UCC collateral categories - confused about fixture filing vs equipment classifications

Good point about the dual filing approach. I've seen lenders get burned when they only filed one way and the collateral didn't fit the category they chose.

Wait, doesn't that mean you have to pay filing fees twice? That seems excessive for the same collateral.

Better to pay twice than lose your security interest entirely. The cost of dual filing is nothing compared to a $485k loss.

That's a really helpful description format. Did you have any issues with the filing being rejected for being too broad?

Nope, it went through fine. The key is being specific about the type of equipment while acknowledging the classification uncertainty.

I like this approach but wouldn't you still need to file in the real estate records for the fixture portion to be properly perfected?

Never heard of that service before. Does it actually understand the nuances between different UCC collateral categories?

Yeah it's pretty sophisticated. It caught that I was mixing personal property and fixture terminology in a way that could create ambiguity. Saved me from a potential perfection issue.

Interesting. I've been doing manual reviews of all my UCC filings but something automated might catch things I miss.

I feel your pain. The fixture filing rules are particularly confusing because you have to file in real estate records in some cases.

EXACTLY! And then you have to worry about whether the real estate filing office even knows what a UCC fixture filing is. Half the time they look at you like you're speaking a foreign language.

The whole system needs an overhaul. Too many overlapping categories and exceptions.

That makes sense. The conveyor system is definitely integrated into their warehouse operations - it's built into the workflow.

You also want to make sure your fixture filing is in the right county where the real estate is located. That's another common mistake.

Good point about the county filing. And don't forget that fixture filings have different continuation requirements than regular UCC filings.

Restaurant equipment is even trickier because you might have inventory (food supplies), equipment (ovens, fryers), and fixtures (built-in dishwashing systems) all in one location.

Exactly! And the lender wants one clean filing that covers everything. It's like trying to fit square pegs in round holes.

For restaurants I usually just describe everything very specifically and let the courts figure out the categories if there's ever a dispute.

Good point - they are leasing the space. Does that change how I should handle the fixture filing?

It might. You'd want to review the lease to see if there are any provisions about tenant improvements or fixtures. Sometimes the landlord has rights to fixtures installed by tenants.

This is getting complicated. Maybe consult with a real estate attorney if there's a lease involved?

That's reassuring to hear from someone with your experience. I was starting to think I was missing something obvious.

Nope, you're not missing anything. These mixed collateral situations are genuinely difficult. Just be thorough and document your reasoning.

15 years and still getting headaches from fixtures? That's not very encouraging for those of us just starting out...

They can be unbolted but it would require some effort and might leave marks on the floor. Not exactly portable but not permanently attached either.

That's probably equipment then, not fixtures. But like others said, dual filing might be the safest approach.

The 'marks on the floor' part might actually push it toward fixture classification. Courts sometimes look at whether removal would damage the real estate.

That sounds useful. I hadn't thought about checking consistency between the UCC filing and the security agreement.

Yeah, it's easy to describe collateral one way in the security agreement and slightly differently in the UCC-1. Those inconsistencies can create problems later if you need to enforce.

Good point about enforcement. Judges don't like it when your UCC filing doesn't match your underlying security documents.

It's packaging equipment for their distribution business, so it's definitely equipment not inventory. But thanks for pointing out that distinction.

Right, but sometimes the line gets blurry. Just wanted to make sure you'd considered all possibilities.

Manufacturing equipment classifications can be tricky. I've seen situations where the same item could be characterized as equipment or inventory depending on the context.

Thanks everyone for all the advice. I think I'm going to go with the dual filing approach and use specific descriptions for each category of equipment.

That sounds like a smart approach. Better safe than sorry with a $485k financing.

Good luck with the filing! Let us know how it goes.