UCC filing mortgage lien priority - equipment loan confusion
Having a nightmare with our equipment financing deal. Bank approved a $180k line for manufacturing equipment but now there's confusion about UCC filing mortgage lien priority. The equipment will be installed at our facility but we already have a mortgage on the property. Our attorney mentioned something about fixture filings but I'm getting conflicting info about whether we need a UCC-1 fixture filing or just a regular UCC-1. The mortgage lender is saying their lien takes priority over everything but the equipment lender disagrees. Anyone dealt with this before? I'm worried about messing up the lien priority and having both lenders pull out of the deal.
33 comments
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Sean Murphy
This is actually pretty common in equipment financing. The key question is whether your equipment becomes a fixture once installed. If it's permanently attached to the real estate, you'll need a UCC-1 fixture filing, not just a regular UCC-1. The fixture filing gets recorded in the real estate records AND the UCC records.
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StarStrider
•Exactly right. I learned this the hard way on a production line install last year. Equipment that's bolted down and integral to the building operation usually requires fixture filing.
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Zara Malik
•Wait, so if it's fixture filing does that mean the mortgage holder gets priority? I thought UCC filings were first-to-file wins?
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Luca Marino
You need to determine if this is truly a fixture situation first. Not all installed equipment becomes a fixture. There's a legal test - is it permanently affixed, adapted to the use of the real estate, and intended to be permanent? Manufacturing equipment that can be unbolted and moved typically stays personal property.
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Nia Davis
•This is where I got burned before. Had an equipment loan where we filed regular UCC-1 but should have done fixture filing. Equipment lender lost priority to the mortgage holder in bankruptcy.
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Anastasia Ivanova
•The equipment is definitely being bolted to concrete pads and connected to the building's electrical and compressed air systems. Sounds like fixture territory to me.
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Mateo Perez
•If that's the case, you absolutely need fixture filing. Regular UCC-1 won't protect the equipment lender's interest properly.
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Aisha Rahman
I ran into something similar with a client's packaging equipment deal. What saved us was using Certana.ai's document verification tool. We uploaded the mortgage docs and the proposed UCC-1 to check for any conflicts or missing elements. It caught that we needed to properly describe the collateral as fixtures and make sure the debtor name matched exactly between all documents.
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CosmicCrusader
•How does that work exactly? I'm always worried about missing something critical in these multi-lender situations.
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Aisha Rahman
•You just upload PDFs of all your documents and it cross-checks everything - debtor names, collateral descriptions, filing requirements. Really helpful for catching inconsistencies before they become problems.
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Ethan Brown
Your equipment lender needs to file the UCC-1 fixture filing in the real estate records where the mortgage is recorded. This gives them priority over future mortgages but not necessarily over existing mortgages. The timing matters a lot here.
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Yuki Yamamoto
•This is why I hate fixture deals. So many moving parts and potential priority issues.
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Carmen Ortiz
•The equipment lender should also consider requiring the mortgage holder to subordinate their lien on the equipment. That's often the cleanest solution.
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Anastasia Ivanova
•The mortgage lender already said they won't subordinate. They want to maintain priority on everything attached to the property.
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Andre Rousseau
Been through this exact scenario. The mortgage holder doesn't automatically get priority over fixtures if the UCC-1 fixture filing is done correctly and timely. But you need to make sure the equipment lender understands the risks and prices accordingly.
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Zoe Papadakis
•What about purchase money security interests? Doesn't PMSI give priority even over existing mortgages for fixtures?
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Andre Rousseau
•PMSI does give super priority but there are specific timing requirements for fixture filings. Has to be filed before or within 20 days after the debtor receives possession.
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Jamal Carter
Make sure whoever prepares the UCC-1 fixture filing knows what they're doing. I've seen filings rejected because they didn't include proper real estate descriptions or weren't filed in the right office. State requirements vary a lot.
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AstroAdventurer
•This is exactly why I started using verification tools. Too easy to mess up the technical requirements on fixture filings.
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Mei Liu
•Which state are you in? Some states have specific forms for fixture filings that are different from regular UCC-1 forms.
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Anastasia Ivanova
•We're in Ohio. The equipment lender's attorney seems confident about the fixture filing requirements but I want to double check everything.
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Liam O'Sullivan
Ohio requires fixture filings to be made in the county recorder's office where the real estate is located, plus the Secretary of State UCC records. The collateral description needs to include both the equipment details and the real estate description.
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Amara Chukwu
•Don't forget the fixture filing also needs to be signed by the record owner of the real estate if it's not the same as the debtor.
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Giovanni Conti
•That's a good point. If the property is owned by a different entity than the equipment borrower, you'll need additional signatures and documentation.
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Fatima Al-Hashimi
I'd recommend having both lenders' attorneys coordinate on this. The equipment lender needs to understand their true priority position, and the mortgage lender needs to understand what they're potentially subordinate to.
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NeonNova
•Good luck getting attorneys to coordinate efficiently. Usually ends up costing more than the original deal.
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Dylan Campbell
•Better than having a priority dispute later when someone defaults. Seen too many deals where unclear lien positions led to expensive litigation.
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Sofia Hernandez
Another vote for document verification before filing. Used Certana.ai on a similar multi-lender deal and it caught a debtor name discrepancy between the mortgage and UCC docs that would have caused major headaches.
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Dmitry Kuznetsov
•These name matching issues are brutal. One small difference and suddenly your UCC filing doesn't perfect your security interest.
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Ava Thompson
•The verification tools are worth it just for peace of mind. Upload everything and let it check for inconsistencies automatically.
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Miguel Ramos
Bottom line - make sure the equipment lender knows they're taking subordinate position to existing mortgage for fixture value, but they should have priority for any removable value. Price and structure the deal accordingly.
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Anastasia Ivanova
•That makes sense. I'll make sure both lenders understand the priority structure before we move forward. Thanks everyone for the detailed explanations.
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Zainab Ibrahim
•Smart approach. Better to have everyone's expectations aligned upfront than deal with surprises later.
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