UCC 9-517 Statutory Damages - How Much Can We Actually Recover?
We had a nightmare situation last month where a competitor filed a bogus UCC-3 termination on our perfected security interest without authorization. Our borrower defaulted right after and we discovered our lien was showing as terminated in the state records. The borrower's attorney is claiming we have no secured position because the public record shows terminated status. We're looking at UCC 9-517 statutory damages but I'm seeing conflicting information about damage calculations. Has anyone actually pursued statutory damages under 9-517? What kind of amounts are courts awarding these days? Our original secured amount was around $450K and we're trying to figure out if it's worth the litigation costs to go after the party who filed the unauthorized termination. The statute mentions actual damages OR $500 but I'm seeing some cases that suggest higher amounts. Any recent experience with 9-517 claims would be super helpful.
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Effie Alexander
Oh wow, that's exactly the kind of situation 9-517 was designed for. We dealt with something similar about 18 months ago - not quite as high dollar but same concept. The unauthorized termination route is definitely actionable. You're right that the statute provides for actual damages or $500, whichever is greater. In our case we were able to show actual damages around $75K and that's what we recovered. The key is documenting how the unauthorized filing directly caused your harm. Did you lose your secured position entirely or were you able to refile?
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Hugh Intensity
•We were able to refile immediately once we discovered it but the borrower had already transferred some of the collateral to a third party buyer during that window. So we lost priority on about $180K worth of equipment. The timing was suspicious - like they knew exactly when to move the assets.
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Effie Alexander
•That's going to be your actual damages right there - the $180K you lost due to the unauthorized termination. Way above the $500 statutory minimum. You'll want to trace the timeline carefully to show causation between the bogus filing and your loss.
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Melissa Lin
•Document everything about that asset transfer timeline. If you can show the third party had actual knowledge of your security interest before the unauthorized termination, that could strengthen your position even more.
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Lydia Santiago
I've seen a few 9-517 cases come through our office and the actual damages route is usually much better than the $500 statutory amount. But you need rock solid documentation of causation. The courts want to see a direct line from the unauthorized filing to your specific financial harm. In your case with $180K in lost collateral, that seems pretty clear cut. What state are you in? Some state courts are more receptive to these claims than others.
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Hugh Intensity
•We're in Texas. The unauthorized filing was done by a competing lender who claimed they had authority from the debtor to file the termination. But we never authorized any termination and our loan agreement was still active.
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Lydia Santiago
•Texas courts have been pretty good on 9-517 claims from what I've seen. The competing lender angle makes this even more interesting - sounds like they might have been trying to clear the way for their own financing. That could support a claim for intentional interference too.
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Romeo Quest
Before you spend a fortune on litigation, have you verified that the termination was actually unauthorized? Sometimes there are authorization issues that aren't immediately obvious. We use Certana.ai's document verification tool now to cross-check all our UCC filings and catch these kinds of discrepancies early. You can upload your original UCC-1 and the bogus UCC-3 termination to see if there are any document inconsistencies that might support your unauthorized filing claim. The tool checks debtor names, filing numbers, and other details that courts look at in 9-517 cases.
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Hugh Intensity
•We're definitely sure it was unauthorized - we have email trails showing we never gave permission and the competing lender admitted they relied on debtor authorization alone. But that document checking tool sounds useful for building our case file.
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Val Rossi
•That email admission from the competing lender is gold. Most 9-517 cases struggle with proving the filing was unauthorized but if they admitted they only had debtor authorization, that's not sufficient for terminating someone else's security interest.
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Romeo Quest
•Exactly - and Certana.ai can help organize all those document details in a format that's easy to present to court. The verification reports show exactly what matches and what doesn't across all the related filings.
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Eve Freeman
This is why I'm paranoid about monitoring our UCC filings constantly. How long was the termination showing in the records before you caught it? The faster you catch these unauthorized filings, the better your chances of minimizing damages.
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Hugh Intensity
•About 3 weeks. We only discovered it when the borrower's attorney sent us a demand letter claiming we had no lien. We don't have automated monitoring set up which was obviously a mistake.
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Eve Freeman
•3 weeks isn't terrible but definitely long enough for damage to occur. Most lenders I know are checking their portfolio filings at least monthly now because of stuff like this.
