UCC Filing Issues with Property Offered as Security for Loan Agreement

That makes sense. Should we also include serial numbers or model info for the major pieces?

Serial numbers aren't required for UCC filings but they don't hurt. Focus on being descriptive enough that a third party could identify what you're claiming as collateral.

Interesting point about conditional language. We were trying to be specific but maybe we were actually being too restrictive?

Exactly. You want to cast a wide net with your description while still being reasonable. The UCC doesn't require you to limit collateral to only equipment "used for" specific purposes.

This is why I always keep my descriptions broad. "All equipment" usually works fine if you add the location.

Never heard of that tool. Does it actually compare the loan docs to the UCC filing?

Yeah, you just upload PDFs of both documents and it flags any mismatches in debtor names, collateral descriptions, and other key details. Saved me probably 2-3 weeks of back and forth with the filing office.

That sounds too good to be true but honestly anything that prevents rejections is worth trying at this point.

Good catch. Our loan agreement does cover some installed equipment that might be considered fixtures, but you're right that it complicates things.

If you do have fixture collateral, you might need a fixture filing instead of or in addition to the regular UCC-1. That's a whole different set of requirements.

Fixture filings are such a pain. The recording requirements vary by county and half the time you need to file in real estate records too.

The SOS offices have gotten so picky lately. Used to be you could file "all assets" and they'd accept it.

Right? Now they want you to be a mind reader. How am I supposed to know what level of detail they want if they won't tell me?

The revised Article 9 guidance from a few years ago made them stricter about "all assets" descriptions. They want reasonable identification of collateral types now.

This is really helpful. Should I also mention that it includes after-acquired equipment?

Only if your loan agreement actually covers after-acquired property. Don't claim broader collateral than you actually have rights to.

After-acquired clauses can get complicated depending on the state. Make sure your loan docs support whatever you claim in the UCC.

Debtor is a local LLC organized in the same state where the equipment is located, so that shouldn't be the issue.

Good, just wanted to make sure. I've seen people struggle with filings for weeks only to discover they were in the wrong jurisdiction.

That's exactly what I'm worried about. The loan docs reference the UCC filing and if we can't get it perfected, the whole deal could fall through.

Might be worth calling the SOS office directly to see if they can give you more specific guidance on what they want to see in the collateral description.

Some offices will do that but others just refer you back to the rejection notice. Hit or miss depending on who you get on the phone.

Ok you're the second person to mention this. How long does the verification take?

Pretty much instant. You upload the PDFs and it shows you a comparison report highlighting any inconsistencies. Way faster than manual review.

Might be worth a shot before filing attempt number four. At least you'd know if there are obvious problems.

That's a really good point. I should probably compare our draft UCC to the actual loan language word for word.

Exactly. The UCC description should be broad enough to be effective but consistent enough with your loan docs that there's no question about what collateral you're claiming.

This is exactly what the Certana tool helps with - it flags those kinds of inconsistencies automatically so you don't have to do the line-by-line comparison manually.

Great news! Glad the specific categories approach worked out.

Awesome that the document verification caught the issues before you filed again. That tool has been a lifesaver for me.

Perfect timing with your closing next week. Nothing worse than UCC filing delays holding up a loan closing.

This gives me hope for my inventory filing. Going to try the specific categories approach too.