UCC 9-310 perfection requirements - when is filing actually required vs other methods?

This is right on the money. We handle this all the time with promissory note portfolios. Possession trumps filing requirements for negotiable instruments.

But what about electronic notes? You can't really 'possess' those in the traditional sense...

Electronic notes fall under different rules - you'd need control rather than possession, and that might require filing depending on the system.

That's exactly why I'm asking - getting different interpretations from different sources. Your compliance team might have been overly cautious?

Some lenders file anyway as backup even when possession should be sufficient. Belt and suspenders approach.

That's interesting - so the document checker can analyze whether your security agreement matches UCC filing requirements? That could be helpful for our situation.

Exactly - you just upload PDFs and it cross-checks everything. Really useful for avoiding the back-and-forth with rejected filings.

Never heard of that tool but sounds like it could prevent a lot of headaches with UCC-1 prep.

It's more about the principle - they don't want public filings if we can avoid them. Privacy concerns rather than cost.

Ah, that makes more sense. Possession would definitely keep it out of public records.

These are definitely negotiable promissory notes, so 9-313 should apply. The question is whether possession alone gives us the same priority as filing would.

Priority-wise, possession generally gives you better protection than filing for negotiable instruments. No gap between attachment and perfection.

Plus no risk of filing errors or continuation deadline issues with possession.

Agree on the security agreement being crucial. That's where most possession-based deals fall apart - inadequate documentation.

Exactly. The UCC filing might be public record, but your security agreement better be bulletproof either way.

Because different types of collateral require different approaches. You can't exactly 'file' possession of cash, and you can't 'possess' accounts receivable.

Still unnecessarily complicated for something that should be straightforward.

It actually makes sense once you understand the policy reasons behind each method.

Good point - they're endorsed in blank, so we should have negotiable document rights in addition to the security interest.

Perfect, that definitely supports the possession route then.

That's a fair point about business vs legal considerations. Did you run into any issues with the dual approach?

No issues at all. Just redundant protection. The filing was belt-and-suspenders since we already had possession.

Redundant protection isn't necessarily bad in a deal this size.

Good advice. We're setting up a lockbox arrangement with detailed custody procedures.

Lockbox is smart. Third-party custody can actually strengthen your possession claim.

Make sure the lockbox agreement clearly establishes your control rights though.

Hadn't thought about that angle. We might be selling this loan within 18 months, so transfer considerations are definitely relevant.

Yeah, physical delivery of possessed collateral can be much cleaner than amendment filings.

Thanks everyone - this has been really helpful. Sounds like possession is the way to go for our situation.

Smart choice. Just remember to review your state's specific requirements too - some states have additional provisions.

Will definitely check state law variations. Appreciate all the insights on UCC 9-310!

Excellent point about the chain of custody documentation. We actually implemented a similar system after a close call on a $3.2M portfolio deal. One thing I'd add - make sure your custody logs include not just physical movements but also any electronic access or digital inspections of the notes. Some courts are getting stricter about what constitutes "continuous possession" in the digital age, especially when you have hybrid paper/electronic note management systems.

Great advice on the custody documentation! I'm curious about the hybrid systems you mentioned - are you referring to situations where some notes in a portfolio are physical paper while others are electronic? We're actually dealing with that exact scenario in another transaction, and I'm wondering how courts handle possession claims when you can't physically hold all the collateral in the same way.