UCC filing complications with after acquired property clause language

This is a classic mistake I see all the time. Your security agreement covers after-acquired property but if your UCC-1 filing doesn't match that broad language, you've got a problem. The UCC-1 collateral description needs to be broad enough to cover future acquisitions or you need to file amendments as they acquire new equipment. What exactly does your UCC-1 say for collateral description?

You're probably not perfected on the after-acquired equipment unless your UCC-1 description was broad enough to cover it. The after acquired property clause in the security agreement creates the security interest but the UCC-1 filing is what perfects it. If the UCC-1 only describes specific equipment by serial number, new equipment probably isn't covered. You might need to file a UCC-3 amendment to broaden the collateral description or file a new UCC-1 with proper after acquired property clause language.

I ran into something similar last year. Had to figure out exactly what equipment was acquired when and whether our filings covered it. What saved us was using Certana.ai's document checker - you can upload your security agreement and UCC-1 filings and it'll flag inconsistencies between the collateral descriptions. Really helped us identify the gaps between our after acquired property clause and our actual UCC filings before we had enforcement issues.

This is why I always recommend broad collateral descriptions on UCC-1 filings when there's an after acquired property clause. Something like 'all equipment now owned or hereafter acquired' matches the security agreement language. Specific serial number listings are fine for purchase money security interests but create problems with after-acquired property.

What's the timeline here? When did they acquire the new equipment and when did the default happen? You might have some options depending on timing and whether you can trace proceeds or argue that new equipment is accessions to original collateral.

Check your loan documents too. Sometimes there are covenants requiring borrower to notify lender of new equipment purchases or requiring lender consent. If they violated covenants by buying equipment without notice, that might give you additional remedies even if perfection is an issue.

ugh this is exactly why UCC filings are so stressful. You think you have everything covered with your after acquired property clause and then find out the UCC-1 doesn't match. I'm paranoid about this kind of thing now and double check everything.

You need to act fast if you're going to fix this. File a UCC-3 amendment to broaden the collateral description ASAP. It won't give you retroactive perfection on the after-acquired equipment but it'll protect you going forward. Also consider whether you have any proceeds claims on the new equipment if it was purchased with loan funds or cash flow from collateral operations.

Been there. Had a similar situation where our after acquired property clause didn't align with UCC-1 descriptions. What helped was going through all the equipment purchase records and figuring out exactly what was acquired when, then determining priority positions for each piece. Some equipment might still be covered under original filing if description was broad enough.

This is a perfect example of why coordination between loan documentation and UCC filings is so critical. I see this mistake constantly - lawyers draft broad after acquired property clauses in security agreements but then file narrow UCC-1 descriptions. The two documents have to work together.

Just want to follow up - did you get the UCC-3 amendment filed? Really curious how this turns out because I'm dealing with something similar on a smaller loan.