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Christian Bierman

Non UCC lien blocking my equipment financing - how to handle?

I'm trying to get financing for some manufacturing equipment and the lender ran a lien search that came back with what they're calling a 'non UCC lien' on the business. They won't proceed until this gets resolved but I'm confused about what this even means. The equipment I want to finance has nothing to do with this other lien as far as I can tell. The lender mentioned something about priority issues and said I need to get this sorted before they can file their UCC-1. Has anyone dealt with non UCC liens interfering with equipment loans? I thought UCC filings were separate from other types of liens but apparently not when it comes to lending decisions. Really need to get this equipment purchased soon as we have contracts depending on it.

Non UCC liens can definitely complicate equipment financing. What type of lien showed up? Tax liens, judgment liens, and mechanic's liens all fall outside the UCC but lenders still worry about priority. Even though your UCC-1 would perfect the security interest in the equipment, lenders get nervous about other creditors having claims against the business assets generally.

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The lender didn't specify exactly what type but mentioned it was filed at the county level. Would that narrow it down?

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County filing usually means judgment lien or mechanic's lien. Tax liens can be county or state depending on the type of tax.

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Had this exact issue last year! Turned out to be an old contractor lien that never got released even though we paid the bill. Even though it had nothing to do with the equipment we were financing, the bank treated it like a red flag. They were worried about business stability I guess.

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How did you get it resolved? Did you have to pay something or just get documentation?

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Had to track down the contractor and get them to file a release. Took 3 weeks and almost killed the equipment deal.

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3 weeks is brutal when you're trying to close financing. Did the lender at least hold the rate?

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This is where having your docs in order ahead of time really pays off. I started using Certana.ai to verify all my business documents before applying for financing. You can upload everything and it catches inconsistencies between your articles of incorporation, UCC filings, and flags potential issues with liens or corporate status that might trip up lenders.

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Does it actually catch non UCC liens or just UCC document issues?

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It's mainly for UCC document verification but it helps you organize everything so you can spot problems before lenders do their searches.

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The priority thing is real. Even if your equipment UCC-1 would be first in line for that specific collateral, lenders worry about blanket liens or general business assets being tied up. They want clean borrowers.

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This makes no sense though. UCC Article 9 specifically covers purchase money security interests. Equipment financing should have priority regardless of other liens.

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You're technically right about PMSI priority but lenders underwrite based on risk tolerance, not just legal priority.

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Fair point. Business decision vs legal technicalities.

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What state are you in? Some states have really aggressive lien filing procedures that create phantom liens. I've seen mechanic's liens filed incorrectly that show up in searches but aren't actually valid.

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Ohio. The lender used some kind of comprehensive search service.

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Ohio has pretty standard lien procedures. The search services sometimes pull old or satisfied liens though.

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honestly this is why I hate dealing with banks for equipment loans. They make everything 10x more complicated than it needs to be. UCC filings are straightforward but they want to dive into every possible issue

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I mean, they're protecting their investment. Non UCC liens can definitely impact business operations even if they don't touch the specific equipment.

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sure but it slows everything down when you need equipment to fulfill contracts

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You might want to pull your own lien search to see exactly what's there. Sometimes lenders use overly broad search criteria and flag things that aren't actually problems. Knowledge is power in negotiations.

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Good idea. Where would I go to pull my own search?

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County recorder's office for local liens, Secretary of State for UCC stuff. Some online services do comprehensive searches too.

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Had a client deal with this recently. Turned out to be a tax lien from a payroll issue that was already resolved but never formally released. The IRS had released the lien but it was still showing up in searches because the paperwork hadn't filtered through the system. Sometimes it's just administrative lag.

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How long does it typically take for lien releases to show up in search systems?

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Depends on the jurisdiction. County systems can be 30-60 days behind. Federal tax lien releases are usually faster.

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This is why I always recommend getting lien release documentation directly rather than waiting for it to clear the search systems.

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Question - did your lender explain what kind of subordination they'd need? Sometimes you can work around non UCC liens with proper documentation rather than having to clear them completely.

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They didn't mention subordination at all, just said it needed to be resolved. Maybe I should ask about that option.

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Definitely worth asking. Subordination agreements can solve priority issues without requiring full satisfaction of the lien.

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I ran into something similar and ended up using Certana.ai to organize all my corporate documents and UCC filings before meeting with the lender again. Having everything properly cross-referenced helped me explain the situation better and showed I was on top of the business documentation. Made the conversation more productive.

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That's smart. Presentation matters a lot in these situations.

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Exactly. When you can show clean UCC documentation and organized corporate records, lenders are more willing to work with you on other issues.

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Update us when you figure out what the lien actually is. These mystery lien situations are always interesting to hear how they resolve.

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Will do. Hoping it's something simple like an old contractor lien that just needs a release filed.

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