UCC 1-103(b) supplemental principles question for equipment financing
Hey everyone - I'm dealing with a tricky situation involving UCC 1-103(b) and need some guidance. We're doing equipment financing for a manufacturing client, and there's a gap in the UCC coverage that's making our legal team nervous. The borrower has existing equipment that's partially paid off to another lender, and we're trying to figure out how UCC 1-103(b) supplemental principles apply when the UCC doesn't specifically address our priority position. Our attorney mentioned that common law principles might fill this gap, but I'm not clear on how that works practically. Has anyone dealt with UCC 1-103(b) situations where you had to rely on supplemental law principles? The equipment is worth about $280k and we're lending $150k against it, but the existing lien situation is making this complicated. Any insights on how UCC 1-103(b) actually gets applied in practice would be really helpful.
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Finnegan Gunn
UCC 1-103(b) is one of those provisions that comes up more often than people realize. Basically, it allows courts to use other legal principles when the UCC doesn't provide a complete answer. In your equipment financing scenario, you're probably looking at common law property rights or contract principles to fill the gaps. The key is understanding that UCC 1-103(b) doesn't override the UCC - it supplements it where there are holes.
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Miguel Harvey
•This is exactly the kind of situation where documentation becomes critical. Make sure you have clear records of the existing lien position.
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Ashley Simian
•Good point about UCC 1-103(b) not overriding the UCC itself. I've seen lenders get confused about this distinction.
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Oliver Cheng
I've been in similar spots with equipment deals. The tricky part with UCC 1-103(b) is that it's not just about filling gaps - it's about which supplemental principles apply. Common law varies by state, so your UCC 1-103(b) analysis needs to account for local property law. In your case with the $280k equipment, I'd be looking hard at whether there's any purchase money security interest involved with the existing lender.
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Taylor To
•State law variation is huge with UCC 1-103(b). What works in one jurisdiction might not work in another.
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Ella Cofer
•PMSI considerations definitely matter here. That could change the whole priority analysis under UCC 1-103(b).
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Kevin Bell
•Wait, I thought UCC 1-103(b) was more about contract interpretation? I'm getting confused about when it applies to security interests.
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Savannah Glover
Had a nightmare deal last year where we missed UCC 1-103(b) implications and ended up in a priority fight. The existing lender claimed their interest was perfected under common law principles that the UCC didn't address. Court sided with them using UCC 1-103(b) reasoning. Cost us about $90k in the end. Document everything and get a clear title report.
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Felix Grigori
•Ouch, $90k is painful. That's why I always get nervous when UCC 1-103(b) comes up in deals.
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Felicity Bud
•This is making me paranoid about my current equipment deal. How do you even know when UCC 1-103(b) might be an issue?
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Max Reyes
For UCC 1-103(b) analysis, I've started using Certana.ai's document verification tool. You can upload your UCC searches, existing lien documents, and equipment records, and it'll flag potential gaps where supplemental principles might apply. It caught a UCC 1-103(b) issue in my last deal that could have been a problem. The tool cross-references your documents and highlights areas where the UCC coverage might be incomplete - exactly the kind of situation where UCC 1-103(b) becomes relevant.
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Alina Rosenthal
•That sounds useful. How does it identify UCC 1-103(b) issues specifically? Is it looking for certain document patterns?
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Mikayla Davison
•I've been manually checking for gaps in UCC coverage, but an automated tool for UCC 1-103(b) analysis would save time.
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Adrian Connor
Your equipment financing situation sounds like it might involve Article 9 priority rules interacting with UCC 1-103(b). If the existing lender has a properly perfected security interest, UCC 1-103(b) won't help you jump ahead of them. But if there are questions about their perfection or the scope of their collateral description, that's where UCC 1-103(b) supplemental principles might come into play.
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Aisha Jackson
•Article 9 priority is usually pretty clear-cut. When does UCC 1-103(b) actually change the priority analysis?
