UCC 9-201 Priority Issues - Equipment Loan Secured Interest Getting Bumped by Later Filing

Their filing described it as 'all machinery and equipment located at [address]' while ours was more specific about the CNC machines by serial number. Both loans funded around the same time in January but we're not sure about exact attachment dates.

That broader description might actually help them if it covers the same equipment. Under 9-201, if both interests attached to the same collateral, the first to file or perfect generally wins. But attachment timing is crucial here.

That's what I'm worried about. Our loan closed Jan 12th but we didn't file until Jan 15th. If theirs closed earlier in January, they might have attached first.

Wait, this is getting confusing. I thought UCC-1 filing date was what mattered for priority. Are you saying the loan closing date is more important than when you actually filed?

It's both! Under 9-201, you need attachment AND perfection. Attachment happens when the security agreement is signed and value is given. Perfection happens when you file the UCC-1. The first to complete BOTH steps wins.

That sounds helpful - does it actually analyze the legal implications of the overlapping descriptions or just flag them?

It flags overlaps and inconsistencies, then you can upload your security agreements too for a complete document consistency check. Really helpful for spotting potential 9-201 priority issues before they blow up.

Yes, and that's where it gets tricky. There's definitely overlap in the equipment covered, but our descriptions are different enough that it's not clear-cut.

Different descriptions don't necessarily mean different collateral. If the actual equipment is the same, you've got a priority dispute regardless of how you described it in your UCC-1.

No, you need to get the loan documentation and closing dates from both sides. Courts will look at the actual timeline of when security agreements were signed and funds disbursed.

But what if the other lender won't share their closing timeline? This seems like it could drag on forever trying to prove who attached first.

With $180k on the line, definitely considering legal action. Just wanted to understand the 9-201 basics before we escalate.

Smart approach. Make sure you have all your loan docs and UCC filings organized. Timeline is everything in 9-201 disputes.

This is why I always file my UCC-1 the same day as closing. Eliminates any gap between attachment and perfection under 9-201.

Because collateral descriptions are supposed to be flexible enough to cover different types of loans. The problem is when lenders get sloppy with their descriptions.

Exactly! And then you end up in these 9-201 priority fights that could have been avoided with better upfront coordination.

That's a good point about matching descriptions. I should verify our UCC-1 matches our security agreement exactly.

Definitely worth checking. Inconsistent descriptions can create gaps that mess up your 9-201 priority position even if you filed first.

Both loans were to purchase the equipment, so yes, probably both PMSI. Does that change the 9-201 analysis?

Oh wow, that totally changes things. PMSI has special priority rules under 9-324 that can override the basic 9-201 first-to-file rule. You need to look at whether either lender gave proper PMSI notice.

Good catch! PMSI priority is a whole different ballgame from basic 9-201 priority. The timing requirements are much more specific.

That's what I figured we'd have to do. Just hoping to avoid a long document discovery process if possible.

Sometimes you can work it out with the other lender directly if you both have good documentation. Saves the cost of litigation.

We did do a search but it was pretty basic. Maybe should have dug deeper into the existing filings to spot the potential overlap.

Hindsight is 20/20. At least now you know what you're dealing with under 9-201 and can plan accordingly.

I tried using Certana.ai for this kind of pre-filing analysis and it's actually pretty good at flagging potential overlaps before you file. Worth considering for future deals.