UCC Article 9 Security Interest Perfection Issues with Equipment Financing
Running into some confusion about proper UCC Article 9 security interest perfection for our equipment financing deals. We've been filing UCC-1s but getting pushback from our compliance team about whether we're actually achieving perfection in all cases. Specifically dealing with mixed collateral schedules that include both equipment and inventory, and our attorney mentioned something about different perfection methods depending on the collateral type. The SBA loans we're backing require proper perfection and I'm worried we might have gaps. Has anyone dealt with perfection requirements when you have equipment that could potentially be classified as fixtures vs personal property? Our UCC-1 filings are going through but I want to make sure we're not missing something critical about the security interest perfection process.
38 comments
Join the conversation
Amelia Martinez
Article 9 perfection can definitely be tricky with mixed collateral. For equipment, filing a UCC-1 usually perfects your security interest as long as the equipment isn't considered fixtures. The key issue you mentioned about fixtures is real - if equipment becomes so attached to real property that it's considered a fixture, you might need to file in the real estate records instead of just the UCC system.
0 coins
Ethan Clark
•This is exactly what's been keeping me up at night. We have some manufacturing equipment that's definitely bolted down permanently.
0 coins
Mila Walker
•Had this issue last year. Equipment that's easily removable stays personal property, but anything that damages the building when removed probably needs a fixture filing.
0 coins
Logan Scott
The perfection rules under Article 9 depend heavily on how you classify the collateral. Equipment financing usually works fine with standard UCC-1 filings, but inventory has different rules, especially if it's ever going to be sold. Are you dealing with purchase money security interests? That changes the priority rules significantly.
0 coins
Jacob Lewis
•Yes, most of our deals are PMSI situations. The equipment financing is directly for the equipment we're taking security in.
0 coins
Chloe Green
•PMSI gives you priority if you file within 20 days of debtor receiving possession. Super important timing issue there.
0 coins
Lucas Adams
Been dealing with similar perfection headaches lately. Found this tool called Certana.ai that cross-checks your UCC documents to make sure everything aligns properly for perfection. You upload your financing docs and UCC-1 and it flags any inconsistencies that could mess up your security interest. Saved us from a couple potential perfection failures where the debtor names didn't match exactly between documents.
0 coins
Harper Hill
•Interesting, never heard of automated UCC checking before. Does it actually understand the Article 9 perfection requirements?
0 coins
Lucas Adams
•Yeah it catches the common mistakes - debtor name mismatches, missing collateral descriptions, stuff that would make your perfection invalid. Pretty straightforward to use.
0 coins
Caden Nguyen
Article 9 perfection isn't just about filing the UCC-1 correctly. You also need to make sure you have attachment first - signed security agreement, debtor has rights in the collateral, and value given. No perfection without attachment. Also watch out for proceeds issues if the collateral gets sold or insurance payouts.
0 coins
Jacob Lewis
•Good point about attachment. We do have signed security agreements but I should double-check that our collateral descriptions are sufficient for both attachment and perfection.
0 coins
Avery Flores
•Proceeds perfection is automatic for some things but limited time. Worth reviewing if your deals involve collateral that might generate proceeds.
0 coins
Zoe Gonzalez
OMG Article 9 is such a nightmare! I thought filing a UCC-1 was enough but apparently there's all these other requirements. What happens if you don't achieve perfection properly?? Does the whole security interest just disappear?
0 coins
Amelia Martinez
•You don't lose the security interest completely, but you lose priority to other creditors. An unperfected security interest is still valid between you and the debtor.
0 coins
Zoe Gonzalez
•Oh thank god, I was picturing total disaster. But losing priority sounds pretty bad too for a lender.
0 coins
Ashley Adams
The fixture issue is huge for equipment financing. I've seen deals where lenders thought they had perfected personal property security interests but the equipment qualified as fixtures and they should have filed fixture filings in the real estate records. Totally different perfection method.
0 coins
Ethan Clark
•How do you even tell if something is a fixture? Is there like a test or something?
0 coins
Ashley Adams
•Usually courts look at intention, method of attachment, and whether removal would damage the real property. Very fact-specific analysis.
