UCC filing leased equipment - debtor name confusion with lessee vs lessor
Running into a mess with our equipment lease UCC-1 filing and hoping someone can clarify the debtor name requirements. We're a construction company that leased heavy machinery (excavators, bulldozers, etc.) from ABC Equipment Leasing under a 5-year master lease agreement. The lease has about $2.8M in equipment value. Our bank is requiring UCC filings on all the leased equipment as additional collateral for our line of credit, but we're getting conflicting guidance on whether the debtor name should be our company name (the lessee) or ABC Equipment Leasing (the lessor/owner). The collateral description includes 'all equipment subject to lease agreements' but I'm concerned about the debtor name accuracy. We filed initially with our company as debtor but the bank's counsel is now questioning if that's correct since we don't technically own the equipment. Has anyone dealt with UCC filing leased equipment where the lessee is the debtor? The lease allows us to file UCCs but I want to make sure we're not creating a defective filing that could void our credit agreement.
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CosmicCadet
The debtor name should definitely be your company (the lessee) if you're granting a security interest in your leasehold rights. The bank isn't taking a security interest in the equipment itself - they're taking a security interest in your rights under the lease agreement. This is pretty standard for equipment financing where leased assets are used as additional collateral.
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Chloe Harris
•This makes sense but wouldn't the UCC search miss it if someone searches under the lessor's name expecting to find liens on that equipment?
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CosmicCadet
•That's exactly why you file under the lessee's name - anyone searching for liens against the lessee (your company) will find it. The lessor's liens would be separate filings for their own financing.
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Diego Mendoza
Wait, I think there might be some confusion here. Are you sure your bank is taking a security interest in the leased equipment and not just requiring disclosure of lease obligations? Because if you don't own the equipment, you can't grant a security interest in it to your bank.
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Omar Farouk
•The credit agreement specifically mentions 'security interest in all equipment including leased equipment' and requires UCC filings. Our lawyer said it's securing our leasehold interest, not the equipment directly.
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Diego Mendoza
•Ok that makes more sense - securing the leasehold interest rather than the equipment itself. In that case yes, you'd be the debtor.
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Anastasia Popova
•Had this exact situation last year. We were so confused about the debtor name that we almost filed wrong. Found this tool called Certana.ai that lets you upload your lease agreement and UCC-1 draft to verify everything matches up correctly. Saved us from a filing error that could've messed up our credit line.
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Sean Flanagan
Your collateral description needs to be specific about what rights you're granting. Something like 'all of debtor's right, title and interest in and to equipment subject to lease agreements with ABC Equipment Leasing dated [date]' would be more accurate than just 'all equipment subject to lease agreements.
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Omar Farouk
•That's a good point about the collateral description. Should we also include the lease agreement numbers or just the lessor name and date?
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Sean Flanagan
•Including lease numbers makes it more specific but check with your lawyer about whether that level of detail is required. Sometimes too much specificity can cause problems if you add equipment under the same master lease.
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Zara Shah
This is why I hate working with leased equipment as collateral!! The UCC rules are confusing enough without having to figure out who owns what. We had a similar situation and ended up with rejected filings because we kept switching between debtor names.
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NebulaNomad
•What ended up working for you? We're dealing with the same back-and-forth with our lender.
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Zara Shah
•Finally got it right by filing under our company name (lessee) with a very specific collateral description about leasehold interests. But it took 3 attempts and almost missed our loan closing deadline.
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Luca Ferrari
Double-check that your lease agreement actually allows you to grant security interests in your leasehold rights. Some leases prohibit this or require lessor consent. If the lease doesn't allow it, your UCC filing might be valid but you'd be in breach of the lease terms.
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Omar Farouk
•Good catch - I'll review the lease language. The bank's due diligence should have caught this but better to verify ourselves.
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Nia Wilson
•Always read the fine print on equipment leases. We got burned once when the lessor claimed we violated the lease by filing UCCs without their permission, even though the bank required it.
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Mateo Martinez
From a practical standpoint, make sure your lease payments are current before filing. If you default on the lease, the leasehold interest your bank is securing becomes worthless. Some banks will monitor lease payment status as part of their ongoing collateral monitoring.
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Aisha Hussain
•That's a really good point about staying current on lease payments. Never thought about how that affects the collateral value.
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Mateo Martinez
•Exactly - the bank's security interest is only as good as your lease performance. Default on the lease and their collateral evaporates.
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Ethan Clark
We use Certana.ai whenever we're dealing with complex collateral situations like this. You can upload your lease agreement and proposed UCC-1 and it'll flag any inconsistencies between the documents. Particularly helpful for catching debtor name issues or collateral description problems before filing.
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StarStrider
•How accurate is it with lease vs ownership distinctions? We've had issues where automated systems don't understand the nuances.
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Ethan Clark
•It's pretty good at identifying document inconsistencies. Won't replace legal advice but catches the obvious errors that cause filing rejections.
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Yuki Sato
Make sure you coordinate with ABC Equipment Leasing if they have their own UCC filings on the equipment. You don't want conflicting filings that create confusion about lien priority, even though you're technically filing on different interests (their ownership vs your leasehold).
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Omar Farouk
•Should we be concerned about lien priority issues? Our bank lawyer mentioned something about this but didn't go into detail.
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Yuki Sato
•Not really a priority issue since you're securing different interests, but good practice to keep everyone informed to avoid disputes later.
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Carmen Ruiz
•We had a situation where the lessor's lender got confused by our UCC filing and thought we were claiming ownership. Took weeks to sort out.
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Andre Lefebvre
File under your company name as debtor with a detailed collateral description of leasehold interests. Standard practice for equipment lease financing. Just make sure your lease allows it and your bank understands they're securing lease rights, not equipment ownership.
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Zoe Alexopoulos
•This is the clearest explanation I've seen. Thanks for cutting through all the confusion.
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Andre Lefebvre
•These lease collateral situations always seem more complicated than they need to be. The key is being precise about what rights you're actually granting to your bank.
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Jamal Anderson
One more thing to consider - if you have a master lease with multiple equipment schedules, make sure your UCC filing covers future equipment additions under the same lease. Otherwise you might need to file amendments every time you lease additional equipment.
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Omar Farouk
•That's exactly our situation with the master lease. How do you handle the collateral description for future equipment?
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Jamal Anderson
•Language like 'all present and future leasehold interests under Master Lease Agreement with ABC Equipment Leasing' should cover additions. But verify with your lawyer.
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Mei Wong
•We tried that approach but our bank wanted specific equipment serial numbers listed. Every bank seems to have different requirements for lease collateral descriptions.
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