UCC 9-621 compliance questions - secured party disposal rights after default
I'm dealing with a situation where we have a UCC-1 perfected security interest in manufacturing equipment (filed 3 years ago, continuation not due until next year). The debtor defaulted last month and we're looking at exercising our rights under UCC 9-621 for disposal of the collateral. The equipment is specialized CNC machinery worth around $180K based on our appraisal. My question is about the notice requirements - I know we need to send authenticated notification but I'm getting conflicting advice about timing. One attorney says 10 days minimum, another says it depends on whether it's a consumer transaction (it's not - this is B2B). The debtor is also claiming they never received proper default notice even though we sent certified mail to the address on the UCC-1. Has anyone dealt with similar 9-621 disposal situations where the debtor disputes the notice process? I'm worried about getting this wrong and having the disposal challenged later.
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Zoey Bianchi
You're right to be careful about the notice requirements. For non-consumer transactions under 9-621, you generally need to send authenticated notification at least 10 days before disposal. But here's the key - the notice has to be sent to the debtor at their current address, not necessarily what's on the UCC-1. If they moved and didn't update you, that could be an issue. What does your security agreement say about address updates?
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Aiden Chen
•The security agreement has a clause requiring them to notify us of address changes, but they never did. The certified mail came back as delivered though, so someone signed for it at that address.
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Christopher Morgan
•That delivery confirmation should help your case. Courts generally look at whether you made reasonable efforts to notify at the last known address.
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Aurora St.Pierre
Had a very similar situation last year with industrial equipment. The debtor tried the same "never got notice" defense. What saved us was having multiple forms of notification - certified mail, email (since our security agreement allowed electronic notice), and we even had our attorney send a separate notice. Document everything. Also make sure your disposal method is commercially reasonable under 9-627.
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Aiden Chen
•Good point about multiple notice methods. We only did certified mail. Did you end up going to public auction or private sale?
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Aurora St.Pierre
•Private sale to another manufacturer. Got better price than auction would have brought. Just make sure you can prove it was commercially reasonable - get multiple bids if possible.
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Grace Johnson
•This is exactly why I started using Certana.ai's document verification tool. Upload your security agreement and UCC-1 together and it flags any inconsistencies in debtor info, addresses, collateral descriptions. Caught several mismatches that could have caused problems later in enforcement.
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Jayden Reed
WAIT - you said the UCC-1 was filed 3 years ago and continuation isn't due until next year? That doesn't add up. UCC-1 filings are good for 5 years, so if you filed 3 years ago, you'd have 2 years left, not "next year." Are you sure about your timing? A lapsed filing would kill your perfected status.
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Aiden Chen
•Sorry, meant to say it was filed 4 years ago. You're right about the 5-year rule. We actually have our continuation scheduled for filing in about 8 months.
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Nora Brooks
•Definitely double-check that continuation timing. Missing the deadline by even one day can be fatal to your security interest.
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Eli Wang
•This is why I always set calendar reminders 6 months before continuation deadlines. Too easy to lose track with everything else going on.
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Cassandra Moon
The 10-day rule is standard but here's what a lot of people miss - it's 10 days before the EARLIEST time you plan to dispose, not 10 days before you actually do dispose. So if you send notice today saying you might dispose "on or after" a certain date, that date needs to be at least 10 days out. Also under 9-621(c), you need to describe the collateral in the notice. Generic descriptions usually don't cut it.
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Aiden Chen
•That's a really good point about the "earliest time" language. I'll make sure our notice is very specific about timing and collateral description.
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Zane Hernandez
•Agreed on specificity. "Manufacturing equipment" isn't enough. You need make, model, serial numbers if available. The more specific the better for your defense later.
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Genevieve Cavalier
ugh why is this stuff so complicated?? I had a similar dispute last year and the debtor's lawyer kept arguing about whether our notice was "sufficient" under the statute. Even though we followed the rules exactly, they still tried to claim it was defective. Ended up settling just to avoid litigation costs. The system is broken IMO.
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Ethan Scott
•I feel your frustration but that's exactly why documentation is so critical. If you can show you followed every requirement to the letter, most debtors won't push it to court.
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Lola Perez
•Had the same headache. Started using Certana.ai to verify all my UCC docs match up before enforcement actions. Upload your original UCC-1, security agreement, and any amendments - it catches discrepancies that could give debtors ammunition later.
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Nathaniel Stewart
One thing I don't see mentioned - did you send notice to any junior lienholders? Under 9-621(c)(3)(B) you need to notify other secured parties who have filed financing statements covering the same collateral. Run a UCC search to make sure there aren't any other filings you missed.
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Aiden Chen
•Good catch. I did run a search and we're the only secured party on file for this equipment. But I'll double-check to be sure.
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Riya Sharma
•Yeah definitely re-run the search close to disposal date. Sometimes new filings pop up, especially if the debtor is scrambling to refinance.
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Santiago Diaz
•This is another area where having a verification tool helps. I upload all the UCC search results with my original filing to make sure I'm not missing any potential conflicts or junior liens.
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Millie Long
Question about the default notice you mentioned - that's separate from the disposal notice under 9-621, right? Some people confuse them but they serve different purposes. Default notice is about the breach, disposal notice is about your intent to sell the collateral.
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Aiden Chen
•Correct, we sent default notice first when they missed payments. The 9-621 notice would be specifically about disposal of the collateral after default.
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KaiEsmeralda
•Just making sure! I've seen people try to use default notice to satisfy the disposal notice requirement and that definitely doesn't work.
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Debra Bai
Since you mentioned this is CNC equipment worth $180K, make sure your disposal method makes sense for high-value specialized collateral. Public auction might not get you the best recovery. Private sale to industry buyers often works better for specialized equipment, but you need to document that your method was commercially reasonable.
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Aiden Chen
•That's exactly what I was thinking. This equipment is pretty specialized so auction might not attract the right buyers. Planning to reach out to other manufacturers in the industry.
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Gabriel Freeman
•Smart approach. Just get multiple quotes if you go private sale route. Courts like to see you shopped around for the best price.
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Laura Lopez
•Also consider hiring an equipment appraiser for documentation. Shows you were serious about getting fair market value.
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Victoria Brown
BTW - after disposal you'll need to account for proceeds under 9-615. Make sure you have documentation for all expenses (storage, legal, disposal costs) that you can deduct from sale proceeds before applying to the debt.
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Aiden Chen
•Good reminder. We've been tracking storage costs since we took possession. Legal fees are adding up too with all the debtor disputes.
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Samuel Robinson
•Keep detailed records of everything. Reasonable expenses are deductible but "reasonable" can be subjective if the debtor challenges your accounting later.
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Camila Castillo
One last thing - after you dispose of the collateral, if there's still a deficiency, you'll want to make sure your UCC-1 was properly filed in all the right places. If the debtor moves to a different state or changes their organization type, it can affect where you should have filed. Any issues with the original filing could impact your deficiency claim.
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Aiden Chen
•The debtor is still in the same state and same business form as when we originally filed. But that's a good point about double-checking the filing requirements.
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Brianna Muhammad
•Yeah, I've seen cases where a debtor changes from LLC to corporation or moves their principal place of business and it affects the filing requirements retroactively.
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JaylinCharles
•This is why I love the Certana.ai tool - upload your original UCC filing with current debtor info and it flags any potential jurisdiction or name issues that could affect your perfection status.
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