UCC commercial tort claim collateral description - need help with specificity requirements
Been working on a UCC-1 filing for a client who has a pending commercial litigation case against their former business partner. The tort claim involves breach of fiduciary duty and misappropriation of funds - we're looking at potentially $2.8M in damages. My question is about the collateral description for this UCC commercial tort claim. I know you can't just put 'all commercial tort claims' anymore - you need to be more specific. But how specific do we need to get? Do I need to include the case number, court jurisdiction, defendant names? The litigation is still in discovery phase so we don't have a final judgment yet. I've seen some filings that just describe it as 'commercial tort claims arising from breach of fiduciary duty by former business partner' but others get way more detailed. What's the minimum level of specificity that won't get this rejected? Also timing question - client wants to file the UCC-1 now while the case is pending, but I'm wondering if we should wait until we have more concrete info about the claim. Any thoughts on best practices here?
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Kendrick Webb
You definitely want to file sooner rather than later - commercial tort claims can be tricky because they're not 'existing' until there's some legal basis established. Since you're already in discovery, that should be sufficient. For the description, I'd go with something like 'Commercial tort claims against [Defendant Name] arising from breach of fiduciary duty and misappropriation of funds in connection with [brief description of business relationship].' Include the court and case number if you have it filed. The key is making it specific enough that a third party could identify the exact claim you're talking about.
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Hattie Carson
•This is exactly right. I learned this the hard way when a filing got rejected because the description was too vague. The SOS office told me they need enough detail to distinguish it from any other potential tort claims the debtor might have.
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Destiny Bryant
•Wait, do you really need the defendant name in the collateral description? That seems like it could cause privacy issues or tip off the other party to the secured transaction.
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Kendrick Webb
•Good point about privacy concerns, but the UCC filings are public record anyway. The bigger issue is making sure your security interest is properly perfected. If the description is too vague, you might not have a valid security interest at all.
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Dyllan Nantx
I've been dealing with this exact same issue! Had a client with a similar commercial tort situation last month. After going back and forth with different description attempts, I ended up using Certana.ai's document verification tool to cross-check my UCC-1 draft against the loan agreement to make sure the collateral descriptions matched perfectly. It caught an inconsistency where I had described the tort claim differently in the two documents - could have been a disaster if the bank had to enforce later.
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TillyCombatwarrior
•Never heard of that tool before - does it actually work well for commercial tort claim descriptions? Those can be so fact-specific.
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Dyllan Nantx
•Yeah it works great - you just upload your PDFs and it highlights any discrepancies between how you've described the same collateral in different documents. Saved me from a potentially void filing.
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Anna Xian
COMMERCIAL TORT CLAIMS ARE THE WORST. Sorry for caps but seriously, I've had three filings rejected this year because of description issues. The problem is every state seems to have slightly different standards for what constitutes 'sufficient specificity.' Some want the case number, some don't care. Some want the exact legal theories, others just want a general description. It's completely inconsistent and frustrating.
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Jungleboo Soletrain
•Tell me about it. I had one rejected because I didn't include the dollar amount of the claim, then the next one rejected because I DID include the dollar amount and they said it was 'speculative.' Make up your minds!
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Rajan Walker
•Which state are you filing in? That might help narrow down what they're looking for specifically.
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Nadia Zaldivar
From a practical standpoint, I always include: 1) The legal theory (breach of fiduciary duty, fraud, etc.), 2) Brief description of the underlying facts, 3) The defendant if known, 4) Court and case number if filed, 5) Approximate time period when the alleged conduct occurred. This level of detail has never been rejected and gives enough specificity that there's no question what claim you're talking about. Better to over-describe than under-describe with commercial torts.
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Lukas Fitzgerald
•This is good advice. I'd add that you should also consider whether the tort claim might spawn additional related claims - sometimes you want to draft the description broad enough to capture those too.
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Norman Fraser
•Thanks, this is really helpful. So you think including the case number is important? We do have it filed already, just wasn't sure if it was necessary.
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Nadia Zaldivar
•Definitely include the case number if you have it. Makes it crystal clear which specific claim you're referring to, and gives the filing office an easy way to verify the claim exists.
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Ev Luca
One thing to watch out for - make sure your security agreement actually grants a security interest in commercial tort claims specifically. I've seen deals where the loan docs covered 'all accounts and general intangibles' but didn't specifically mention tort claims, which can create problems since tort claims have special rules under Article 9.
