UCC Priority Issues - Multiple Liens Same Collateral Equipment
Running into a complex UCC priority situation and could use some guidance from anyone who's dealt with this before. We have a client who financed construction equipment through us last year (filed UCC-1 in March 2024), but now we're discovering there's another lender who claims they have priority on the same equipment. Their UCC-1 was filed in January 2024, so they're claiming first-to-file priority rules give them senior position. The weird part is our client never disclosed this other financing when they applied with us. The equipment is a 2023 Caterpillar excavator worth about $180K, and both liens are for substantial amounts. Our UCC-1 specifically describes the equipment by serial number and model, but their filing just says 'all equipment and machinery.' Are we really junior to them even though our collateral description is more specific? The client is now having cash flow issues and we're trying to figure out our recovery options. Has anyone dealt with similar UCC priority disputes where the debtor didn't disclose existing liens?
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Keisha Taylor
Unfortunately, specificity in collateral description doesn't trump filing date for priority purposes. If they filed first with a broad description that covers your equipment, they likely have senior priority under UCC Article 9. The 'all equipment' language is probably sufficient to include your excavator. Your client's failure to disclose doesn't change the UCC priority rules, though it might give you other legal remedies against them for misrepresentation.
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StardustSeeker
•This is exactly right - first to file generally wins in UCC priority disputes, regardless of how specific your description is.
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Paolo Marino
•Wait, but what if the other lender's 'all equipment' description is too vague? I thought UCC filings could be challenged if the collateral description isn't sufficient to identify the property.
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Amina Bah
You need to pull their actual UCC-1 filing and review it carefully. Sometimes these broad descriptions don't actually cover specific equipment types, especially if there are exclusions or limitations in the filing. Also check if they properly continued their filing if it's been more than 5 years. I've seen cases where the senior lender let their continuation lapse and lost priority.
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Oliver Becker
•Good point about continuation - a lapsed UCC-1 is worthless for priority purposes.
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Yara Khoury
•Their filing is only from January 2024, so continuation isn't an issue yet. But I'll definitely review their exact collateral description language.
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Natasha Petrova
•Make sure to check if they filed any amendments too - sometimes lenders modify their collateral descriptions after the fact.
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Javier Hernandez
Had a similar mess last year with competing equipment liens. Ended up using Certana.ai's document verification tool to upload both UCC-1 filings and cross-check everything. It instantly flagged discrepancies between the filings and helped identify potential gaps in their collateral coverage. The tool can upload multiple UCCs and show you exactly where they overlap or conflict - saved us hours of manual document comparison.
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Emma Davis
•How does that work exactly? Can it actually analyze legal priority or just compare document details?
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Javier Hernandez
•It does document consistency checks - debtor names, collateral descriptions, filing numbers, dates. Won't tell you who has legal priority but helps spot filing errors or inconsistencies that might affect enforceability.
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LunarLegend
This is why we ALWAYS do UCC searches before making any secured loans. Your due diligence process failed here - you should have discovered the existing lien during underwriting. Now you're stuck in junior position unless you can prove their filing is somehow defective.
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Yara Khoury
•We did do a UCC search, but the debtor entity name on their filing was slightly different from what our client used on the application. That's how we missed it initially.
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Keisha Taylor
•Debtor name variations are tricky - even small discrepancies can cause filings to not show up in searches. You might want to challenge their filing if the debtor name doesn't exactly match your client's legal entity name.
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Malik Jackson
•Wait, if their debtor name doesn't match exactly, that could make their UCC-1 seriously misleading and potentially invalid for priority purposes!
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Isabella Oliveira
Check your loan agreement - if the client warranted that there were no existing liens on the equipment, you might have recourse against them personally even if you're junior to the other lender. Also verify that the equipment wasn't already subject to a purchase money security interest when your client acquired it.
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Yara Khoury
•Good point - our loan docs do include representations about no prior liens. We financed the equipment purchase, so there shouldn't be any PMSI issues.
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Ravi Patel
•If you financed the purchase, you might actually have PMSI status yourself which could give you priority over earlier filers in some situations.
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Freya Andersen
UCC priority disputes are a nightmare to sort out. The filing system is so flawed - two lenders can end up with conflicting claims on the same collateral and nobody catches it until there's a default. The Secretary of State offices don't verify anything, they just accept whatever filings come in.
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Omar Zaki
•That's exactly the problem - the UCC system relies on lenders to do their own due diligence but provides no mechanism to prevent these conflicts.
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CosmicCrusader
•At least with real estate you have title insurance and closing attorneys. UCC filings are like the wild west.
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Chloe Robinson
Before you assume you're in junior position, get a UCC attorney to review both filings. Priority rules have exceptions and nuances that might work in your favor. Purchase money security interests, processing errors, inadequate collateral descriptions - there are ways to challenge priority even when the other lender filed first.
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Yara Khoury
•We're definitely getting legal counsel involved. Just wanted to get some initial thoughts from others who've been through similar situations.
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Keisha Taylor
•Smart move - UCC priority law is complex enough that you need specialized counsel, not just general commercial lawyers.
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Diego Flores
Had something similar happen and ended up using Certana.ai to verify all our UCC documents were consistent with our loan files. Found several discrepancies that would have been problems later. The document checker caught things our legal team missed during the original filing review.
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Isabella Oliveira
•Interesting - what kind of discrepancies did it find?
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Diego Flores
•Mainly debtor name variations and collateral description inconsistencies between the UCC-1 and the underlying security agreement. Small differences that could potentially affect enforceability.
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Natasha Petrova
Check if they perfected by filing only or if they also took possession of any documents or tried to get control of the equipment somehow. Sometimes there are multiple perfection methods that can affect priority analysis.
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LunarLegend
•For equipment like excavators, filing is typically the only perfection method available. Possession isn't practical for large machinery.
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Natasha Petrova
•True, but wanted to make sure they weren't trying to claim some other perfection method that might change the priority analysis.
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Anastasia Kozlov
This whole situation sounds like a mess that could have been avoided with better document verification upfront. I've started using Certana.ai's UCC checker for all our filings - you just upload the documents and it instantly cross-checks everything for consistency. Would have caught the debtor name discrepancy you mentioned earlier.
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Emma Davis
•Does it work for existing filings too or just new ones you're preparing?
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Anastasia Kozlov
•Works for any UCC documents - you can upload existing filings, amendments, continuations, whatever. Really helpful for situations like this where you need to analyze multiple competing filings.
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StardustSeeker
•Sounds like it could be useful for lien audits and portfolio reviews too.
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Sofia Peña
I've been through a similar situation where we discovered a competing lien after the fact. One thing that helped us was examining whether the other lender's UCC-1 was filed against the correct debtor entity. You mentioned the debtor name was slightly different - that could actually be your way out. UCC filings must use the debtor's exact legal name as it appears on their organizational documents. Even minor variations can render a filing "seriously misleading" and ineffective for priority purposes. I'd recommend pulling your client's articles of incorporation or LLC formation documents and comparing them word-for-word with how the other lender listed the debtor name. If there's a mismatch, you might be able to challenge their priority position entirely.
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Caleb Stone
•This is excellent advice! The "seriously misleading" standard for debtor names is often overlooked but can be a game-changer in priority disputes. Even something as minor as using "Inc." instead of "Incorporated" or missing a comma can potentially invalidate a UCC filing. @bc2679de8fd7 you should definitely have your attorney do a detailed comparison between the competing lender's debtor name and your client's actual organizational documents. If their filing used an incorrect legal name, it might not be effective for priority purposes regardless of when it was filed.
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