0 coins
Alexis Robinson
•This is why we always get title insurance when we're dealing with potentially fixture-y equipment.
0 coins
Aaron Lee
For mixed collateral like you mentioned, make sure your UCC-1 collateral description covers everything properly. Can't perfect a security interest in collateral that's not described. Also consider whether you need to file in multiple states if the debtor has locations everywhere.
0 coins
Jacob Lewis
•Multi-state filing is another headache we're dealing with. Some of our borrowers have equipment in 3-4 states.
0 coins
Chloe Mitchell
•File where the debtor is located for most personal property. But fixtures and some other special cases have different location rules.
0 coins
Michael Adams
Article 9 perfection also depends on possession for some collateral types. Instruments, chattel paper, stuff like that might require physical possession instead of just filing. Equipment is usually fine with just UCC-1 filing though.
0 coins
Natalie Wang
•Possession is such an old-school way to perfect but still required for some things. Makes sense for bearer instruments I guess.
0 coins
Michael Adams
•Yeah possession perfection is mostly for stuff where filing doesn't make sense. Equipment financing rarely involves possession perfection.
0 coins
Noah Torres
ran into perfection issues last year when our UCC-1 got rejected for a tiny debtor name error. whole security interest was hanging in limbo until we could file an amendment. definitely recommend double checking everything before filing
0 coins
Samantha Hall
•Those debtor name rejections are the worst! SOS offices are so picky about exact matches.
0 coins
Lucas Adams
•This is exactly why I started using that Certana tool I mentioned earlier. Upload your docs and it catches those name mismatches before you file.
0 coins
Ryan Young
Don't forget about continuation filings for maintaining perfection! Article 9 security interests lapse after 5 years unless you file UCC-3 continuations. I've seen lenders lose perfection because they missed the continuation deadline.
0 coins
Sophia Clark
•5 year rule is so easy to forget when you're dealing with longer term equipment loans.
0 coins
Jacob Lewis
•We have a tickler system for continuations but always worried we'll miss one. The consequences of losing perfection are just too severe.
0 coins
Katherine Harris
•Can you file continuation early or do you have to wait until close to the 5 year mark?
0 coins
Ryan Young
•You can file continuation within 6 months before the lapse date. Earlier than that and it's ineffective.
0 coins
Madison Allen
Article 9 security interest perfection seems simple until you actually start doing it. Between debtor name requirements, collateral descriptions, fixture issues, and multi-state complications, there's so many ways to mess it up. At least once you get perfection right, you're generally in good shape priority-wise.
0 coins
Jacob Lewis
•Thanks everyone for all the insights. Sounds like we're on the right track but definitely need to be more careful about the fixture analysis and make sure our collateral descriptions are bulletproof.
0 coins
Joshua Wood
•Good luck with your perfection issues! Article 9 is complicated but at least it's mostly standardized across states.
0 coins
Isabella Silva
As someone new to equipment financing, this thread has been incredibly helpful! I'm just starting to understand UCC Article 9 perfection requirements and had no idea about the fixture vs personal property distinction. It sounds like the key issues to watch for are: 1) proper debtor names on UCC-1 filings, 2) adequate collateral descriptions that cover everything, 3) fixture analysis for permanently attached equipment, 4) PMSI timing requirements (20 days), and 5) continuation filings every 5 years. The mention of automated tools like Certana for document checking is intriguing - seems like it could help catch those costly technical errors before they become problems. Thanks for sharing all this practical knowledge!
0 coins
Maya Diaz
•Welcome to the UCC perfection nightmare club! You've got a great summary of the key issues. One thing I'd add as a fellow newcomer who learned this the hard way - don't forget about the different state filing requirements if your borrowers operate across state lines. Even with the same UCC system, each state can have slightly different requirements for things like corporate suffixes or LLC designations in debtor names. Also worth noting that while Certana sounds useful for catching document mismatches, you'll still need good legal counsel for the fixture analysis since that's such a fact-specific determination. The 20-day PMSI window is absolutely critical - I've seen deals lose their super-priority status because someone was a day late with the filing!
0 coins