UCC-1 collateral description too vague for foreclosing on ucc collateral - lender rejecting claim

But wouldn't a UCC-3 amendment after default look suspicious? I thought you had to have specific descriptions from the beginning or you're stuck with what you filed.

Not necessarily - amendments can clarify existing collateral as long as you're not expanding the scope. If the original loan agreement had specific equipment listed, the UCC-3 can reference that detail.

That's exactly what we're worried about. Did you try to amend the filing or just proceed with what you had?

We tried amending but it was too late in the process. The judge said we should have been more specific initially. Now we always include serial numbers and detailed descriptions on every UCC-1.

This is why I always double-check collateral descriptions before filing. Too many lenders get sloppy with the paperwork and pay for it later.

How does that work exactly? Can it help with existing filings or just new ones?

You just upload the PDFs and it cross-checks everything automatically. For your situation, you could upload your original loan docs and the UCC-1 to see exactly where the descriptions don't match up. It's helped us avoid several potential problems.

Interesting - I've been manually comparing loan agreements to UCC filings for years. Having an automated check would save tons of time.

The move happened after default though. Shouldn't our lien still attach to the equipment regardless of location?

Generally yes but some states have specific notice requirements when collateral moves. You might need to file in the new location too. Check your state's UCC rules on equipment relocation.

Restaurant equipment is usually easier because it's more standardized. But yes, serial numbers are always better if you have them. Don't panic but maybe review your loan agreement to see if you have more details.

The loan docs do list specific items like the pizza ovens and refrigeration units. Maybe I should file an amendment to add those details?

Better safe than sorry with UCC filings. An amendment now is way cheaper than litigation later.

Tell me about it! I had a filing rejected because the debtor's middle initial was wrong but I've seen filings accepted that just say 'all assets' with no other description.

Exactly! The system is broken. Some states are better than others but it's still a nightmare to navigate consistently.

They're saying the description might not be sufficient to establish a valid security interest in the specific equipment we're trying to seize. So more about validity than priority.

Got it. That's definitely a description problem then. You'll want to cross-reference your original loan agreement to see what specific equipment was listed there.

How accurate is it? I'm always skeptical of automated tools for legal documents.

It's been spot-on for us. Obviously you still need legal review for final decisions but it catches the obvious problems that are easy to miss when you're reviewing dozens of filings.

I might have to try that. We just had a continuation filing rejected because of a tiny debtor name mismatch that we missed in our manual review.

That's good advice. We're meeting with our attorney tomorrow to review all the documentation and figure out our best approach.

Smart move. Make sure they review both the UCC-1 and the original security agreement side by side. The inconsistencies are usually obvious once you put them together.

Three months delay sounds awful. Did you eventually get full recovery or did the delay hurt your position?

We got most of it back but the debtor had time to sell some equipment during the delay. Could have been much worse though.

This is why I always tell clients to invest in proper documentation upfront. It's way cheaper than fixing problems later.

That sounds like exactly what we need. Is it expensive to use?

Focus on the value - catching one major filing error easily pays for itself. Way cheaper than dealing with problems during foreclosure.

Will do! Meeting with legal counsel tomorrow so should have a clearer picture of our options by end of week.

Thanks! These UCC collateral issues seem to be getting more common lately.