UCC Filing Requirements for Credit and Security Agreement - Missing Something?

That's reassuring, but won't that create issues if there's ever a dispute about what's covered? The credit and security agreement is so specific about the equipment.

The credit and security agreement controls what you can actually take as collateral. The UCC-1 just needs to give notice to other creditors about the types of collateral that might be covered. Think of it as a warning sign rather than a detailed inventory.

This is exactly right. I've seen too many UCC-1s get rejected because someone tried to list every piece of equipment and made a typo in a serial number.

Good point about rejection risk. I was overthinking this because the credit and security agreement took forever to negotiate all those specific items.

Did you have any pushback from the borrower about the broader UCC language versus the specific credit and security agreement terms?

Not really. Most borrowers understand that UCC filings are public notices. They don't want their entire equipment list published anyway.

That's a good point about privacy. The credit and security agreement stays private but the UCC-1 is searchable by anyone.

Interesting, does it specifically check the relationship between credit and security agreement terms and UCC descriptions?

Yeah, it looks at document consistency across the whole loan package. I've caught several debtor name mismatches that way - like when the credit and security agreement uses the full corporate name but someone abbreviated it on the UCC-1.

It's not really different - they serve different purposes. The credit and security agreement creates your security interest, the UCC-1 just gives public notice about it.

ok but what if someone searches the UCC records and sees "all equipment" but my credit and security agreement only covers specific machines? Are they going to think I have a lien on stuff I don't actually have rights to?

That's why anyone doing due diligence would request copies of the actual credit and security agreement. The UCC-1 is just the starting point for their investigation.

That's a great point about after-acquired property. Our credit and security agreement has an after-acquired property clause, so the broader UCC description would cover that automatically.

Exactly. And you don't have to amend your UCC-1 every time they buy a new piece of equipment, as long as it falls within your broad collateral description.

That's a common misconception. The UCC-1 just needs to reasonably describe the collateral covered by your security agreement. It doesn't need to be identical.

Mind blown. I've been making this way harder than it needs to be. No wonder our UCC-1s are always three pages long.

Three pages?! That's definitely overkill. Most of mine are maybe half a page for the collateral description, even on big deals.

Thanks everyone. Sounds like I was overthinking this. Going with the broader description makes sense.

You'll sleep better knowing you have good perfection coverage. The broad description protects you better than trying to list every bolt and screw.

Good reminder. I've been focused on the collateral description but you're right that debtor name consistency is crucial.

That's actually another thing the Certana tool catches - debtor name variations between documents. I've seen UCC-1s get rejected because someone used "Inc." instead of "Incorporated" or missed a comma in the entity name.

Those little details will kill you. I always pull a fresh entity report right before filing to make sure I have the exact legal name.

That's the confirmation I needed. Going to file with "all equipment and inventory" and stop second-guessing myself.

Smart choice. You'll have solid perfection and won't have to worry about amendment filings every time something changes.