UCC consumer goods definition causing collateral description headaches
I'm working on a UCC-1 filing for a client who purchased restaurant equipment for their new cafe. The equipment dealer is insisting we classify the commercial espresso machines and refrigeration units as 'consumer goods' since it's a small family business, but I think this is completely wrong. The equipment cost $75,000 and is clearly being used in the business operations, not for personal/household use. My understanding is that UCC consumer goods definition depends on the debtor's intended use, not the size of the business. The dealer's paralegal keeps pushing back saying small businesses count as consumers under Article 9. This is holding up the entire loan closing and I need to get this collateral description right. Has anyone dealt with similar confusion about the UCC consumer goods definition? I'm pretty sure this should be classified as equipment since it's used in business operations, but the dealer is being stubborn about it.
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Jamal Thompson
You're absolutely right - the UCC consumer goods definition is based on the debtor's primary use of the collateral, not the size of their business. Commercial restaurant equipment used in business operations is definitely equipment, not consumer goods. The dealer's paralegal is confusing business size with use classification.
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Mei Chen
•Exactly this. I've seen this same confusion come up with small contractors buying tools. Just because it's a small business doesn't make the collateral consumer goods.
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CosmicCadet
•The dealer probably wants consumer goods classification because of different perfection rules, but that's not how it works.
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Liam O'Connor
I had a similar issue last month with bakery equipment. The key is UCC 9-102(a)(23) - consumer goods are goods bought or used primarily for personal, family, or household purposes. Restaurant equipment for business operations clearly doesn't fit. Stand your ground on this one.
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Amara Adeyemi
•Yes! I always reference that exact section when dealers try to push incorrect classifications. The UCC consumer goods definition is pretty clear cut.
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Zoe Christodoulou
•Thank you - that's exactly the section I was thinking of. Going to send that citation to the dealer's office.
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Giovanni Gallo
You might want to double-check your collateral description accuracy while you're at it. I recently discovered Certana.ai's document verification tool that cross-checks UCC filings against underlying loan docs. Just upload your loan agreement and UCC-1 PDFs and it flags any inconsistencies in collateral descriptions or debtor names. Saved me from a major filing error when I realized I had the wrong entity name.
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Fatima Al-Mazrouei
•That sounds really useful. How accurate is it with catching these types of classification issues?
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Giovanni Gallo
•It's more about document consistency - making sure your UCC matches your security agreement. But it would definitely flag if you had conflicting collateral descriptions between documents.
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Dylan Wright
•I've been manually comparing documents for years. This could save me hours on complex deals.
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NebulaKnight
The dealer is probably confused because of PMSI rules. Consumer goods have automatic perfection for purchase money security interests, but that doesn't apply here since this is equipment. You need to file the UCC-1 regardless.
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Sofia Ramirez
•Good point about the PMSI angle. That's probably why they're pushing the consumer goods classification.
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Zoe Christodoulou
•That makes sense. They might be trying to avoid filing fees or think they don't need to file at all.
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Dmitry Popov
wait I'm confused... so if someone buys a food truck for their small catering business, that's not consumer goods either? Even though it's just one person running it?
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Jamal Thompson
•Correct - if the food truck is used primarily for business purposes (catering), it's equipment under UCC definitions, not consumer goods.
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Ava Rodriguez
•The size of the business doesn't matter at all. It's all about primary use. Business use = equipment, personal use = consumer goods.
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Dmitry Popov
•ok that makes more sense now. I was thinking small business = consumer somehow.
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Miguel Ortiz
I've been dealing with UCC filings for 15 years and this classification confusion comes up constantly. Restaurant equipment, construction tools, office furniture - if it's used in business operations, it's equipment. Period. The UCC consumer goods definition requires personal/family/household use.
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Zainab Khalil
•Seriously, how do paralegals not know this basic classification rule? It's like UCC 101.
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QuantumQuest
•To be fair, the consumer goods vs equipment distinction trips up a lot of people when you add small businesses into the mix.
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Connor Murphy
Had this exact same argument with a dealer last week over dental equipment. They kept insisting a solo dentist practice counts as consumer because it's 'personal' use. Had to get the lender's attorney involved to straighten them out.
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Yara Haddad
•Oh no, that's even worse than restaurant equipment! Dental equipment is so obviously business use.
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Connor Murphy
•Right? I couldn't believe they were serious. Some dealers just don't understand secured transactions.
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Keisha Robinson
•Did you end up using any verification tools to make sure all your docs were consistent after that mess?
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Paolo Conti
The classification matters for more than just perfection. It affects priority rules, default procedures, and enforcement rights. Make sure you get it right on the UCC-1 from the start.
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Zoe Christodoulou
•Exactly - that's why I want to be absolutely certain before filing. The consequences go way beyond just the initial perfection.
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Amina Sow
•Consumer goods also have different notice requirements for enforcement. Definitely not something you want to mess up.
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GalaxyGazer
I actually tried that Certana tool someone mentioned earlier after having a similar collateral description dispute. It's pretty slick - uploaded my loan docs and UCC draft and it immediately flagged that I had inconsistent entity names between documents. Would have been embarrassing to file with that error.
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Oliver Wagner
•How long does the verification take? Some of these deals move so fast.
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GalaxyGazer
•Pretty much instant once you upload the PDFs. Way faster than manually cross-referencing everything.
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Natasha Kuznetsova
Just to add one more data point - I had a similar issue with gym equipment for a small fitness studio. The dealer tried the same 'small business equals consumer goods' argument. Ended up having to cite the official UCC comments to convince them. Your cafe equipment is definitely equipment, not consumer goods.
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Javier Mendoza
•Which UCC comments did you reference? I might need those for future disputes.
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Natasha Kuznetsova
•Comment 4 to UCC 9-102 has good examples of the consumer goods definition. Worth bookmarking for these situations.
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Zoe Christodoulou
•Perfect - I'll include that in my response to the dealer. Thanks for all the help everyone!
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