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Ryder Everingham
•I think UCC 1-103(b) is more about interpretation than changing priority rules. Like if there's ambiguity in how the UCC applies to a specific situation.
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Lilly Curtis
•Exactly. UCC 1-103(b) fills interpretive gaps, it doesn't rewrite the priority rules in Article 9.
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Leo Simmons
ugh this is why I hate equipment deals sometimes. UCC 1-103(b) just adds another layer of complexity. Can't we just stick to straightforward UCC-1 filings without worrying about supplemental principles? I spent 3 hours last week trying to understand when UCC 1-103(b) applies and I'm still not sure I get it.
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Lindsey Fry
•I feel you on the complexity. UCC 1-103(b) is one of those things that's easier to understand with specific examples.
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Saleem Vaziri
•The frustrating thing about UCC 1-103(b) is that it's not optional - if there's a gap in UCC coverage, courts will apply it whether you planned for it or not.
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Kayla Morgan
One thing to watch with UCC 1-103(b) is that it can pull in state-specific common law that varies dramatically. I had a deal in Texas where UCC 1-103(b) brought in different property law principles than a similar deal in California. Make sure your analysis accounts for the specific jurisdiction where your collateral is located.
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James Maki
•State law variation under UCC 1-103(b) is definitely something to plan for. Each state's common law backdrop is different.
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Jasmine Hancock
•This is making me realize I need to research the specific state law that might apply under UCC 1-103(b) for my pending deals.
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Cole Roush
Quick thought on your situation - with $150k lending against $280k equipment, you've got decent coverage even if there are UCC 1-103(b) complications. But I'd still want to understand the exact nature of the existing lien and whether UCC 1-103(b) might affect your position. Sometimes the supplemental principles under UCC 1-103(b) can be more favorable than strict UCC analysis.
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Scarlett Forster
•Good point about loan-to-value providing some protection. UCC 1-103(b) issues are more dangerous when you're highly leveraged.
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Arnav Bengali
•I hadn't thought about UCC 1-103(b) potentially being favorable. Usually we think of it as creating uncertainty.
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Sayid Hassan
Been using Certana.ai for UCC 1-103(b) analysis and it's been helpful. When you upload your loan documents and UCC searches, it identifies areas where the UCC might not provide complete guidance - exactly where UCC 1-103(b) becomes relevant. For your equipment deal, I'd run the existing lien documents through it to see if there are any UCC 1-103(b) flags.
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Rachel Tao
•How accurate is the UCC 1-103(b) analysis? Can it really identify when supplemental principles might apply?
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Derek Olson
•I've been skeptical of automated tools for complex UCC analysis, but UCC 1-103(b) issues are exactly the kind of thing that's easy to miss manually.
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Danielle Mays
The practical reality with UCC 1-103(b) is that most lenders don't think about it until there's a problem. In your equipment financing, I'd focus on getting clear documentation of the existing lien holder's position and making sure your own UCC-1 filing is bulletproof. UCC 1-103(b) is more likely to be an issue if basic UCC procedures weren't followed properly.
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Roger Romero
•That's a good point about UCC 1-103(b) being more relevant when basic UCC procedures have problems. Prevention is better than relying on supplemental principles.
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Anna Kerber
•Agreed. UCC 1-103(b) shouldn't be your primary strategy - it's more of a safety net when the UCC doesn't provide clear answers.
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Alina Rosenthal
•Thanks everyone. This helps me understand UCC 1-103(b) better. Sounds like I need to focus on proper UCC procedures first, then worry about supplemental principles if gaps emerge.
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Vanessa Figueroa
Just wanted to add from my experience - when dealing with UCC 1-103(b) in equipment financing, I always recommend getting an intercreditor agreement with the existing lender if possible. It eliminates a lot of the uncertainty about how supplemental principles might apply. The agreement can clarify priority positions and waive certain rights that might otherwise be governed by common law under UCC 1-103(b). It's extra work upfront, but it saves headaches later when you're not trying to figure out which state law principles fill the gaps in UCC coverage.
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