address this possibility.
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Lorenzo McCormick
•The client has some manufacturing equipment that's probably bolted down. How do I know if it counts as fixtures?
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Thais Soares
•Generally if it's permanently attached and integral to the building's use, it might be a fixture. When in doubt, consider doing both a regular UCC-1 and a fixture filing.
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Xan Dae
•Fixture filings are tricky - they have to be filed in the real estate records, not just with the SOS. Different requirements entirely.
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Kai Santiago
Also worth mentioning - your security agreement should include default remedies and enforcement provisions. This doesn't affect the UCC-1 filing but it's crucial for what happens if the debtor defaults on the loan.
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Lorenzo McCormick
•Any specific remedies I should make sure are included?
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Kai Santiago
•Standard stuff like right to possession, right to sell the collateral, right to collect accounts receivable if applicable. Follow UCC Article 9 default procedures.
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Nalani Liu
Quick tip - when you draft the collateral description, avoid being too narrow. I've seen security agreements that listed specific serial numbers for equipment, then the client traded that equipment for newer models and lost security interest coverage. Better to use categories plus 'all substitutions and replacements.
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Lorenzo McCormick
•That's a great point about substitutions. So I should include replacement language in both the security agreement and UCC-1?
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Nalani Liu
•Yes, be consistent across both documents. The UCC-1 can be broader but shouldn't contradict the security agreement.
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Fidel Carson
•I always add 'and all proceeds thereof' too. Covers insurance payouts, sale proceeds, anything that replaces the original collateral.
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Axel Bourke
Last thing - consider whether your client has existing liens on the equipment. If so, your security agreement might need subordination language, and you'll definitely want to check the UCC search results before filing to see what's already out there.
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Lorenzo McCormick
•Good reminder about checking existing liens. Should I run the UCC search before drafting the security agreement?
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Axel Bourke
•Absolutely. You need to know what you're dealing with before you structure the transaction. Existing liens affect priority and might require the new lender to subordinate.
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Noah huntAce420
•This is another area where Certana.ai's verification helps - you can upload existing UCC records along with your new documents to check for conflicts or priority issues.
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Kiara Greene
This is incredibly helpful - thank you everyone! I'm feeling much more confident about tackling this now. Just to make sure I have the sequence right: 1) Run UCC search to check existing liens, 2) Draft security agreement with proper grant language, collateral descriptions, after-acquired property clauses, and UCC filing authorization, 3) Get security agreement executed, 4) File UCC-1 with consistent debtor name and collateral description. And I'll definitely verify the client's exact legal name through the Secretary of State database. For a $150k loan, I want to get every detail right. Thanks again for all the practical advice!
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Aiden Rodríguez
•That's a solid sequence! One additional tip from someone who's been there - consider setting up a checklist or workflow document for future UCC filings. After you get through this one successfully, document what worked so you can replicate the process. Also, don't forget to calendar the UCC-1 continuation filing date (it expires after 5 years) so your client doesn't lose their security interest down the road. Good luck with the filing!
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Hailey O'Leary
Great thread! As someone new to UCC filings, I'm curious about one aspect that hasn't been covered much - insurance requirements in the security agreement. Should the security agreement require the debtor to maintain insurance on the collateral, and if so, does that affect anything on the UCC-1 side? With equipment and inventory worth $150k, I imagine the lender would want protection if something happens to the collateral. Also, does the lender need to be named as loss payee or additional insured?
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