Security agreement UCC filing - when does the agreement itself create the security interest vs just provide for it?

This is exactly right. We had a deal last year where the security agreement said it 'provides for' a security interest but didn't clearly state when it attached. Created a mess when we had to prove priority against another creditor.

How do you handle situations where the collateral isn't delivered until after signing? Does that change whether you use 'creates' vs 'provides for'?

That makes sense. So as long as we have the three attachment requirements met, the UCC-1 filing should be solid regardless of whether we say creates or provides for?

Exactly, but I'd still recommend being consistent across all your docs. Mixed language can create interpretation issues if you ever end up in court.

That sounds useful. Does it actually check the legal language or just flag formatting differences?

It checks both. Caught several places where our security agreement described the collateral one way but the UCC-1 used slightly different language. Also flagged debtor name variations that could have caused problems.

How accurate is it with legal terminology? I'm always skeptical of automated tools for something this technical.

I get the frustration, but yes, the underlying agreement matters. The UCC-1 is just notice - the security agreement is what actually creates your rights.

So if my security agreement is unclear, my UCC-1 could be worthless even if it's filed correctly?

Not worthless, but potentially weaker if challenged. Think of the security agreement as the foundation and the UCC-1 as the public notice.

I disagree - we've seen deals where that language mattered during bankruptcy proceedings. Better to be precise from the start.

Fair point. I guess it depends on how sophisticated your borrowers are and whether you expect challenges down the road.

Good question. For PMSI, timing is everything, so you want language that makes it clear the security interest attaches immediately when the debtor gets rights in the collateral.

Right, and you need to file your UCC-1 within 20 days for equipment PMSI priority. The security agreement language should support that timing.

That's scary. What conditions were in there that caused problems?

It was tied to insurance requirements that the borrower never fully satisfied. Made our security interest questionable because the agreement said it would only create the interest once all conditions were met.

Exactly. We standardized on 'hereby grants and creates' language across all our security agreements. Eliminates any ambiguity.

That's what we do too. Simple and clear beats fancy legal language that might be misinterpreted.

I mentioned it earlier - it's really helpful for catching inconsistencies between your security agreements and UCC filings. Just upload both docs and it shows you discrepancies.

We started using it after missing a debtor name mismatch that caused filing problems. Now we run everything through it before filing UCCs.

Good to know. Might be worth trying on our next batch of filings.

Thanks everyone. Sounds like I should focus more on consistency across documents than worrying about the specific creates vs provides for language.

Exactly. And consider having legal review your standard forms periodically to make sure they're still serving you well.