UCC-1 Filing Strategy - When Cautionary UCC Filings Make Sense vs Overkill

Totally agree on equipment. We learned this the hard way when a borrower's HVAC system got classified as fixtures during bankruptcy proceedings.

What's the threshold though? Filing on every piece of equipment that gets bolted down seems excessive.

Which states are you finding most restrictive on the fixture definitions? We mostly lend in TX and OK where the rules seem pretty borrower-friendly.

California and New York are nightmares for fixture determinations. The case law keeps evolving and what was personal property last year might be a fixture today.

Don't forget about the real estate records requirement for fixture filings. That's where a lot of lenders mess up the perfection.

That sounds useful - does it help with the fixture vs personal property analysis too?

It identifies collateral that commonly gets disputed in bankruptcy. Gives you a heads up on what might need dual perfection.

That's a smart approach. Takes the guesswork out of the decision-making process.

10% seems low to me. We use 25% as our trigger point for additional filings.

Fair point, but we've had deals where the 'minor' collateral became the only recoverable asset. Rather be safe on the lower threshold.

This is why we batch our cautionary filings. Do them all at once during the initial loan setup rather than piecemeal later.

Good point about continuation tracking. Nothing worse than letting a precautionary filing lapse because it got lost in the system.

Have you seen many cases where cautionary filings actually made the difference in recovery?

Several bankruptcy cases where the trustee successfully challenged the primary lien but the cautionary filing held up. It's insurance you hope to never need.

Exactly. Trying to perfect after the fact when issues arise is usually too late.

Plus the debtor might not be as cooperative with additional filings once problems start surfacing.

Good point about the documentation trail. Judges appreciate thorough lenders who dotted their i's and crossed their t's.

That's where tools like Certana help too - upload your whole file and it verifies everything aligns properly between documents.

Multiple filings on identical collateral is definitely overkill. But one primary plus one cautionary on questionable items? That's just good practice.

The key is being strategic about it. Not every piece of collateral needs multiple filings.

I think 2 filings max on any single piece of collateral. More than that and you're probably overthinking it.

That's becoming our standard approach too. Thanks for all the input - really helpful perspective from everyone.

Sounds like most lenders are on the same page about erring on the side of caution. Good to know we're not alone in the conservative approach.