UCC Definition Confusion - Which Assets Don't Qualify as Goods for Filing?

Right, and don't forget about fixtures - they start as goods but can become real estate depending on how they're attached. Always a fun conversation with borrowers who don't understand why their HVAC system might need a fixture filing.

This is exactly why I always over-describe in the collateral schedule. Better to be comprehensive than miss something that should have been included.

The borrower has some software licenses, patent applications, and customer lists mixed in with their equipment and inventory. I know the intangibles aren't goods, but wanted to double-check my thinking.

Yeah, software licenses and patents are definitely general intangibles, customer lists too. Make sure your UCC-1 covers both goods and general intangibles if you need both categories.

Been there! I had a deal where we missed the general intangibles classification and had to file an amendment. Client was not happy about the delay.

That sounds helpful - does it actually understand the UCC definitions well enough to catch classification mistakes?

It's pretty good at spotting when your collateral description mentions items that don't match your classification. Like if you describe software but only check 'goods' it'll flag the mismatch.

Interesting, I hadn't heard of automated UCC checking tools. Might be worth trying given how many amendment filings we do to fix initial mistakes.

This is way too simplified. What about things like standing timber or oil and gas rights? There's definitely more nuance than just 'can you touch it.

Fair point on oil and gas, but for most commercial lending those specialty situations don't come up often. OP sounds like they're dealing with a typical business loan package.

Good point about money. I've seen people get confused about cash deposits - those are deposit accounts, not goods, even though the physical currency would technically be goods.

What about cryptocurrency? I know it's not physical but some people treat it like digital cash...

Crypto would be general intangibles. It's not tangible so definitely not goods, and it's not one of the other specific categories like accounts or deposit accounts.

Tell me about it. Had a client insist their customer database was 'inventory' because it was valuable. Try explaining general intangibles to someone who just wants everything to be simple.

At least trademarks and databases are clearly intangible. The really fun ones are when you have mixed media or digital products that exist both physically and electronically.

It's a manufacturing company so mostly standard equipment and inventory, but they also have some specialized machinery that's bolted down and some licensing agreements.

Bolted down equipment could go either way - depends on intent and method of attachment. You might need fixture filings for some of it. The licenses are definitely general intangibles though.

For manufacturing equipment, I'd suggest doing a walkthrough with the borrower to assess each piece individually. Something like a conveyor system that's integrated into the building structure would likely need a fixture filing, while standalone machines that are just bolted for stability usually stay as goods. The key test is whether removal would damage the real estate or if the equipment was specifically manufactured for that location.

Good reminder about consumer goods vs equipment. Same UCC rules apply but different priority analysis if there's a dispute later.

I always have to look up the chattel paper definition. It's like the forgotten stepchild of UCC collateral types.

Chattel paper is basically a document that shows both a monetary obligation AND a security interest in goods. Think car loan documents - the paper itself becomes collateral separate from the underlying goods.

NFTs would almost certainly be general intangibles. They're not tangible and they don't fit the other specific UCC categories. Treat them like any other IP or digital asset.

We had this exact question come up and decided to classify them as general intangibles. Better safe than sorry with new asset types.

Do tools like that actually understand UCC Article 9 well enough to be reliable? I'm always nervous about automated legal analysis.

It's not doing legal analysis per se, more like document consistency checking. But it does flag potential classification mismatches which is where a lot of UCC errors happen.

That's the practical approach but you still need to get the UCC-1 classification boxes right. Can't just check 'all of the above' and hope for the best.

True, but a comprehensive collateral description covers you better than trying to get too cute with narrow categories and missing something important.