Solar UCC subordination agreement timing - equipment lender won't budge

Total project is $4.2M with $2.8M equipment financing and $1.4M construction loan. Equipment lender filed UCC-1 about 3 weeks before construction lender, so they have priority position.

That's a substantial equipment portion. No wonder they won't subordinate - they're basically financing 67% of the collateral value.

Interesting idea - we haven't proposed splitting the collateral. The UCC-1 covers 'all solar panels, inverters, mounting systems, and related electrical equipment.' Could we potentially carve out just the mounting systems?

Exactly. The mounting systems are typically less critical to equipment lenders since they can't easily be repossessed. Focus on keeping the panels and inverters as senior collateral for the equipment lender.

Make sure any partial subordination is documented with a UCC-3 amendment. Don't rely on side agreements that might not be properly recorded.

That's really helpful. What kind of inconsistencies did you find? We've been comparing documents manually but might be missing something.

The equipment lender's UCC-1 had broad language about 'all solar equipment' but their loan agreement was more specific about panels and inverters. The construction lender's collateral description included 'permanent improvements' which covered the mounting systems. Certana caught the overlap and helped us negotiate a clean split.

This is why I always run documents through verification tools before finalizing deals. Manual comparison misses these critical details that can make or break negotiations.

This is exactly why I hate solar deals. Too many lenders fighting over the same collateral and nobody wants to compromise.

It's not just about being difficult - equipment lenders have legitimate concerns about collateral mobility. Solar panels can be uninstalled and relocated, unlike traditional real estate improvements.

We haven't explored that option yet. Do you have any recommendations for specialists who handle solar UCC subordination?

I'd start with attorneys who specialize in energy project finance. They understand the unique collateral issues with solar installations and can draft subordination agreements that protect both parties.

Also consider intercreditor agreements instead of straight subordination. Might give both lenders more comfort about their respective collateral positions.

Good question. Construction lender says the solar installation increases the property value significantly, so they want to ensure their lien covers the enhanced value. They're worried about the equipment lender removing panels before they can foreclose on the property.

That's a valid concern. Once those panels are installed, they become integral to the property's income stream. Removing them would devastate the property value.

This is where fixture filing rules come into play. If the panels are permanently affixed to the real estate, they might be considered fixtures subject to the real estate mortgage rather than personal property under the UCC.

Great outcome! How long did the negotiation take once you had the document analysis?

About two weeks after we identified the collateral overlap. Having the detailed analysis made it much easier to propose a solution that both lenders could accept.

That's exactly the kind of resolution we achieved with our project. Document verification tools really help identify these negotiating opportunities.

Agreed. The solar financing market is still evolving and lenders are learning to work together on these complex transactions.

This thread has been incredibly helpful. Dealing with a similar situation and now have some concrete strategies to try.

Absolutely learned that lesson. Next solar deal we'll map out all the UCC filings and potential conflicts during the initial due diligence phase.

Good practice is to have all lenders review each other's collateral descriptions before filing UCC-1s. Prevents these conflicts from arising in the first place.

That's why I always run the Charter→UCC-1 verification through Certana before finalizing any commercial energy deal. Catches these issues before they become deal-breakers.

Happy to help others avoid the same headaches. Solar financing is complex enough without UCC surprises derailing deals at the last minute.

This thread should be required reading for anyone structuring solar project financing. Great practical advice from everyone.