UCC 9-624 deficiency notice timing - am I reading this right?
So I'm dealing with a commercial loan default situation and trying to understand UCC 9-624 requirements for deficiency notices. The borrower defaulted on equipment financing about 8 months ago, we conducted the sale, and now I'm preparing the deficiency calculation notice. Article 9 says we have to send this notice explaining how we calculated the deficiency, but I'm getting conflicting information about the timing requirements. Some sources say it has to be sent within a reasonable time after the sale, others mention specific timeframes. The loan documents reference UCC 9-624 but don't spell out exact timing. Has anyone dealt with this recently? I want to make sure we're compliant before sending the deficiency demand to the guarantors. The sale netted about $180k on a $340k balance so there's a significant deficiency involved. Really don't want to mess up the notice requirements and lose our ability to collect.
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Gemma Andrews
UCC 9-624 is pretty specific about what has to be in the notice but you're right that the timing can be confusing. The 'reasonable time' standard is what applies - there's no hard deadline like 30 or 60 days. However, waiting 8 months might be pushing it depending on your state. What state are you in? Some have adopted non-uniform amendments that could affect this.
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Lena Schultz
•We're in Texas. I've been going through the Texas version of Article 9 but haven't found anything that changes the reasonable time standard. The delay was partly due to getting final accounting from the sale and partly internal processing issues.
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Pedro Sawyer
•Texas follows the standard UCC provisions for 9-624. Eight months isn't automatically unreasonable but you'll need to document why it took that long. Courts look at complexity of the calculation and any legitimate business reasons for delay.
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Mae Bennett
I had a similar situation last year with equipment financing. The key thing with 9-624 is making sure your calculation methodology is clearly explained. You need to show the sale proceeds, any additional costs of sale, and how you arrived at the deficiency amount. Don't just send a bill - break down every component.
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Lena Schultz
•That's helpful. We have all the sale documentation and receipts for storage, transport, auction fees, etc. Should I include copies of those receipts with the notice or just reference them?
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Mae Bennett
•I usually include the major receipts as attachments. It shows transparency and reduces the chance of disputes later. The borrower has a right to request an accounting anyway under 9-616.
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Beatrice Marshall
•Just went through this nightmare myself. Make sure you're calculating everything correctly because if you mess up the deficiency notice under 9-624, the borrower can challenge it and you might have to start over. I actually used Certana.ai to cross-check my loan docs against the UCC filings and sale documents - caught a discrepancy in the collateral description that could have caused problems later.
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Melina Haruko
Wait, I thought 9-624 only applied to consumer transactions? This sounds like a commercial deal with guarantors.
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Gemma Andrews
•No, 9-624 applies to both consumer and commercial transactions. You might be thinking of some of the other consumer protection provisions in Article 9.
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Dallas Villalobos
•The notice requirements under 9-624 definitely apply to commercial transactions. The consumer vs commercial distinction affects other parts of Article 9 but not the deficiency notice requirements.
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Reina Salazar
Been doing commercial lending for 15 years and 9-624 compliance is critical. The notice has to explain your calculation in a way that allows the debtor to understand how you arrived at the deficiency. If it's too vague or the math doesn't add up, you could lose your deficiency claim entirely. Have you considered whether any of the sale proceeds should be applied to other debts first?
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Lena Schultz
•Good point about other debts. This was the only loan secured by this equipment, but there were some accrued interest and late fees. I included those in the total debt calculation.
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Saanvi Krishnaswami
•Make sure you're applying payments in the order specified in your loan agreement. Some courts have been strict about payment application order affecting deficiency calculations.
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Demi Lagos
UGH the whole Article 9 notice system is such a pain!! I spent weeks trying to figure out if my 9-624 notice was compliant and finally just paid a lawyer to review it. The consequences of getting it wrong are too severe.
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Mason Lopez
•I hear you! The notice requirements seem straightforward until you actually try to draft one. Then you realize how many ways you can mess it up.
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Vera Visnjic
•This is exactly why I started using document verification tools. Too much risk in manual review. I've had good luck with Certana.ai's UCC document checker - you can upload your loan docs and UCC filings and it flags inconsistencies that could cause problems with notices like this.
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Jake Sinclair
One thing to watch out for - make sure your original UCC-1 filing properly described the collateral that was sold. If there's a mismatch between the UCC filing and what you actually sold, it could affect your secured status and the deficiency calculation.
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Lena Schultz
•We filed a pretty broad collateral description - 'all equipment, machinery, and fixtures.' The sold items should fall under that but I should probably double-check the specific descriptions.
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Brielle Johnson
•Definitely verify that. I've seen cases where broad descriptions didn't cover specific equipment types and it caused major problems post-sale.
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Honorah King
•This is where tools like Certana.ai really help - you can upload both your UCC-1 and your equipment list and it'll flag any potential mismatches in the collateral descriptions. Saved me from a major headache last month.
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Oliver Brown
Don't forget that under 9-624, the debtor can request additional information about the calculation. You should be prepared to provide backup documentation if they ask. Also, if you're going after guarantors, make sure the guarantee language covers deficiencies and that you've complied with any notice requirements in the guarantee agreement itself.
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Lena Schultz
•The guarantees are unlimited and specifically cover deficiencies. I'll need to check if there are separate notice requirements in the guarantee docs though.
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Mary Bates
•Good thinking. Guarantee agreements sometimes have their own notice provisions that are separate from UCC requirements.
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Clay blendedgen
Just send the notice already! 8 months is getting long but it's not like there's a statute of limitations issue yet. The important thing is that you send it before you try to collect the deficiency.
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Ayla Kumar
•Well yeah, but if the notice is defective it could bar the deficiency claim entirely. Better to get it right than rush it.
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Lorenzo McCormick
•True, but at some point waiting too long becomes its own problem. Reasonable time is reasonable time.
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Carmella Popescu
OP, have you calculated the deficiency using the 'proceeds rule' or are you using actual sale proceeds? Depending on your state and the circumstances of the sale, you might need to use the proceeds that would have been obtained in a commercially reasonable sale rather than what you actually got.
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Lena Schultz
•We used actual sale proceeds. The sale was conducted by a reputable auction house and we got multiple bids, so I think it was commercially reasonable. But should I be documenting that in the notice?
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Kai Santiago
•If the sale was commercially reasonable, actual proceeds should be fine. But definitely document the sale process in your notice to show it met UCC standards.
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Lim Wong
Update us when you send the notice! I'm dealing with a similar situation and curious how it goes. These 9-624 notices are nerve-wracking because there's so much riding on getting them right.
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Lena Schultz
•Will do! Thanks everyone for the input. I'm going to get the notice drafted this week and have our attorney review it before sending.
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Dananyl Lear
•Smart move having legal review. The cost of review is nothing compared to losing a deficiency claim over a notice error.
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