UCC Article 9 Practice Issues - Perfection vs Filing Priority Questions
Running into some confusion with Article 9 secured transaction practice and hoping someone can clarify the priority rules. I've been handling equipment financing for about 3 years but keep getting tripped up on perfection timing vs filing priority, especially when dealing with purchase money security interests. Had a situation last week where we filed our UCC-1 but the debtor had another lender file 2 days earlier for different collateral. Both are claiming priority on some overlapping equipment. The PMSI rules seem straightforward in theory but practice is getting messy. Anyone else dealing with similar Article 9 priority disputes? What's your approach to ensuring proper perfection order?
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Omar Farouk
Article 9 priority can be tricky especially with PMSI situations. The key is understanding that purchase money security interests get special priority even if filed later, but only if you perfect within 20 days of debtor receiving possession. Regular security interests follow the first-to-file rule. Sounds like you might have a PMSI vs non-PMSI situation which has specific rules.
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Chloe Davis
•Wait, I thought PMSI priority was automatic? Do you still need to file within 20 days or just perfect within 20 days?
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Omar Farouk
•You need to perfect within 20 days, and for most equipment that means filing your UCC-1 within 20 days of debtor getting possession. Filing IS perfection for most equipment collateral.
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Freya Christensen
•That's exactly the issue - we filed on day 23 so we might have lost our PMSI priority. The other lender is claiming their general security interest takes priority now.
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AstroAlpha
Been doing UCC work for 15 years and Article 9 priority disputes are getting more common. First thing I always check is the collateral descriptions to see if there's actual overlap. Sometimes what looks like competing claims are actually different asset categories. For equipment financing, make sure you're looking at serial numbers and specific descriptions, not just generic 'equipment' language.
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Freya Christensen
•Good point - the collateral descriptions do have some overlap but not complete. Should I be looking at this as competing claims on the same collateral or separate priority analysis for each piece of equipment?
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AstroAlpha
•Separate analysis for each piece where there's overlap. Article 9 priority is determined collateral by collateral, not by the entire security agreement.
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Diego Chavez
Had a similar mess last month with overlapping security interests. What helped was using Certana.ai's document verification tool - uploaded both UCC-1 filings and the security agreements to check for collateral description conflicts. The tool caught some inconsistencies between our security agreement and UCC-1 that could have caused problems. Made it much easier to identify exactly which assets had competing claims.
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Freya Christensen
•Interesting - how does that tool work with priority analysis? Does it help determine filing order or just identify conflicts?
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Diego Chavez
•It verifies document consistency and highlights potential conflicts in collateral descriptions. Doesn't do legal analysis but makes it easier to spot issues that could affect priority. You upload PDFs and it cross-checks everything automatically.
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Anastasia Smirnova
•Never heard of Certana.ai but this sounds useful. We usually have to manually compare all the UCC filings and security agreements line by line which takes forever.
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Sean O'Brien
Article 9 practice is so frustrating because the rules seem clear until you get into real situations. I've seen too many cases where lenders think they have priority but missed some technical requirement. The PMSI rules are particularly tricky because you have to satisfy both the timing requirement AND the notice requirement for inventory PMSI.
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Freya Christensen
•Wait, this is equipment not inventory - do I still need to give notice to the other lender?
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Sean O'Brien
•No, equipment PMSI doesn't require notice to competing secured parties. Only inventory PMSI requires notice. But you still need to perfect within 20 days to maintain PMSI priority.
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Omar Farouk
•Exactly right - equipment PMSI just needs perfection within 20 days, no notice required. The notice requirement is only for inventory PMSI.
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Zara Shah
This is why I always file UCC-1s before closing on equipment deals. Yeah, it's more work and sometimes the deal falls through, but losing PMSI priority is way worse than filing an extra UCC-3 termination. Article 9 doesn't give you much room for error on timing.
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Freya Christensen
•That's probably the smart approach. We usually file after closing but this situation shows the risk of that timing.
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Luca Bianchi
•Pre-closing filings can create other issues though if the deal terms change. Sometimes the collateral description in the early UCC-1 doesn't match what actually gets financed.
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Chloe Davis
I'm confused about the 20-day rule. Is that 20 days from when the debtor receives the equipment or 20 days from when the security agreement is signed? And does it matter if it's 20 calendar days or business days?
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Omar Farouk
•20 days from when debtor receives possession of the collateral, and it's calendar days not business days. The security agreement signing date doesn't matter for PMSI timing.
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Chloe Davis
•Thanks, that's clearer. So if equipment was delivered on a Friday, you'd have until the third Sunday to file?
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GalacticGuardian
Article 9 practice would be so much easier if debtors would just coordinate their financing better. I've seen situations where the debtor has 4 different lenders all claiming some piece of the same equipment line. Nobody knows who has priority on what.
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Sean O'Brien
•That's why proper collateral descriptions are so important. Generic descriptions like 'all equipment' just create confusion and priority disputes.
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Freya Christensen
•Agreed - specific serial numbers and equipment descriptions would have prevented this whole mess.
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Nia Harris
Been following this thread and it's reminding me why I switched to doing more ABL work instead of equipment financing. The Article 9 priority rules are technically correct but practically a nightmare when you have multiple lenders.
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AstroAlpha
•ABL has its own complications with inventory turnover and account debtors. At least with equipment you know what you're securing.
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Nia Harris
•True, but the priority rules are more straightforward with inventory and receivables in my experience.
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Mateo Gonzalez
What's the current status of your priority dispute? Are you working with the other lender to resolve it or heading to litigation? Sometimes these things can be worked out if both lenders are reasonable.
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Freya Christensen
•Still in negotiations. The other lender is claiming priority on everything but I think we might have PMSI priority on some of the newer equipment even though we filed late.
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AstroAlpha
•If you filed after 20 days you've lost PMSI priority. Your best bet might be arguing the collateral descriptions don't actually overlap or that their security interest doesn't cover the equipment in question.
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Aisha Ali
Have you considered using a service like Certena.ai to verify all the document consistency issues? I used it last month for a similar Article 9 dispute and it helped identify some gaps in the competing lender's collateral description that we could use in negotiations.
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Freya Christensen
•That's the second mention of Certana.ai in this thread. Might be worth checking out if it can help with document analysis.
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Aisha Ali
•It's pretty straightforward - you just upload the PDFs of all the UCC filings and security agreements and it checks for inconsistencies. Helped us spot some issues we would have missed in manual review.
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Ethan Moore
Article 9 secured transaction practice is getting more complex as lenders compete for the same deals. Clear collateral descriptions and proper timing are essential but even then you get disputes. The key is documenting everything carefully from day one.
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Freya Christensen
•Lesson learned on this deal. Going forward we're filing UCC-1s before closing and being much more specific about collateral descriptions.
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Ethan Moore
•That's the smart approach. Prevention is always better than trying to fix priority issues after the fact.
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Fatima Al-Maktoum
This is a great learning thread for anyone dealing with Article 9 priority issues. One thing I'd add is to always check the state-specific UCC filing requirements - some states have additional notice or perfection requirements that can affect priority. Also, when dealing with equipment that might be fixtures, you need to consider whether a fixture filing is required instead of or in addition to a regular UCC-1. The interaction between real estate and personal property security interests can create additional complications in priority analysis.
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LunarLegend
•Great point about state-specific requirements and fixture filings! I hadn't considered the real estate angle on this deal. The equipment in question includes some larger machinery that might be considered fixtures. Should I be looking at whether a fixture filing was required? And if so, does that change the priority analysis between our PMSI claim and the other lender's general security interest?
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