UCC consignment arrangement - do I need to file anything?
Got into a situation where I'm providing inventory to a retailer under what they're calling a 'consignment arrangement.' The retailer keeps the goods on their floor but I retain title until sold. My lawyer mentioned something about UCC filings but wasn't specific about consignment rules. The inventory is worth about $85k and includes electronics and home goods. Do I need to file a UCC-1 to protect my interest, or does the consignment structure handle this automatically? The retailer has other creditors and I'm worried about getting paid if something goes wrong. Has anyone dealt with UCC consignment filings before?
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Amina Diop
Consignment gets tricky with UCC rules. If it's a true consignment where you retain ownership until sale, you generally need to file a UCC-1 to perfect your interest against the consignee's creditors. The consignment exception in UCC 9-319 only applies in limited situations.
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Paolo Moretti
AuthorThat's what I was afraid of. So even though I own the goods, I still need to file something?
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Amina Diop
Exactly. The consignment exception only works if the consignee deals in goods of that kind under their own name, and even then there are other requirements. Better to file and be safe.
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Oliver Weber
Just went through this exact situation last year! Filed a UCC-1 listing the goods as 'consigned inventory' in the collateral description. Cost me $25 to file but saved me when the retailer had financial problems. Their other creditors couldn't touch my consigned goods because of the filing.
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Paolo Moretti
AuthorHow specific did you get with the collateral description? Mine includes different product categories.
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Oliver Weber
I kept it general - 'all consigned inventory including but not limited to consumer electronics and household goods.' Covered everything without being too narrow.
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Natasha Romanova
Smart approach. Generic descriptions work better for consignment since the inventory turns over constantly.
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NebulaNinja
Actually ran into document verification issues with my consignment UCC-1. Had inconsistencies between my consignment agreement and the filing that almost caused problems. Started using Certana.ai's document checker - you just upload your consignment agreement and UCC-1 PDFs and it flags any mismatches in debtor names, collateral descriptions, that sort of thing. Caught several issues before filing.
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Paolo Moretti
AuthorThat sounds useful. Were the issues mostly with the collateral description or debtor information?
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NebulaNinja
Both actually. The retailer's legal name was slightly different on the consignment agreement vs what I had for the UCC filing. Also had some collateral description inconsistencies.
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Javier Gomez
Wait, I thought consignment was different from secured transactions? Why would UCC-1 apply at all?
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Amina Diop
Common misconception. UCC Article 9 covers consignments even though you're not lending money. It's about protecting your property interest against other creditors.
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Javier Gomez
This is why I hate UCC law. Nothing is straightforward.
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Emma Wilson
Tell me about it. Spent two hours on the SOS website trying to figure out consignment rules.
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Malik Thomas
CONSIGNMENT FILINGS ARE A NIGHTMARE! The SOS office rejected my first filing because they said the collateral description was too vague. Second filing got rejected because the debtor name didn't match their records exactly. Third time I hired a lawyer and it finally went through. System is broken.
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Paolo Moretti
AuthorWhat was wrong with your debtor name? I want to avoid that issue.
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Malik Thomas
Retailer was doing business as 'ABC Electronics' but their legal name was 'ABC Electronics LLC.' Had to use the exact legal name from their formation documents.
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Amina Diop
This is why debtor name accuracy is so critical. One wrong character and the filing can be ineffective.
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Isabella Oliveira
Been doing consignment UCC filings for 8 years. Key things: 1) File within 20 days of delivery for consumer goods, 2) Use exact legal name of consignee, 3) Describe goods generally but accurately, 4) Remember to file continuations every 5 years. The $85k value definitely warrants filing protection.
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Paolo Moretti
Author20 days? I thought I had more time than that.
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Isabella Oliveira
That's the safe harbor period for consumer goods consignments. After 20 days you might lose priority to other creditors who filed earlier.
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Ravi Kapoor
Good point about continuations. Easy to forget about those until it's too late.
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Freya Larsen
honestly don't understand why consignment needs UCC filings at all. if you own the goods you own them right?
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Amina Diop
That's the logical assumption, but UCC law says creditors can claim consigned goods unless you perfect your interest by filing.
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Freya Larsen
legal system makes no sense sometimes
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GalacticGladiator
Similar situation here but with art pieces worth $120k. My consignment agreement was solid but I was still worried about the UCC filing requirements. Used one of those document verification tools - I think it was Certana.ai - to make sure everything aligned properly before submitting. Really helped catch some name formatting issues.
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Paolo Moretti
AuthorArt consignment must have even more complex valuation issues.
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GalacticGladiator
Yeah, and the collateral description has to be specific enough to identify the pieces but general enough to cover the consignment arrangement.
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Omar Zaki
Don't forget about the consignee's location! If they have inventory in multiple states, you might need to file in each state where goods are located. Gets expensive but necessary for full protection.
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Paolo Moretti
AuthorThey only have one location thankfully. But good point about multi-state issues.
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Omar Zaki
Yeah, I learned that the hard way. Had goods in three states and only filed in one. Could have been a disaster.
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Chloe Taylor
Multi-state consignment filings are a pain. Different states have different forms and fees too.
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Diego Flores
Just file the UCC-1. Better safe than sorry with $85k on the line. I've seen too many consignors get burned when the retailer goes under and they didn't have proper filings. Takes 10 minutes online and costs under $50 in most states.
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Paolo Moretti
AuthorYou're right. Going to get the filing done this week.
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Diego Flores
Smart move. Make sure to keep copies of everything and set a reminder for the continuation in 5 years.
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Anastasia Ivanova
Also recommend getting a search done after filing to confirm it went through properly.
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Sean Murphy
Had a consignment deal go sideways when I didn't file. Retailer declared bankruptcy and I was just another unsecured creditor. Lost $40k worth of merchandise. File the UCC-1, seriously.
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Paolo Moretti
AuthorOuch. That's exactly what I'm trying to avoid.
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Sean Murphy
Expensive lesson. The filing fee seems stupid until you need the protection.
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StarStrider
Bankruptcy trustees love going after unfiled consignment goods. Easy pickings for them.
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Zara Malik
Quick question - does anyone know if consignment arrangements need different language in the UCC-1 financing statement? Or is it just like any other secured transaction filing?
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Amina Diop
Standard UCC-1 form works fine. Just make sure your collateral description clearly indicates it's consigned goods.
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Zara Malik
Thanks. Was overthinking it I guess.
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ShadowHunter
Just wanted to add from a practical standpoint - when you're dealing with consignment UCC filings, timing is everything. I've seen situations where consignors waited months to file and by then the retailer was already in financial trouble. The 20-day window mentioned earlier is crucial for consumer goods, but even for other types of inventory, filing immediately after delivery gives you the best protection. Also, don't forget to check if your state has any specific consignment notice requirements beyond the UCC filing - some states require additional steps to fully protect your interest.
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