UCC Security Agreement Requirements - What Must Be Included Besides Pledges?

This is exactly right. I'd emphasize that the collateral description doesn't have to be super detailed, but it has to be sufficient to reasonably identify the property. 'All equipment' is usually fine, but 'all assets' might be too broad depending on your state.

The signature requirement trips people up sometimes. Electronic signatures are generally fine, but make sure you have proper authentication if you're going that route.

That's a perfect example of why consistency is so important. The exact legal name has to match across all documents.

That's exactly the kind of mistake I'm trying to avoid! Did you have to refile everything or were you able to amend?

We had to do a new UCC-1 filing with the correct name. Expensive lesson but now I triple-check everything before filing.

That sounds really useful. How does it handle variations in collateral descriptions between the two documents?

It flags potential inconsistencies and shows you exactly where the descriptions might not align. For example, if your security agreement says 'manufacturing equipment' but your UCC-1 says 'machinery,' it'll highlight that for review.

Good point. Standard language like 'all equipment now owned or hereafter acquired' covers this nicely.

Just be careful with consumer goods - the after-acquired property rules are more restrictive there.

The UCC is pretty flexible on this. Generic descriptions like 'equipment' or 'inventory' are usually sufficient. You don't need serial numbers or detailed specifications.

The test is whether someone reading the description could reasonably determine what property is covered. 'Equipment located at 123 Main Street' is better than just 'equipment' but both might work.

That makes sense. So it's more about being clear enough to avoid confusion rather than being exhaustively detailed.

What's an example of language that clearly grants the security interest?

Something like 'Debtor hereby grants to Secured Party a security interest in the following collateral...' or 'As security for the obligations, Debtor grants a security interest in...' The key is being explicit about the grant.

Right, the security agreement creates the security interest, but you need the UCC-1 filing to perfect it and get priority over other creditors.

exactly - ive seen lenders think they were protected just because they had a security agreement but they never filed the ucc-1

General references like 'all obligations now or hereafter owing' are typically fine. You don't need to list every specific debt or obligation.

Just make sure the language is broad enough to cover future advances if that's what you intend. Future advance clauses can be really important for revolving credit facilities.

Good point. This is just equipment and inventory, so regular UCC-1 should be sufficient.

Perfect. Equipment and inventory are straightforward - just make sure you get those names right!

Thanks for the additional endorsement. It sounds like this kind of document checking is becoming pretty standard practice.

Given how picky the filing systems are getting, having an automated check makes a lot of sense. Manual review can miss these tiny details.

Perfect summary. This has been incredibly helpful. I feel much more confident about drafting our security agreement now.

Glad we could help! Remember to double-check everything before filing that UCC-1.

That's a really important point about proceeds! I hadn't thought about how the collateral can change form - like when inventory gets sold and becomes accounts receivable. Does the proceeds clause need specific language, or is the general "all proceeds" wording you mentioned typically sufficient for most situations?

The general "all proceeds" language is usually sufficient, but I like to be more specific when possible. Something like "all proceeds of the collateral, including but not limited to cash, accounts, chattel paper, instruments, and general intangibles" covers more bases. The UCC automatically gives you proceeds coverage to some extent, but explicit language in your security agreement makes your intent crystal clear and can help avoid disputes later.