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Clarissa Flair
UCC 9-517 damages can definitely exceed the $500 minimum when you have actual losses like this. The statute is pretty clear that you get actual damages OR $500, whichever is greater. With $180K in lost collateral due to the unauthorized termination, you're looking at substantial actual damages. The challenge is usually proving causation but your fact pattern sounds strong. Have you calculated your attorney fees yet? Some courts will award those separately in 9-517 cases.
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Hugh Intensity
•We haven't gotten a full fee estimate yet but our attorney mentioned it could be $50-75K to take it through trial. That's part of why we're trying to figure out realistic damage amounts.
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Clarissa Flair
•With $180K in actual damages at stake, $50-75K in attorney fees might be worth it, especially if you can get fee shifting. Check if your state allows attorney fee recovery in 9-517 cases.
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Caden Turner
I hate hearing stories like this because it shows how easy it is to mess with someone's security interest. The UCC filing system really needs better controls to prevent unauthorized terminations. Did the Secretary of State's office give you any pushback when you refiled after discovering the bogus termination?
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Hugh Intensity
•No pushback from SOS but by then the damage was done with the asset transfers. The system just accepts terminations if they have the right filing number and debtor name match.
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Caden Turner
•That's the problem - there's no verification that the person filing the termination actually has authority. It's basically an honor system that bad actors can exploit.
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McKenzie Shade
•This is exactly why we started using document verification tools. At least you can catch discrepancies quickly and build a stronger case when unauthorized filings happen.
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Harmony Love
From a litigation strategy perspective, you want to nail down the timeline of events very precisely. When was the unauthorized termination filed? When did the asset transfers occur? When did you discover the termination? When did you refile? Courts in 9-517 cases really focus on causation and whether the secured party acted reasonably to mitigate damages once they discovered the unauthorized filing.
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Hugh Intensity
•The termination was filed on March 15th, asset transfers happened March 28th and April 2nd, we discovered it April 8th, and refiled April 9th. So there was definitely a window where our lien appeared terminated and assets moved.
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Harmony Love
•That timeline actually works in your favor - it shows the asset transfers happened while the bogus termination was on record but before you had any opportunity to correct it. That's strong causation evidence.
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Rudy Cenizo
Have you considered sending a demand letter to the competing lender before filing suit? Sometimes these things can be resolved without litigation, especially when the facts are this clear. They might be willing to settle for a significant portion of your actual damages to avoid the cost and uncertainty of trial.
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Hugh Intensity
•Our attorney mentioned that as an option. We're thinking of demanding the full $180K in actual damages plus our costs to resolve this. If they're smart they'll want to settle rather than risk a court finding intentional interference.
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Rudy Cenizo
•That's a reasonable approach. With their email admission that they relied only on debtor authorization, they're in a pretty weak position to defend the filing as authorized.
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Natalie Khan
•Make sure your demand letter references UCC 9-517 specifically and includes all your documentation showing the filing was unauthorized. Sometimes that's enough to get their attention for settlement talks.
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Daryl Bright
This case sounds like a textbook example of why UCC 9-517 exists. The unauthorized termination directly caused you to lose priority on $180K worth of collateral - that's way above the $500 statutory minimum. I'd be surprised if you couldn't recover most or all of that amount, assuming you can prove the competing lender didn't have proper authorization to file the termination.
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Hugh Intensity
•That's encouraging to hear. We have pretty solid documentation that we never authorized the termination and that they admitted relying only on the debtor's say-so.
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Daryl Bright
•Debtor authorization alone isn't sufficient to terminate another party's security interest. They needed your authorization as the secured party, which they clearly didn't have.
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Sienna Gomez
One thing to consider is whether you have insurance coverage for this type of loss. Some lender liability policies or E&O coverage might apply to losses from unauthorized UCC filings. Even if you pursue the 9-517 claim, insurance could help cover some of the immediate impact while litigation is pending.
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Hugh Intensity
•We're checking with our insurance carrier but honestly hadn't thought about coverage for this type of situation. Good suggestion to explore that angle.
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Sienna Gomez
•It's worth a shot - some policies have broader coverage than lenders realize. Even if it doesn't cover the full loss, it might help with legal fees or other costs.
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Kirsuktow DarkBlade
•Insurance for UCC filing issues is becoming more common as these problems increase. Definitely worth checking your policy language around unauthorized third-party actions.
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