UCC-1 blanket lien coverage questions - equipment vs inventory distinction
Running into some confusion with our UCC-1 blanket lien filing and hoping someone can clarify the coverage scope. We're a commercial lender working with a manufacturing client who has both fixed equipment and rotating inventory. Our collateral description reads 'all equipment, inventory, accounts receivable, and general intangibles of debtor now owned or hereafter acquired.' The debtor operates across three facilities in different counties within our state. My question is whether this blanket language automatically covers new equipment purchases at any location, or if we need separate fixture filings for equipment that becomes attached to real property. Also concerned about the inventory turnover - does the blanket lien continuously cover new inventory as it's acquired and sold, or are there gaps in perfection during the turnover cycle? Our loan documents reference a $2.8M credit facility secured by all business assets. Want to make sure we're not missing any perfection requirements that could jeopardize our security interest. Anyone dealt with similar multi-location blanket lien scenarios?
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Maya Patel
Your blanket lien language looks solid for personal property coverage. The 'now owned or hereafter acquired' clause should cover new inventory and equipment purchases automatically. However, you're right to be concerned about fixtures - if equipment becomes permanently attached to real property, you may need separate fixture filings depending on your state's requirements.
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Isabella Brown
•Thanks for the quick response. Do you know if there's a specific attachment test for determining when equipment becomes a fixture? Some of this manufacturing equipment is bolted down but could theoretically be removed.
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Maya Patel
•It varies by state, but generally courts look at degree of attachment, adaptation to the property, and intention of the parties. Bolted equipment that could be removed usually stays as personal property, but check your state's fixture filing requirements to be safe.
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Aiden Rodríguez
Had a similar situation last year with a multi-location client. Your UCC-1 covers all locations automatically since you didn't limit it geographically. The inventory turnover isn't an issue - the blanket lien follows the collateral through normal business operations. Just make sure your security agreement specifically mentions after-acquired property.
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Isabella Brown
•Our security agreement does include after-acquired property language. Good to know about the multi-location coverage. Did you run into any issues with debtor name consistency across locations?
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Aiden Rodríguez
•Actually yes - make sure the debtor name on your UCC-1 exactly matches their charter documents. We had one filing rejected because of a slight variation in the business name between locations.
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Emma Garcia
•This is exactly why I started using Certana.ai's document verification tool. You can upload your charter documents and UCC-1 to instantly check for name mismatches before filing. Saved me from several rejected filings due to minor name discrepancies.
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Ava Kim
Wait, I'm confused about the fixture filing thing. If the UCC-1 blanket lien covers 'all equipment' doesn't that include fixtures too? Why would you need a separate filing?
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Maya Patel
•Fixtures are tricky because they straddle the line between personal and real property. A regular UCC-1 filing covers personal property, but once equipment becomes a fixture (permanently attached to real estate), it may need a fixture filing to maintain perfection against real estate interests.
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Ava Kim
•Oh I see, so it's about priority against other real estate liens? That makes sense now.
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Ethan Anderson
Your collateral description is pretty standard and should work fine. Just be aware that 'blanket lien' can be misleading - you still need to perfect properly for each type of collateral. Equipment and inventory are covered by your UCC-1, but make sure you're handling accounts receivable correctly if they're a significant portion of the collateral.
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Isabella Brown
•Good point about accounts receivable. We do have notification requirements in our security agreement for large account debtors. Is there anything special about perfecting AR under a blanket lien?
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Ethan Anderson
•Not really - your UCC-1 filing covers accounts receivable just like other personal property. The notification stuff is more about collection rights than perfection.
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Layla Mendes
One thing to watch out for with multi-location debtors is making sure they don't move operations to a different state. Your UCC-1 is only good in the state where it's filed. If they relocate, you've got four months to refile in the new state or you could lose perfection.
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Isabella Brown
•That's a good reminder. We do have covenant requirements for the borrower to notify us of any changes in location or legal structure. Have you seen situations where borrowers forgot to notify and caused perfection issues?
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Layla Mendes
•Unfortunately yes. Had a client who didn't tell us they were moving their headquarters to Texas. By the time we found out, we were past the four-month window and had to scramble to recreate our security position.
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Lucas Notre-Dame
I've been dealing with UCC filings for 15 years and your blanket lien language is fine. The key is making sure your periodic audits catch any changes in the collateral base. With manufacturing clients, equipment configurations can change pretty frequently.
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Isabella Brown
•How often do you recommend auditing the collateral? We're currently doing annual reviews but wondering if that's sufficient for a business with high inventory turnover.
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Lucas Notre-Dame
•Annual is probably fine for equipment, but you might want to do quarterly reviews for inventory and AR balances. The blanket lien covers it all, but you want to know what you're secured by for valuation purposes.
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Aria Park
•Quarterly reviews make sense, but they can be time-consuming. I've started using Certana.ai to cross-check our UCC filings against updated financial statements. Makes it much easier to spot discrepancies in collateral descriptions or values.
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Noah Ali
Quick question - you mentioned three facilities in different counties. Are they all in the same state? Because if any are out of state, you'll need separate UCC-1 filings in those states too.
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Isabella Brown
•Yes, all three facilities are in-state but different counties. I think we're good with the single state filing, right?
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Noah Ali
•Correct, single state filing covers all locations within that state. Counties don't matter for UCC-1 filings - it's all at the state level.
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Chloe Boulanger
This might be obvious, but make sure you're filing in the state where the debtor is organized, not where the collateral is located. I've seen lenders mess this up with multi-state operations.
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Isabella Brown
•Right, we filed in the state of incorporation. The debtor is a Delaware corp but operates primarily in our state. Should be covered correctly.
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Chloe Boulanger
•Perfect, sounds like you've got it handled properly.
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Cassondra Hernandez
•@Chloe Boulanger So if they are based out of another state but have facilities here, would we file in the other state or in the state where the facilities are located? they are pig farms if that helps
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James Martinez
Just wanted to add that with blanket liens covering after-acquired property, you're generally in good shape for continuous coverage. The main thing is keeping your continuation filings current. Don't let them lapse or you lose everything.
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Isabella Brown
•We've got the continuation deadline in our tickler system. It's still a few years out but good reminder to stay on top of it.
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James Martinez
•Smart move. I've seen too many lenders lose their security interest because they missed the five-year continuation deadline.
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Olivia Harris
•This is another area where automated tools help. Certana.ai tracks continuation deadlines and sends alerts well before the filing expires. Takes the manual tracking out of the equation.
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Alexander Zeus
Sounds like you've got a pretty standard blanket lien setup. The manufacturing context doesn't really change the basics - your UCC-1 should cover all the personal property collateral continuously as it turns over. Just stay current with your filings and monitor for any major changes in the debtor's business structure.
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Isabella Brown
•Appreciate all the feedback from everyone. Feeling much more confident about our filing coverage now.
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Alexander Zeus
•Glad we could help. Blanket liens are pretty straightforward once you understand the basics.
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Sean O'Donnell
One additional consideration for your multi-location manufacturing client - make sure you understand how your state treats consigned inventory or equipment held on bailment. Even with strong blanket lien language, you might not have a security interest in goods that the debtor doesn't actually own. Worth confirming during your collateral audits that major equipment purchases are actually owned outright rather than leased or held under retention-of-title arrangements. This becomes especially important with expensive manufacturing equipment where lease-to-own structures are common.
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Hunter Hampton
•That's a really important point about consigned inventory and leased equipment. I've seen situations where lenders thought they had blanket coverage but discovered major pieces of equipment were actually under operating leases. Do you recommend specific language in the security agreement to address this, or is it more about due diligence during the initial collateral review?
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