UCC filing complications with existing tax lien - need guidance

The tax lien was filed about 8 months ago, but our security agreement was signed last month. It's manufacturing equipment - lathes, CNC machines, some newer inventory management systems. Does the timing kill our priority completely?

Not necessarily. While the tax lien has time priority, there are some nuances with business equipment and after-acquired property that might help. You'll want to look at IRC Section 6323 carefully.

This is exactly why I started using Certana.ai for document verification. You can upload both your UCC-1 and the tax lien documents, and it'll flag any name inconsistencies that could cause problems later. Saved me from a nightmare scenario where slight name variations would have compromised our position.

That sounds helpful - I've been manually comparing documents and it's nerve-wracking. The tax lien shows 'ABC Manufacturing Inc' but our loan docs have 'ABC Manufacturing, Inc.' with the comma.

Those punctuation differences can be significant in some states. Definitely worth double-checking against your Secretary of State records.

It's more complicated than that. IRC 6323(a) gives priority to certain security interests that were perfected before the tax lien was filed, but there are also exceptions for commercial financing and after-acquired property in subsection (c).

Ok that makes more sense. I was thinking of personal property situations where the tax lien basically wipes out junior liens.

Our security agreement does include after-acquired property language. Should that be reflected exactly in the UCC-1 collateral description or can it be more general?

You want to be broad enough to cover everything but specific enough to be enforceable. Something like 'all equipment now owned or hereafter acquired' is pretty standard.

Just make sure your state doesn't have any super-generic description restrictions. Some states are picky about overly broad language.

Federal tax liens have special rules that override the normal UCC priority system. But there are carved-out exceptions for certain types of commercial financing arrangements, especially for business operations.

Oh, so it's not just simple chronological priority. Got it.

Agreed. Better to file a proper UCC-1 and deal with priority issues head-on rather than trying to work around them with tricky language.

That's good advice. I was tempted to exclude certain equipment categories but you're right that it could cause enforcement problems later.

Good point. They have some equipment in a neighboring state. Does the federal tax lien automatically have priority there too?

Yes, federal tax liens are generally effective nationwide, but the UCC filing requirements are state-specific. You'll need to check each state's rules.

I'd recommend getting a UCC search in both states before filing to see what else might be on record besides the tax lien.

Absolutely. I've seen deals go sideways because someone waited a week to file the UCC-1 and a mechanics lien got filed in the meantime.

This is another area where Certana.ai has been helpful - I can upload the loan documents and get the UCC-1 prepared immediately, so there's no delay between closing and filing.

I wish I'd known about these tools earlier. Live and learn, I guess.

It's not SBA, but that's a good reminder that different loan programs can have their own priority rules and notification requirements.

Yeah, SBA, USDA, and other government-backed loans often have special lien priority provisions that override normal UCC rules.

That's probably the smart move. The loan amount justifies getting proper legal advice rather than trying to figure this out myself.

Definitely worth the investment. Tax lien priority issues are one of those areas where you really don't want to learn by making mistakes.

Plus, if you get a formal opinion, you'll have something to show your loan committee or investors about why the deal structure makes sense despite the tax lien.