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Avery Davis
•This is such an important point that gets overlooked. Commercial tort claims have to be specifically described in the security agreement too, not just the UCC filing.
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Norman Fraser
•Good catch - I did make sure the security agreement specifically covers commercial tort claims, but I should double-check that the descriptions are consistent between the two documents.
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Collins Angel
•That's where something like Certana.ai could be helpful - it can compare your security agreement and UCC filing to flag any inconsistencies in how you've described the collateral.
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Marcelle Drum
Just want to add that timing really matters here. If the tort hasn't been 'committed' yet or if it's just a potential claim, you might not be able to perfect a security interest in it. Sounds like your situation is fine since you're already in litigation, but it's worth double-checking that the claim meets the 'existing' requirement under the UCC.
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Tate Jensen
•When does a commercial tort claim become 'existing' exactly? Is it when the wrongful act occurs, when you discover it, or when you file suit?
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Marcelle Drum
•Generally when the wrongful act occurs and you have a right to bring suit, but it can be state-specific. Since they're already in discovery, they're definitely past that threshold.
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Adaline Wong
I hate commercial tort claim filings. Did one last year where we had everything perfectly described, case number, defendants, the works. Then the defendant filed for bankruptcy and everything got stayed. Client ended up with a security interest in a worthless piece of litigation. Just make sure your client understands that even a perfect UCC filing doesn't guarantee the underlying asset will have any value.
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Gabriel Ruiz
•Oof, that's rough. But at least you had a perfected security interest - better than having nothing at all if the case had settled favorably.
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Misterclamation Skyblue
•Yeah bankruptcy throws a wrench into everything. At least with commercial tort claims you might be able to pursue the claim in bankruptcy court as part of the estate.
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Peyton Clarke
Quick question - are you filing this as the only collateral or is it part of a broader collateral package? If there are other assets involved, you might want to consider whether the commercial tort claim is even worth the hassle of the specific description requirements.
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Norman Fraser
•It's part of a broader package - we've got equipment, inventory, and accounts receivable too. But the tort claim is potentially the most valuable piece, so we definitely want to include it.
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Peyton Clarke
•Makes sense. In that case, I'd go with the detailed description approach others have suggested. Better to be over-inclusive when there's significant value involved.
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Vince Eh
One more practical tip - consider doing a continuation search before you file to make sure there aren't any prior filings against the same commercial tort claim. Since these claims can be pretty unique, it's less common than with other collateral types, but still worth checking.
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Sophia Gabriel
•Good point. Also worth checking if there are any judgment liens or other encumbrances on the claim itself.
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Tobias Lancaster
•How would you even search for prior filings on a specific tort claim? The search systems aren't really set up for that level of collateral specificity.
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Vince Eh
•True, it's not easy. Usually I just do a comprehensive search on the debtor and review all filings to see if any mention similar claims or litigation.
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Ezra Beard
Thanks everyone for all the input. I think I have enough to move forward with a detailed description including case number and specific legal theories. Really appreciate the practical advice - this forum is always more helpful than the official guidance documents.
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Statiia Aarssizan
•Let us know how it goes! Always interested to hear whether filings get accepted with these tricky collateral descriptions.
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Reginald Blackwell
•Good luck with the filing. And definitely consider using one of those document checking tools mentioned earlier - commercial tort descriptions are easy to mess up between different documents.
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Joy Olmedo
I've been handling commercial tort claim UCC filings for about 8 years now, and I'd strongly recommend including all the details you mentioned - case number, court, defendant name, and specific legal theories. The "minimum specificity" approach is risky because if your description is too vague, you could lose priority to a later filer who describes it more precisely. I usually use this format: "Commercial tort claims against [Defendant Name] arising from breach of fiduciary duty and misappropriation of funds occurring between [date range], as more particularly described in litigation pending in [Court Name], Case No. [Number], including all proceeds thereof." This gives you broad enough coverage to capture related claims while being specific enough to satisfy the filing office. Also, since you're looking at $2.8M in potential damages, the extra effort in drafting is definitely worth the protection.
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Fatima Al-Suwaidi
•This is really comprehensive advice, thank you! I like the format you suggested - it covers all the bases while being specific enough to avoid rejection. The point about priority is crucial too - hadn't really thought about the risk of a later filer with a more precise description potentially getting priority over a vague one. With $2.8M at stake, definitely worth the extra care in drafting. Do you typically include language about "proceeds thereof" for commercial tort claims, or is that more relevant for other types of collateral?
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