UCC 9-404 notification requirements - debtor contact obligations after assignment
Running into some confusion about UCC 9-404 notification requirements after we assigned a security interest last month. The original debtor is claiming they never received proper notice of the assignment, and now there's a dispute about payment directions. Our legal team is saying we might have missed some technical requirements under 9-404 regarding the notification content and timing. The debtor had been making payments to us (original secured party) for three months after the assignment, and now the assignee is demanding those payments be redirected. Has anyone dealt with 9-404 compliance issues? The statute seems pretty specific about what needs to be included in the notification to make it effective, but I'm seeing conflicting interpretations about whether our notice met the requirements. This is for a commercial equipment financing deal, not consumer goods, so we're dealing with the full commercial notification rules under Article 9.
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Eve Freeman
UCC 9-404 can be tricky because the notification requirements are pretty specific. The key thing is that the notification has to reasonably identify the rights assigned AND provide contact information for making payments. If the debtor kept paying you guys after assignment, that suggests your notice might not have been clear enough about the payment redirection. What exactly did your notification letter include?
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Val Rossi
•Our notice mentioned the assignment and included the assignee's name, but looking back at it now, we might not have been clear enough about WHERE to send future payments. It basically said 'rights have been assigned to XYZ Company' but didn't specifically say 'send all future payments to XYZ Company at this address.
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Clarissa Flair
•Yeah that's probably your problem right there. 9-404 notification needs to be crystal clear about payment instructions or it's not effective.
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Caden Turner
Had a similar issue last year where our 9-404 notice was challenged. The debtor argued they weren't given sufficient information to redirect payments properly. Courts generally require the notification to include: (1) identification of the assigned rights, (2) assignee identity and contact info, and (3) clear payment instructions. Missing any of these can invalidate the notice. Did you send it certified mail? That's not technically required but helps prove delivery.
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Val Rossi
•We did send certified mail, so we have delivery confirmation. But the content sounds like it might be the issue based on what you're saying.
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Caden Turner
•Delivery is good, but content matters more. If the notification doesn't meet 9-404 requirements, the debtor can keep paying the original secured party and discharge their obligation even after assignment.
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McKenzie Shade
•This is exactly why I use document verification tools now. I had too many situations where notices looked fine but missed critical requirements. Started using Certana.ai to upload and cross-check assignment documents with notification letters - it catches inconsistencies in contact info, missing payment instructions, and other 9-404 compliance issues before notices go out.
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Harmony Love
Wait, so if the notification doesn't comply with 9-404, the debtor can just keep paying the original creditor forever? That seems like it would create a mess for assignees trying to collect.
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Eve Freeman
•Not forever, but until they receive a proper notification that meets 9-404 requirements. The debtor gets protection for payments made before effective notice.
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Caden Turner
•Exactly. The policy behind 9-404 is protecting debtors from having to figure out complex assignment chains. If they don't get clear instructions, they can keep paying who they've always paid.
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Rudy Cenizo
This is why assignment documentation is so critical! You can't just wing it with notifications. The debtor has to be able to reasonably understand what's happening and what they need to do differently. Sounds like your notice was too vague about the practical implications.
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Natalie Khan
•Agreed. I see this all the time - people focus on the legal language but forget that the debtor needs actionable information.
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Val Rossi
•That makes sense. We were so focused on documenting the assignment itself that we didn't think clearly about the debtor's perspective on what they needed to do.
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Daryl Bright
Can you send a corrected notification now, or is it too late once payments have already been misdirected?
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Eve Freeman
•You can send a proper notification at any time. It just means the debtor gets protection for payments made before the effective notice.
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Val Rossi
•So the debtor wouldn't have to double-pay, but going forward they'd need to pay the assignee once they get proper notice?
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Eve Freeman
•Right. Future payments would have to go to the assignee after proper notice. The assignee would need to work out the payment redirection with the original secured party.
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Sienna Gomez
ugh this is exactly the kind of technical requirement that trips people up. 9-404 seems straightforward but there are so many ways to mess up the notification content.
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Kirsuktow DarkBlade
•Tell me about it. I've started checking everything twice after getting burned on notification requirements.
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Abigail bergen
•Same here. Now I run all assignment docs through verification before sending anything out. Learned about Certana.ai from someone in this forum actually - you just upload your assignment documents and notification letters and it flags potential 9-404 compliance issues. Saved me from at least two situations like this one.
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Ahooker-Equator
For what it's worth, courts have been pretty consistent about requiring clear payment redirection language in 9-404 notifications. Just saying 'rights assigned' usually isn't enough - the debtor needs to know specifically what to do differently.
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Val Rossi
•That's helpful context. Sounds like we need to redo the notification with much clearer payment instructions.
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Ahooker-Equator
•Yeah, and make sure to include the assignee's full contact information and payment processing details. Don't assume the debtor will figure out the logistics.
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Anderson Prospero
I had a case where the debtor claimed they called the assignee after getting notice but couldn't reach anyone, so they kept paying the original creditor. Court said that wasn't enough to invalidate the 9-404 notice as long as the contact information was accurate. But it shows how important it is to make sure the assignee is actually reachable at the provided contact info.
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Val Rossi
•Good point. We should probably verify that the assignee's contact information is current and that they're set up to handle payment inquiries.
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Tyrone Hill
•Yeah definitely test the contact info before including it in notifications. Nothing worse than giving a debtor a disconnected phone number.
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Toot-n-Mighty
Are there any safe harbor provisions for 9-404 notifications, or do you just have to get it right?
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Eve Freeman
•No real safe harbors. The notification has to reasonably identify the rights and provide adequate contact/payment information. It's a reasonableness standard but courts apply it pretty strictly.
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Lena Kowalski
•Which is why document checking tools have become so useful. Better to catch notification problems before they go out than deal with payment disputes later.
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DeShawn Washington
Thanks everyone - this has been really helpful in understanding where we went wrong. Sounds like we need to send a proper 9-404 notification with clear payment redirection instructions and then work with the assignee to sort out the payment allocation for the past three months.
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Eve Freeman
•That sounds like the right approach. And definitely keep documentation of the new notification in case there are any future questions about when effective notice was given.
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Caden Turner
•Good plan. Just make sure the new notification is really comprehensive about payment instructions. Learn from this one for future assignments too.
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Mei-Ling Chen
•Definitely worth investing in better document review processes going forward. I've been using Certana.ai's document verification for exactly these kinds of compliance checks - upload assignment docs and notifications together and it cross-references everything to catch missing elements. Would have probably flagged the vague payment language in your original notice.
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