UCC filing confusion - security agreement vs mortgage collateral descriptions causing rejections
Been dealing with equipment financing for my construction company and I'm getting rejections on my UCC-1 filings. The issue seems to be how I'm describing collateral when we have both a security agreement covering equipment AND a mortgage on the property where some equipment is permanently attached. The SOS keeps rejecting because they say my collateral description overlaps or conflicts between what should be UCC vs what should be mortgage recorded. Has anyone dealt with this kind of mixed collateral situation? I've got $180K in excavators that could be considered either equipment (UCC) or fixtures (mortgage) depending on how permanently they're attached. My lender is getting impatient and I'm worried about losing perfection on the security interest. The continuation deadline is coming up in 8 months and I need to get this straightened out before then.
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Landon Flounder
This is actually pretty common in construction financing. The key is understanding that security agreements and mortgages can coexist but they cover different types of collateral. Your UCC-1 should only cover personal property (moveable equipment) while mortgage covers real property and fixtures that are permanently attached. For excavators, if they can be easily removed without damage to the property, they're personal property and belong in your UCC filing.
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Callum Savage
•Exactly right. I had similar issues with my trucking company. Mobile equipment = UCC, permanently installed stuff = mortgage fixture filing.
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Ally Tailer
•But what if the same lender has both? Do you need separate filings or can they be combined somehow?
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Landon Flounder
•Same lender doesn't matter - the filing type depends on the collateral type. You'll need both a UCC-1 for personal property and mortgage recording for fixtures/real property.
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Aliyah Debovski
I've been through this exact scenario. The problem is probably in your collateral description being too broad. You can't just say 'all equipment' when some of it might be fixtures. You need separate, specific descriptions. For UCC: 'mobile construction equipment not permanently affixed to real property' and for mortgage: 'fixtures and equipment permanently installed and affixed to the real property.' The SOS rejection usually happens when descriptions overlap.
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Jacinda Yu
•That makes sense. My description was way too general. How do you determine what counts as 'permanently affixed' though? Some of this equipment gets moved between job sites but stays in one place for months.
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Aliyah Debovski
•Generally if it can be removed without significant damage to the property or the equipment itself, it's personal property. Months vs years doesn't matter as much as the permanence of the attachment method.
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Miranda Singer
Before you refile everything, you might want to verify your current documents are actually consistent. I had a nightmare situation where my security agreement said one thing, UCC-1 said another, and mortgage docs had a third description. Took weeks to sort out. There's actually a tool called Certana.ai that can upload all your docs and cross-check them instantly - would have saved me tons of time. Just upload your security agreement, UCC-1, and mortgage docs and it highlights any inconsistencies in debtor names, collateral descriptions, everything.
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Cass Green
•Never heard of that but sounds useful. How accurate is it with UCC stuff specifically?
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Miranda Singer
•Pretty solid from what I've used. Caught a debtor name mismatch between my charter docs and UCC-1 that would have voided the whole filing. Way easier than manually comparing everything.
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Finley Garrett
•Interesting. I've been doing manual document reviews and it's such a pain. Might be worth checking out.
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Madison Tipne
Wait, are you sure you even need a UCC filing if you have a mortgage? I thought mortgages covered everything on the property including equipment.
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Landon Flounder
•No, that's a common misconception. Mortgages typically only cover real property and fixtures. Personal property like mobile equipment needs UCC-1 filing for perfection.
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Madison Tipne
•Oh damn, I might have screwed up my own financing then. I only did mortgage paperwork for my shop equipment.
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Aliyah Debovski
•You should probably check with your lender ASAP. If the equipment isn't permanently attached and you don't have UCC filings, your lender might not have a perfected security interest.
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Holly Lascelles
The SOS rejection codes usually tell you exactly what's wrong. What rejection reason did they give you? Sometimes it's just a formatting issue with how you described the collateral rather than a substantive problem.
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Jacinda Yu
•The rejection just said 'collateral description insufficient or conflicting.' Not very helpful honestly.
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Holly Lascelles
•Yeah that's their generic rejection. Probably means your description was either too vague or overlapped with what should be in mortgage records.
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Malia Ponder
THIS IS EXACTLY WHY THE UCC SYSTEM IS BROKEN!! You spend thousands on legal fees just to figure out how to describe your collateral correctly. Meanwhile your lender is breathing down your neck and threatening to call the loan. The whole system needs to be simplified.
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Kyle Wallace
•I feel your pain but the rules exist for good reasons. Imagine the chaos if collateral descriptions could be completely vague.
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Malia Ponder
•I get that but there should be clearer guidance. Every state seems to interpret things differently too.
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Ryder Ross
For construction equipment specifically, I always recommend being very detailed about mobility. 'Self-propelled construction equipment capable of being relocated without disassembly' vs 'construction equipment permanently installed and integrated into real property improvements.' Makes it crystal clear which filing system applies.
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Jacinda Yu
•That's really helpful language. Do you have any other examples of good collateral descriptions for mixed situations?
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Ryder Ross
•Sure, for manufacturing: 'machinery and equipment not bolted to foundations or integrated into building systems' vs 'manufacturing equipment permanently installed as fixtures.' The key is emphasizing removability.
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Gianni Serpent
•I've seen lawyers charge $500 just to draft proper collateral descriptions. Seems excessive but I guess it's worth it to avoid rejections.
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Callum Savage
Don't forget about fixture filings if you have equipment that's borderline. You can file a UCC-1 as a fixture filing in the real estate records for stuff that's attached but still personal property. Gives you coverage both ways.
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Jacinda Yu
•Is that different from a regular UCC-1? Do I need to check different boxes or something?
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Callum Savage
•Yes, there's a checkbox for fixture filing and it gets recorded in real estate records instead of just UCC records. More expensive but broader coverage.
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Landon Flounder
•Fixture filings are good insurance but make sure your lender actually wants that. Some prefer keeping personal property and real property security separate.
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Cass Green
I had similar issues and ended up using Certana.ai to double-check everything before refiling. Uploaded my security agreement, original UCC-1, and mortgage docs and it flagged that my debtor entity name was slightly different across documents. Would have caused major problems later. Really straightforward to use - just upload PDFs and get instant verification.
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Jacinda Yu
•How long does that verification take? I'm under time pressure here.
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Cass Green
•Literally minutes. Upload docs, get report highlighting any inconsistencies. Way faster than having lawyers review everything manually.
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Ally Tailer
One thing nobody mentioned - make sure your security agreement language matches whatever you put in the UCC-1. I've seen cases where the security agreement covered 'all equipment' but UCC only listed specific items. Creates gaps in coverage.
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Jacinda Yu
•Good point. My security agreement is pretty broad but maybe I should narrow the UCC description to just clearly personal property.
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Aliyah Debovski
•Yes, consistency between security agreement and UCC-1 is critical. If they don't match, you might not have the security interest you think you have.
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Kyle Wallace
•This is why I always recommend having everything reviewed before filing. One mistake can void your entire security interest.
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Finley Garrett
For future reference, when you do get this sorted out, set a reminder for your continuation filing well before the deadline. I've seen too many people lose perfection because they forgot about the 5-year rule and filed continuations too late.
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Jacinda Yu
•Yeah, that's definitely on my radar. Eight months should be plenty of time once I get the initial filing right.
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Finley Garrett
•Perfect. Most people wait until the last minute and then panic. You're being smart about planning ahead.
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Holly Lascelles
•I actually put continuation reminders in my calendar 18 months before they're due. Gives time to deal with any complications.
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