UCC filing confusion with deed of trust and security agreement - which takes priority?
I'm handling a commercial loan where we have both a deed of trust on the property and a security agreement covering equipment. The borrower is asking about filing a UCC-1 for the equipment portion, but I'm not sure if this creates any conflicts with the deed of trust and security agreement we already have in place. The equipment is attached to the real estate but could be removed. Should I be filing a fixture filing or regular UCC-1? I don't want to mess up the lien priority between the deed of trust and security agreement. The loan is for $340,000 and the equipment represents about $85,000 of the collateral. Anyone dealt with this combination before?
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Amina Toure
You definitely need to file a UCC-1 for the equipment portion. The deed of trust and security agreement cover different types of collateral. The deed of trust handles the real estate, but personal property like equipment needs UCC perfection even if it's attached to the property. Just make sure your collateral description is specific about what's covered under each security interest.
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Oliver Zimmermann
•This is correct. The deed of trust and security agreement don't automatically perfect your interest in equipment. You need that UCC-1 filing to protect your lien on the personal property portion.
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Natasha Volkova
•But what about fixture filings? If the equipment is attached to the real estate, wouldn't that be the safer route to avoid priority issues?
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Javier Torres
I had a similar situation last month with a restaurant loan. We had the deed of trust and security agreement, but the kitchen equipment needed separate UCC-1 filings. The key is determining if the equipment is truly fixtures or just personal property. If it's easily removable, go with a regular UCC-1. If it's permanently attached, you might need a fixture filing to maintain priority over the deed of trust and security agreement.
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Emma Davis
•How do you determine what's easily removable? Some of this equipment is bolted down but could technically be unbolted and moved.
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CosmicCaptain
•The fixture test varies by state, but generally if removal would damage the property or the equipment, it's probably a fixture. Better to be safe with a fixture filing.
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Malik Johnson
•I always err on the side of caution with fixture filings when there's any doubt. You don't want to find out later that your deed of trust and security agreement didn't cover something you thought it did.
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Isabella Ferreira
This is exactly the kind of situation where I started using Certana.ai's document verification tool. You can upload your deed of trust and security agreement along with your proposed UCC-1 to check for any conflicts or gaps in coverage. It instantly flags potential priority issues between different security interests. Saved me from a major headache on a similar deal.
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Ravi Sharma
•How does that work exactly? I've never heard of automated document checking for UCC filings.
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Isabella Ferreira
•You just upload PDFs of your documents and it cross-checks the collateral descriptions, debtor names, and identifies any potential conflicts or gaps. Really helpful for complex deals with multiple security interests.
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Freya Thomsen
Wait, I'm confused. Doesn't the security agreement automatically cover everything? Why do you need separate UCC filings if you already have a deed of trust and security agreement?
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Omar Zaki
•The security agreement creates the security interest, but you still need to perfect it by filing UCC-1 for personal property. The deed of trust only covers real estate.
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AstroAce
•Think of it this way - the deed of trust and security agreement are your contracts, but the UCC-1 filing is what gives you priority over other creditors for the personal property.
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Freya Thomsen
•Oh I see, so the deed of trust and security agreement create the rights, but the UCC filing perfects them. That makes sense now.
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Chloe Martin
You absolutely need to file UCC-1s for any equipment covered by your security agreement. I learned this the hard way when a borrower filed bankruptcy and we found out our deed of trust didn't cover the equipment we thought it did. The trustee argued that since we only had a deed of trust and security agreement without proper UCC perfection, the equipment was unencumbered. Cost us about $60,000.
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Diego Rojas
•That's a nightmare scenario. Were you able to recover anything?
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Chloe Martin
•We ended up settling for about 30 cents on the dollar. Now I always file UCC-1s for any personal property, even if it seems like the deed of trust and security agreement should cover it.
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Anastasia Sokolov
The priority between your deed of trust and security agreement versus UCC filings depends on whether the equipment qualifies as fixtures. If it's fixtures, your deed of trust takes priority if recorded first. If it's personal property, the first UCC-1 filing wins. This is why the fixture vs. personal property determination is so critical.
