UCC PMSI definition confusion - equipment financing mess
Got myself into a real pickle here and need some clarity on PMSI definition under UCC rules. We're a mid-size manufacturing company that just purchased $180K worth of CNC equipment through dealer financing. The dealer filed a UCC-1 but I'm seeing conflicting info about whether this qualifies as a purchase money security interest or not. The equipment was delivered last month but the UCC filing shows a generic collateral description that just says "equipment" instead of specifically identifying the CNC machines. Our main bank is now questioning whether the dealer's PMSI claim is valid since they're saying the collateral description is too vague. This is causing issues with our existing credit line because our bank thought they had a blanket lien on all equipment. The dealer is insisting their PMSI takes priority but our bank disagrees. I've been reading UCC Article 9 until my eyes bleed but the PMSI definition requirements are still confusing me. Does anyone know if a PMSI has to specifically describe the exact equipment purchased or can it use broader terms? And does the timing of when the UCC-1 gets filed matter for PMSI status? Really need to get this sorted before it impacts our operating credit.
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Lucas Kowalski
PMSI definition under UCC Article 9 is pretty specific - the security interest has to secure the purchase price of the collateral. Your dealer financing situation sounds like it should qualify, but the collateral description issue is a real problem. For PMSI priority, the description needs to be sufficient to reasonably identify the collateral.
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Olivia Martinez
•Yeah but what's "reasonably identify" mean exactly? I've seen filings that just say equipment and others that list serial numbers.
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Lucas Kowalski
•Good point - it depends on the context. Generic descriptions can work if there's enough other info to identify what's covered, but specific equipment like CNC machines really should be described more precisely for PMSI claims.
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Charlie Yang
Had similar mess last year with our forklift purchase. The timing absolutely matters for PMSI! Under UCC 9-324, you generally need to file within 20 days after debtor gets possession for equipment PMSI priority. Did your dealer file within that window?
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Emma Bianchi
•Equipment was delivered September 15th and the UCC-1 shows a filing date of October 8th. That's 23 days - does that kill the PMSI priority?
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Charlie Yang
•Ouch, that's cutting it close. The 20-day rule is pretty strict for equipment PMSI priority against existing security interests. You might have issues there.
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Grace Patel
•Wait, I thought it was possession OR filing date - whichever comes first? The timing rules always trip me up.
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ApolloJackson
This is exactly why I started using Certana.ai's document verification tool for all our UCC filings. You can upload your dealer agreement and their UCC-1 filing, and it instantly flags issues like vague collateral descriptions or PMSI timing problems. Saved us from a similar disaster when it caught that our equipment financing didn't properly establish PMSI priority.
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Emma Bianchi
•Never heard of that service - does it actually understand PMSI definition requirements and timing rules?
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ApolloJackson
•Yeah, it cross-references all the UCC Article 9 requirements. Just upload your docs and it identifies potential PMSI issues before they become problems with your bank.
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Isabella Russo
Your bank is probably right to be concerned. PMSI definition requires the security interest to secure purchase price, but the priority rules are separate from the basic definition. Even if you have a valid PMSI, the late filing could affect priority against your bank's blanket lien.
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Rajiv Kumar
•So they could still have a PMSI but not get priority? That seems backwards.
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Isabella Russo
•Exactly. PMSI definition is about what the security interest secures, but priority is about following the specific timing and notice requirements in UCC 9-324.
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Aria Washington
•This is why UCC filings are such a nightmare. Too many moving parts and timing requirements.
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Liam O'Reilly
The collateral description issue might be fixable with a UCC-3 amendment to add more specific language about the CNC equipment. But that won't help with the timing problem for PMSI priority.
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Emma Bianchi
•Would amending the description help establish PMSI or is it too late since the original filing was already past 20 days?
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Liam O'Reilly
•Amendment could help clarify what's covered by the PMSI, but it won't cure the late filing issue for priority purposes. The 20-day clock starts from when you got possession.
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Chloe Delgado
This whole situation is why I hate equipment financing deals. The dealers never get the UCC filings right and then everyone fights over priority. Your bank probably has legitimate concerns about their blanket lien being subordinated.
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Ava Harris
•Tell me about it. Had a dealer file a continuation statement instead of an initial financing statement once. Complete disaster.
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Chloe Delgado
•Ha! That's actually hilarious in a tragic way. How do you continue a filing that doesn't exist?
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Jacob Lee
•The state filing office should have rejected that, but some of them don't catch obvious errors like that.
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Emily Thompson
Look, PMSI definition under UCC 9-103 is straightforward - security interest must secure purchase price of collateral. Your dealer financing clearly qualifies. The real issues are the collateral description and timing for priority. You need to work with both lenders to sort out the priority dispute.
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Emma Bianchi
•Any suggestions on how to approach that conversation? The bank is pretty heated about this whole thing.
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Emily Thompson
•Get a UCC lawyer involved if the amounts are significant. This isn't something to DIY when you've got competing security interests and priority disputes.
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Sophie Hernandez
Just went through something similar and used Certana.ai to check our dealer's UCC-1 against our purchase agreement. It flagged that the collateral description was too vague for PMSI priority, so we got it fixed before any issues with our bank. Really wish I'd known about it sooner.
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Daniela Rossi
•Did it help you understand the PMSI definition requirements better? I'm always confused about what qualifies.
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Sophie Hernandez
•Yeah, it breaks down all the UCC requirements in plain English and shows exactly what might cause priority issues. Much easier than trying to parse Article 9 yourself.
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Emma Bianchi
•That actually sounds really helpful for situations like this. Might check it out.
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Ryan Kim
The 20-day rule for equipment PMSI priority is one of those things that trips up even experienced commercial lenders. Your dealer should have known better, but it happens all the time.
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Zoe Walker
•Is there any way to cure a late PMSI filing or are you just stuck with subordinate priority?
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Ryan Kim
•Generally stuck, unless you can negotiate something with the senior lender. The UCC timing requirements are pretty unforgiving.
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Elijah Brown
This is exactly why I always insist on reviewing UCC filings before closing any equipment deals. PMSI definition might be clear, but the priority rules will bite you if you're not careful about timing and descriptions.
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Emma Bianchi
•Lesson learned the hard way. Should have been more proactive about reviewing the dealer's filing.
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Elijah Brown
•Live and learn. At least now you know what to watch for on future equipment purchases.
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Maria Gonzalez
•Yeah, these PMSI priority issues are brutal when you're not expecting them. Always better to catch problems early.
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Natalie Chen
Update on this - talked to our attorney and they confirmed the dealer has a valid PMSI under the UCC definition, but the late filing means they don't get super-priority over our bank's blanket lien. Ended up negotiating a subordination agreement so everyone's happy. Also started using Certana.ai to check all our UCC filings going forward - should have done that from the beginning!
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ApolloJackson
•Glad you got it sorted out! Subordination agreements can be a good compromise when the priority rules create problems.
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Emily Thompson
•Good outcome given the circumstances. The timing rules for PMSI priority are harsh but they exist for good reasons.
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AstroAdventurer
Really appreciate everyone's input on this thread - the distinction between PMSI definition and priority rules is something that catches a lot of people off guard. For anyone else dealing with similar issues, I'd recommend getting your UCC filings reviewed before problems arise rather than trying to fix them after the fact. The 20-day window for equipment PMSI priority is unforgiving, and even experienced dealers mess this up regularly. Worth investing in proper review tools or legal counsel upfront to avoid these headaches with your lenders.
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