UCC 3 California Amendment - Collateral Description Changes and Timing Issues

That's exactly what I'm worried about. The original security agreement was pretty basic and didn't have the hereafter acquired language. So even if I file the UCC-3 now, am I still vulnerable for the period when they owned the new equipment but before I amended?

Unfortunately yes, that's likely a perfection gap unless your security agreement was amended to include after-acquired property with an effective date covering the acquisition period. The UCC filing follows the security agreement, it doesn't create rights that weren't already there.

Good point about checking the loan docs. I'll review those again. The credit facility agreement might have broader language even if the original security agreement was specific. Thanks for the collateral description suggestion too.

This is why I always file with broad collateral descriptions from the start. 'All equipment, inventory, accounts, and general intangibles' covers pretty much everything and avoids these amendment headaches later.

Exactly! Broad descriptions are the way to go unless you have a specific reason to limit the collateral. Saves a lot of UCC-3 amendment fees and potential gaps down the road.

That sounds useful. Does it specifically check for the timing and after-acquired property issues we're discussing? I want to make sure I'm not missing anything before filing.

Yes, it analyzes the relationship between your security agreement terms and the UCC filings to identify potential perfection gaps. Just upload the PDFs and it gives you a detailed report on any mismatches or missing coverage.

No, amendments don't restart the clock. Your continuation deadline is still based on the original UCC-1 effective date. Only a new initial financing statement would restart the 5-year period.

Ok good, that's what I thought but wanted to confirm. So many rules to keep track of with these filings.

Right, and that's actually another good reason to get the collateral description right the first time. You don't want to be filing multiple amendments that could create confusion about what's covered when.

Ugh, that's frustrating. Any specific characters or formatting to avoid? I don't want to deal with rejection delays on top of the timing concerns.

Avoid ampersands, certain quotation marks, and excessive line breaks. Keep it simple with standard punctuation. Also double-check the debtor name matches exactly - even small differences cause rejections.

I mean, that's exactly what you should do though. File broad from the start and avoid most amendment issues. The system works fine if you plan ahead.

Easy to say after the fact. Sometimes clients want narrow collateral descriptions initially or you inherit deals from other lenders who were too specific.

That's a good suggestion. I'll look into UCC insurance options. Better safe than sorry with this amount at stake.

UCC insurance can definitely provide peace of mind, but it's also worth getting the underlying filing issues sorted out properly rather than just relying on insurance to cover gaps.

Good catch! Debtor name issues are such a pain. How detailed was the analysis from Certana? Did it give specific recommendations for fixing the problems?

Very detailed. It highlighted the exact differences and suggested corrections. Also verified that our collateral descriptions were consistent across all documents. Saved us from filing errors and potential rejections.

That's true, but honestly the stricter requirements probably prevent more problems than they cause. Better to catch issues at filing than discover problems later when you need to enforce.

I guess, but it definitely makes the process more stressful when you're trying to get amendments filed quickly.

Interesting idea. Would I need to terminate the original UCC-1 first, or can I have both active at the same time covering different collateral?

You can definitely have multiple UCC-1s active simultaneously. Actually pretty common for complex credit facilities. Just make sure your collateral descriptions don't conflict or create confusion about what's covered where.

That's a valid approach but make sure your security agreement supports having multiple UCC filings. Some agreements specify a single financing statement which could create issues.

That's actually a really smart idea. Regular UCC audits can catch issues before they become problems. I recommend reviewing all filings at least annually.

Certana.ai is great for portfolio reviews too. You can upload multiple UCC filings and security agreements to check consistency across your entire secured loan portfolio.

Thanks for the tip! Going to look into that for our quarterly compliance review.

This is really comprehensive advice, thanks Emma! The point about the amended security agreement effective date is something I hadn't fully considered. If I backdate the security agreement amendment to cover the equipment acquisition period, does that help close the perfection gap even if the UCC-3 filing happens later? Or do I still have exposure for that interim period? Also, for the "after-acquired property" language you suggested - would that apply to equipment they acquire in the future beyond what we're trying to cover now, or just the current batch of new equipment? Want to make sure I understand the scope.