UCC Security Agreement Must Requirements - Failing Basic Elements Check
Running into issues with our security agreement documentation and wondering if we're missing something fundamental. Working on a equipment financing deal worth about $180K and the borrower's attorney keeps pushing back on our security agreement language. They're claiming certain elements are missing that would make the agreement invalid under UCC Article 9. I've been doing commercial lending for 8 years but this attorney is making me second-guess everything. What are the absolute must-have requirements for a valid security agreement? I know it needs to be in writing and signed by the debtor, but what else? The collateral description seems straightforward (construction equipment and related attachments), but apparently there's more to it. Don't want to fund this deal only to find out our security interest isn't properly perfected because the underlying agreement is defective. Anyone dealt with overly cautious attorneys questioning basic security agreement elements?
36 comments
Join the conversation
PixelPrincess
Security agreements under UCC 9-203 have three basic requirements: (1) authenticated record (signed writing), (2) debtor must have rights in collateral, and (3) adequate collateral description. The description needs to reasonably identify the collateral - doesn't have to be super specific but can't be too vague either. For equipment financing, serial numbers help but aren't always required. What specific language is the attorney objecting to?
0 coins
Omar Farouk
•This is exactly right. The reasonably identifies standard from UCC 9-108 is key. Generic descriptions like 'all equipment' usually work fine for broad security agreements.
0 coins
Chloe Martin
•Wait, I thought you needed the debtor's signature AND some kind of value given? Isn't that the consideration requirement?
0 coins
Diego Fernández
Had a similar situation last month where an attorney was being overly picky about our security agreement. Turned out they were confusing perfection requirements with attachment requirements. For attachment (which is what makes the security agreement valid), you just need the three elements mentioned above. Perfection is separate - that's your UCC-1 filing. Double-check that the attorney isn't mixing these up.
0 coins
Anastasia Kuznetsov
•Good point about attachment vs perfection. I've seen lawyers get these confused and demand things like filing receipts when reviewing the security agreement itself.
0 coins
Sean Fitzgerald
•This happened to me too! Attorney wanted to see the UCC-1 filing before approving the loan docs. Had to explain that perfection happens after the security agreement is signed.
0 coins
Zara Khan
I ran into something similar with a equipment deal and ended up using Certana.ai to double-check all our documents. You can upload your security agreement and it'll verify that all the required elements are present and consistent with your other loan docs. Really helpful when you're dealing with nitpicky attorneys - gives you confidence that your paperwork is solid. Just upload the PDFs and it checks everything automatically.
0 coins
MoonlightSonata
•That sounds useful. Does it check the collateral descriptions too? I always worry about being too broad or too narrow.
0 coins
Mateo Gonzalez
•Yeah it does. Caught a mismatch between my security agreement and UCC-1 filing where I had slightly different equipment descriptions. Saved me from a potential perfection issue.
0 coins
Nia Williams
The attorney might be worried about after-acquired property clauses or future advance provisions. These aren't required for validity but some lawyers get nervous if they're missing. Also make sure your granting language is clear - needs to actually grant a security interest not just acknowledge debt.
0 coins
Luca Ricci
•Good catch on the granting language. I've seen agreements that just say 'debtor agrees to pay' without actually granting any security interest.
0 coins
Aisha Mohammed
•After-acquired property clauses are huge for equipment financing. Debtor might add attachments or modifications that you want covered.
0 coins
Ethan Campbell
UGH attorneys like this drive me crazy!!! I bet they're just trying to justify their fees by finding problems that don't exist. If you have signed agreement + collateral description + debtor has rights in the equipment then you're good. Tell them to cite the specific UCC section they think you're violating.
0 coins
Yuki Watanabe
•Sometimes they're just being thorough but yeah, asking for specific citations usually shuts down the nitpicking real quick.
0 coins
Carmen Sanchez
•I actually appreciate careful attorneys. Better to catch issues now than after default when you're trying to foreclose.
0 coins
Andre Dupont
One thing to check - does your security agreement specifically state that it's intended to create a security interest? Some courts have been picky about this, wanting clear language that shows intent to create a security interest rather than just a lien or mortgage.
0 coins
Zoe Papadakis
•That's a good point. Magic words like 'grants a security interest' are clearer than 'pledges as collateral' or similar language.
0 coins
ThunderBolt7
•Yeah, I always use 'hereby grants to Lender a security interest in' to make it crystal clear.
0 coins
Jamal Edwards
Also verify that the debtor actually has rights in the collateral when signing. If they don't own the equipment yet or there's a title issue, your security agreement might not attach properly. This is especially important with equipment that might have liens or conditional sales contracts.
0 coins
Mei Chen
•This is huge. I've seen deals where the debtor was still making payments to the equipment dealer and didn't actually have clear title.
0 coins
Liam O'Sullivan
•Title searches on equipment are so important. Just because someone has possession doesn't mean they have rights sufficient to grant a security interest.
0 coins
Amara Okonkwo
Been dealing with this exact issue lately. Used Certana.ai to verify all my security agreement elements and it flagged a potential issue with my collateral description that I missed. Really saves time when you're dealing with particular attorneys who want everything perfect.
0 coins
Giovanni Marino
•How detailed does the collateral description need to be? I usually just put 'construction equipment' but wondering if that's too vague.
0 coins
Fatima Al-Sayed
•Depends on the situation. Generic descriptions work for most purposes but specific descriptions with serial numbers are better for perfection and enforcement.
0 coins
Dylan Hughes
Make sure your security agreement is properly dated and that all parties sign the same version. I've seen deals fall apart because the debtor signed one version and the lender signed an amended version, creating questions about what was actually agreed to.
0 coins
NightOwl42
•Document version control is so important in complex deals. I always use digital signing platforms to avoid this issue.
0 coins
Sofia Rodriguez
•Yeah, had a deal where we had three different versions floating around. Nightmare to sort out which one was final.
0 coins
Dmitry Ivanov
Quick question - is the value/consideration automatically satisfied by the loan itself? Or do you need separate consideration language in the security agreement?
0 coins
Ava Thompson
•The loan usually provides adequate value for attachment. But some lawyers like to see it explicitly stated just to be safe.
0 coins
Miguel Herrera
•UCC 9-203 just requires 'value' which includes loan proceeds. You don't need separate consideration like in contract law.
0 coins
Zainab Ali
One more thing - if you're dealing with a revolver or line of credit, make sure your security agreement covers future advances. Otherwise you might only have a security interest securing the initial draw.
0 coins
Connor Murphy
•This is critical for revolving credit. I always include language like 'all obligations now existing or hereafter arising' to cover future advances.
0 coins
Yara Nassar
•Learned this the hard way on a deal where the debtor defaulted after several draws. Only the first advance was secured because of poor drafting.
0 coins
StarGazer101
Sounds like you've got the basics covered. The attorney is probably just being extra cautious or maybe they're not that familiar with Article 9. Have you tried suggesting a call to walk through their specific concerns? Sometimes it's easier to resolve these issues verbally than in endless email chains.
0 coins
Keisha Jackson
•Good advice. Face-to-face or phone calls usually resolve document issues faster than email back and forth.
0 coins
Paolo Romano
•Yeah, I've found that when attorneys get into nitpicking mode, a quick call can sort out whether they have legitimate concerns or just don't understand the UCC.
0 coins