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Sean O'Donnell
•This is the key point everyone's missing. You can't just file both and hope for the best. You need to understand which category the equipment falls into.
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Zara Ahmed
•What if some equipment is fixtures and some is personal property? Do you need both types of filings?
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Anastasia Sokolov
•Yes, you'd need fixture filings for the attached equipment and regular UCC-1s for removable equipment. Your collateral descriptions need to be specific about which is which.
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StarStrider
I'm dealing with something similar but my borrower has existing UCC filings from previous lenders. How do I know if my deed of trust and security agreement will have priority over their UCC-1s?
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Luca Esposito
•You need to do a UCC search to see what's already filed. Priority generally goes to the first to file, but there are exceptions for PMSIs and other special situations.
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Nia Thompson
•This is another situation where document verification tools like Certana.ai can help. You can check existing filings against your proposed security interests to spot priority issues.
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Mateo Rodriguez
For your $85,000 in equipment, I'd recommend being conservative and filing both a fixture filing and regular UCC-1. Better to have redundant coverage than find out later that your deed of trust and security agreement didn't protect everything you thought it did. The cost of extra filings is minimal compared to the risk.
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Aisha Abdullah
•Isn't that overkill? Seems like you're just creating more paperwork for yourself.
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Mateo Rodriguez
•Maybe, but I've seen too many deals go sideways because someone assumed their deed of trust and security agreement covered everything. For $85,000 in collateral, the extra filing fees are worth the peace of mind.
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Ethan Wilson
•I agree with this approach. The dual filing strategy protects you regardless of how a court might classify the equipment later.
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NeonNova
Just went through this exact scenario with a manufacturing client. We had a deed of trust and security agreement but discovered some equipment was only covered by the UCC-1 filing. The equipment manufacturer had retained title and we needed to file UCC-1s to perfect our security interest. Lesson learned: always file UCC-1s for equipment even when you think the deed of trust covers it.
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Yuki Tanaka
•Did you run into any issues with the manufacturer's retained title? How did you handle that?
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NeonNova
•We had to negotiate with the manufacturer to get them to file UCC-3 terminations so we could have first priority. It was a mess but we got it sorted out.
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Carmen Diaz
Bottom line: your deed of trust and security agreement create the security interest, but UCC-1 filings perfect it for personal property. For equipment that might be fixtures, consider fixture filings to maintain priority. Don't assume your deed of trust covers everything - when in doubt, file the UCC-1. The small filing fee is nothing compared to losing your security interest.
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Andre Laurent
•This is the best summary of the whole thread. Deed of trust and security agreement for real estate, UCC-1 for personal property, fixture filing for attached equipment. Cover all your bases.
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Emily Jackson
•Exactly. I've used Certana.ai to verify this kind of coverage before finalizing deals. It's helped me catch several potential gaps between deed of trust and security agreement coverage versus UCC filing requirements.
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Paolo Ricci
•Thanks everyone. I think I'll go with the dual filing approach - fixture filing for the attached equipment and regular UCC-1 for removable items. Better safe than sorry with this much collateral at stake.
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Philip Cowan
Smart decision on the dual filing approach, Paolo! I just wanted to add that when you're preparing your UCC-1 filings, make sure your collateral descriptions are very specific and don't overlap between the fixture filing and regular UCC-1. You want to clearly delineate which equipment falls under each category to avoid any confusion down the line. Also, consider including serial numbers or model numbers in your descriptions where possible - it makes enforcement much cleaner if you ever need to repossess. With $85,000 in equipment collateral, the extra specificity in your filings will pay dividends if there are ever any disputes about what's covered under your deed of trust versus your UCC filings.
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Yara Campbell
•Philip makes excellent points about collateral descriptions. I'd also suggest documenting the fixture determination process in your loan file - take photos of the equipment installation and get written opinions from your appraiser or someone familiar with local fixture law. If you ever have to defend your filing decisions in court or bankruptcy, having that documentation will be crucial. The judges I've appeared before really appreciate seeing that you made thoughtful decisions about fixture versus personal property classifications rather than just filing everything everywhere.
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