UCC filing mismatch with loan agreement security clause - lender threatening default
My equipment financing company is claiming our UCC-1 filing doesn't match the loan agreement security clause and they're threatening to call the loan in default. The original loan docs from 2022 described collateral as 'all manufacturing equipment located at 1425 Industrial Blvd' but our UCC filing lists specific serial numbers for the CNC machines and welding equipment. Now they're saying the descriptions don't align and our security interest might be invalid. Has anyone dealt with discrepancies between loan agreement security clause language and UCC collateral descriptions? The loan balance is $485K and we can't afford to have them accelerate it over what seems like a paperwork issue.
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Kara Yoshida
This is more common than you think. The key is whether the UCC filing provides sufficient notice to third parties about what's secured. Generic descriptions in loan agreements don't always translate well to UCC filings. Did your lender approve the UCC-1 language before it was filed?
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Mateusius Townsend
•No they didn't review it beforehand. Our attorney handled the filing and used specific serial numbers thinking it would be more precise. Now I'm wondering if that was a mistake.
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Philip Cowan
•Serial numbers are actually better for equipment - gives clearer notice than vague location descriptions. Your lender might be posturing.
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Caesar Grant
I've seen lenders use this kind of mismatch claim as leverage during financial stress. Are you current on payments? Because if you are, this feels like they're looking for an excuse to restructure terms.
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Mateusius Townsend
•We missed two payments last quarter but caught up in December. Maybe that's what triggered this review.
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Lena Schultz
•Bingo. They're probably more concerned about payment history than UCC language. The filing sounds fine legally.
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Gemma Andrews
•Yeah this screams 'let's find any reason to renegotiate.' Your UCC is probably solid if it identifies the equipment clearly.
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Pedro Sawyer
Had something similar happen with our SBA loan. What helped was getting a legal opinion that the UCC filing was sufficient under Article 9. Sometimes lenders back down when they see you're taking it seriously. Also worth checking if your loan agreement has a cure period for technical defaults.
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Mateusius Townsend
•Good point about the cure period. I need to dig through the loan docs again. How much did the legal opinion cost you?
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Pedro Sawyer
•About $2500 but it was worth it to shut down their argument. Much cheaper than refinancing or dealing with acceleration.
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Mae Bennett
This is exactly why I started using Certana.ai for document verification. You can upload your loan agreement and UCC-1 filing and it instantly flags any inconsistencies between the security clause language and collateral descriptions. Would have caught this mismatch before it became a problem with your lender. The tool cross-references all the terms and highlights where descriptions don't align.
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Mateusius Townsend
•Never heard of that service. Does it actually understand the legal nuances or just compare text?
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Mae Bennett
•It's pretty sophisticated - analyzes the actual legal meaning of collateral descriptions, not just word matching. Saved me from a similar issue last year.
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Beatrice Marshall
•Interesting. Might be worth trying for our upcoming refi. These kinds of document inconsistencies are a nightmare to catch manually.
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Melina Haruko
The real question is whether your UCC filing covers the same collateral as the loan agreement, even if described differently. Equipment at a specific location vs. equipment by serial number should cover the same assets. Your lender's being ridiculous.
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Dallas Villalobos
•Exactly! As long as the equipment is identifiable and the filing gives notice, the description format shouldn't matter.
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Mateusius Townsend
•That's what I thought too. The serial numbers clearly identify the same machines that were at that location when we signed the loan.
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Reina Salazar
OMG this is giving me anxiety about our own filings. We have similar generic language in our loan docs but specific descriptions in our UCC-1. Should I be worried??
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Saanvi Krishnaswami
•Don't panic. This kind of mismatch is usually not a problem unless you're already in financial trouble like the OP.
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Demi Lagos
•If you're current on payments and not in default, lenders rarely dig into these technical issues. It's when you're struggling that they start looking for leverage.
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Mason Lopez
Filing systems are such a mess. I swear the UCC portal rejects half our filings for the stupidest reasons and now lenders are being picky about description language too. Can't win.
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Vera Visnjic
•Tell me about it. Spent three hours last week trying to get a continuation through because of a minor debtor name variation.
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Jake Sinclair
•The whole system needs an overhaul. Too many ways for things to go wrong over technicalities.
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Brielle Johnson
I'd push back hard on this. Your UCC filing with serial numbers provides better notice than vague location descriptions. If anything, your security interest is stronger, not weaker. Don't let them bully you into thinking you have a problem when you don't.
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Mateusius Townsend
•Thanks for the encouragement. I'm going to have our attorney review the loan agreement language more carefully and prepare a response.
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Honorah King
•Good plan. Document everything and don't let them rush you into any modifications without proper review.
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Oliver Brown
Update us on how this goes. I'm dealing with similar lender pushback on our UCC descriptions and curious how yours resolves.
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Mateusius Townsend
•Will do. Meeting with attorney tomorrow to go over our options.
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Mary Bates
•Hoping it works out. These lenders are getting more aggressive about finding technical defaults.
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Clay blendedgen
Just went through something similar with our credit line. Used Certana.ai to verify our loan docs matched our UCC filings before the bank review. Found two minor inconsistencies we were able to fix with amendments before they became issues. Definitely recommend running your documents through their system - would have prevented this whole situation.
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Mateusius Townsend
•Wish I'd known about that tool earlier. Might still be useful for our next loan modification.
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Ayla Kumar
•Same here. These document verification tools are becoming essential with how picky lenders are getting.
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