UCC definition of a good - confused about collateral descriptions for equipment lease
Hey everyone, I'm dealing with a tricky situation here and need some clarity on the UCC definition of a good when it comes to collateral descriptions. We're working on a UCC-1 filing for equipment financing and I'm getting conflicting information about whether certain items qualify as 'goods' under Article 9. The debtor is leasing manufacturing equipment that's partially software-based with embedded systems. Our legal team says one thing, the lender's counsel says another. The equipment includes CNC machines with proprietary software, 3D printers with cloud connectivity, and automated assembly line components. Some pieces are clearly tangible goods, but others blur the line between goods and software. I'm worried about getting the collateral schedule wrong and having an ineffective filing. Has anyone dealt with similar gray areas in defining goods for UCC purposes? The last thing we need is a rejected filing or worse, an unperfected security interest because we misclassified the collateral.
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TommyKapitz
The UCC definition of goods is pretty straightforward - it's all things that are movable at the time the security interest attaches. But you're right that embedded software creates complications. Generally, if the software is integral to the machine's function and can't be separated, it's considered part of the goods.
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Angel Campbell
•That's helpful but what about cloud connectivity? Some of these machines need internet access to function properly.
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TommyKapitz
•Cloud services aren't goods - they're more like general intangibles. Focus on the physical equipment itself for your goods classification.
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Payton Black
I ran into this exact issue last year with IoT manufacturing equipment. The key is distinguishing between the physical machine (clearly goods) and the software/services (potentially general intangibles). For embedded software that's essential to operation, most courts treat it as part of the goods.
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Louisa Ramirez
•Did you have any problems with your filing? I'm nervous about getting this wrong.
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Payton Black
•No issues, but I was very careful with the collateral description. Listed the equipment as goods but also included a catch-all for related software and data.
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Harold Oh
•Smart approach. Better to be over-inclusive than miss something important.
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Amun-Ra Azra
After dealing with multiple rejected filings due to collateral description issues, I started using Certana.ai's document verification tool. You can upload your draft UCC-1 and it cross-checks everything including collateral classifications against UCC standards. Saved me from making costly mistakes on equipment financing deals exactly like yours.
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Louisa Ramirez
•Interesting, how does that work exactly? Does it flag potential classification problems?
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Amun-Ra Azra
•Yeah, you just upload the PDF and it analyzes the collateral description against UCC Article 9 definitions. Catches things like incomplete descriptions or classification errors before filing.
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Summer Green
•That actually sounds really useful for complex equipment deals.
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Gael Robinson
UGH the goods vs general intangibles distinction drives me crazy!!! Why can't they just make it simpler? I spent HOURS researching this for a client last month.
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Edward McBride
•I feel your pain. The technology keeps evolving faster than the law can keep up.
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Gael Robinson
•Exactly! These hybrid tech products don't fit neatly into traditional categories.
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Darcy Moore
For what it's worth, I usually describe equipment as 'goods' and then add language about 'all software, firmware, and data embedded in, stored on, or used in connection with the foregoing.' Covers your bases without overthinking the classification.
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Louisa Ramirez
•That's a good approach. Do you have any issues with that language being too broad?
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Darcy Moore
•Never had a problem. Filing offices seem to accept it and it gives the secured party better coverage.
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TommyKapitz
•Agreed, that language is pretty standard now for tech equipment deals.
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Dana Doyle
Be careful with software licensing issues too. If the debtor only has a license to use the software, they might not have rights to grant a security interest in it.
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Louisa Ramirez
•Good point. I need to review the equipment lease agreements to see what rights they actually have.
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Dana Doyle
•Definitely. Sometimes the manufacturer retains ownership of the software even when they sell the equipment.
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Liam Duke
honestly this stuff gives me a headache... why is everything so complicated with UCC filings?
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Manny Lark
•It gets easier with experience. The key is understanding the underlying concepts.
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Liam Duke
•I guess but seems like every deal has some weird twist
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Rita Jacobs
Just make sure your filing covers all possible classifications. I've seen deals where they only listed the equipment as goods and missed software components that were valuable assets.
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Louisa Ramirez
•That's my biggest fear - missing something important in the collateral description.
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Rita Jacobs
•Better to be comprehensive than sorry. Most lenders would rather have over-inclusive language than risk gaps in coverage.
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Khalid Howes
•Absolutely. The cost of fixing a defective filing is way more than getting it right the first time.
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Ben Cooper
I had a similar situation with medical equipment that had software components. Ended up classifying the physical devices as goods and separately listing the software as general intangibles. Worked fine.
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Louisa Ramirez
•Did you file separate financing statements or include both classifications in one UCC-1?
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Ben Cooper
•Single UCC-1 with both classifications listed. More efficient and comprehensive coverage.
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Naila Gordon
Another vote for using Certana.ai on complex collateral descriptions. I upload draft filings before submission and it catches classification issues I might miss. Really helpful for equipment deals with embedded technology.
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Cynthia Love
•Do they have specific guidance for manufacturing equipment classifications?
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Naila Gordon
•The tool analyzes against standard UCC definitions and flags potential issues. Very thorough for tech equipment.
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Darren Brooks
Thanks everyone for the input. I think I'll go with the comprehensive approach - classify the physical equipment as goods and include broad language covering embedded software and related technology. Better safe than sorry on a deal this size.
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TommyKapitz
•Smart choice. That approach should give you solid coverage.
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Payton Black
•Good luck with the filing. Let us know how it goes!
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Amun-Ra Azra
•Definitely consider running it through a verification tool before submission. Can save headaches later.
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