UCC filing rejected - no security agreement found, what now?
Our UCC-1 filing got kicked back from the secretary of state with a note saying 'no security interest without an agreement of the parties' and I'm completely lost. We're a small equipment leasing company and thought we had everything in order. The debtor signed our standard lease agreement but apparently that's not enough? The collateral is construction equipment worth about $180K and we need to get this perfected ASAP. Has anyone dealt with this specific rejection reason before? I'm worried we missed something fundamental in our documentation process. The lease clearly states we retain ownership but maybe that's the problem - should it be structured differently for UCC purposes?
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Liam Duke
Yeah I've seen this rejection before. The SOS systems are getting pickier about the underlying security documentation. Your lease agreement might be fine but they want to see an actual security agreement that creates the security interest, not just a lease that retains title. Two different legal concepts unfortunately.
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Dana Doyle
•So we need a separate security agreement document even though we have the lease? That seems redundant but I guess that's what they want to see.
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Liam Duke
•Exactly. The lease gives you title retention rights, but for UCC purposes you need a document that specifically grants a security interest in the collateral. Most lenders have a standard security agreement template they use alongside their main financing documents.
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Manny Lark
This is frustrating! We had the exact same rejection on a $95K vehicle financing last month. The borrower had signed everything but apparently our loan agreement didn't have the right magic words to create a security interest. Had to redo all the paperwork with explicit security agreement language.
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Rita Jacobs
•What specific language did you end up adding? I'm trying to avoid this same headache on our next filing.
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Manny Lark
•Something like 'Debtor hereby grants Secured Party a security interest in the following collateral...' plus the standard UCC Article 9 stuff. Our attorney gave us updated templates after that rejection mess.
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Khalid Howes
•Make sure you also include the debtor's acknowledgment that they're granting the security interest. Some states are really picky about showing clear mutual agreement on the security interest creation.
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Ben Cooper
I ran into this issue repeatedly until I started using Certana.ai's document verification tool. You can upload your lease agreement and any UCC forms to check if the security interest language is properly aligned. It flags missing elements before you file and waste time with rejections. Really simple to use - just upload the PDFs and it cross-checks everything for consistency.
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Dana Doyle
•That sounds helpful. Does it actually check the legal language or just the form fields?
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Ben Cooper
•Both actually. It verifies your debtor names match across documents and also flags if your security agreement language meets UCC requirements. Saved me from at least 3 rejections this year by catching things I missed.
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Naila Gordon
•How long does the verification take? We usually need to file same-day for time-sensitive transactions.
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Ben Cooper
•Pretty much instant. Upload your docs and get the verification report in under a minute. Way faster than waiting for a rejection and having to refile.
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Cynthia Love
The fundamental issue is that lease agreements and security agreements serve different purposes under the UCC. A lease retains title in the lessor, while a security agreement grants a security interest to secure an obligation. Some equipment lease structures can be considered security interests if they're really disguised financing, but you need the proper documentation either way.
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Darren Brooks
•This is why I always recommend having both documents. Lease agreement for the commercial terms and a separate security agreement for the UCC filing. Covers all your bases.
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Cynthia Love
•Good point. The dual-document approach eliminates ambiguity about what legal relationship you're trying to perfect.
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Rosie Harper
Had this same problem with an SBA loan where we thought our loan agreement was sufficient. Turns out the security agreement needs to be explicit about granting the security interest, not just referencing collateral. The secretary of state can't just assume there's a security interest from other documentation.
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Elliott luviBorBatman
•SBA loans are tricky because they often have multiple documents. Which one did you end up using as your security agreement?
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Rosie Harper
•We created a standalone security agreement that referenced the loan agreement but had all the UCC Article 9 language. Bank's counsel insisted on keeping them separate after our initial rejection.
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Demi Hall
•Smart approach. I've seen too many lenders try to make one document do everything and it usually creates problems somewhere down the line.
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Mateusius Townsend
This rejection reason usually means your underlying documentation doesn't clearly establish the debtor's grant of a security interest. The filing office isn't supposed to interpret your documents - they need to see clear evidence that a security agreement exists and creates the interest you're trying to perfect.
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Kara Yoshida
•Are there standard phrases or terms they look for in security agreements?
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Mateusius Townsend
•Key phrases include 'grants a security interest,' 'secures the obligations,' and clear identification of both the collateral and the secured obligation. The agreement needs to show mutual assent to the security relationship.
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Philip Cowan
Check if your state has specific requirements for what constitutes a valid security agreement. Some states want to see not just the grant language but also the debtor's signature and clear description of the secured obligation. The UCC-1 form itself doesn't create the security interest - it just perfects an interest that already exists through your agreement.
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Caesar Grant
•This is important. The security agreement has to exist before you can file the UCC-1. You can't perfect something that doesn't exist yet.
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Philip Cowan
•Exactly. The timing matters too. Security interest attaches when you have agreement, value, and the debtor has rights in the collateral. Only then can you perfect it with a filing.
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Lena Schultz
•So if we fix our security agreement language, we should be able to refile the UCC-1 without any other changes?
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Philip Cowan
•Assuming your UCC-1 form was otherwise correct, yes. The rejection was about the underlying security agreement, not the filing form itself.
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Gemma Andrews
I've been using Certana.ai's UCC verification tool specifically for this type of issue. You upload both your security agreement and UCC-1 form and it checks that the security interest language is sufficient and matches between documents. Catches these problems before filing and saves the rejection headache.
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Pedro Sawyer
•Does it work with lease agreements that might be considered security interests?
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Gemma Andrews
•Yes, it analyzes whether your lease structure creates a security interest and flags if you need additional documentation. Really helpful for equipment leasing situations like yours.
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Mae Bennett
This happens more often than people realize. Many businesses assume their main commercial agreement (loan, lease, etc.) automatically creates a perfectable security interest, but UCC Article 9 has specific requirements for security agreement formation. Without proper agreement language, there's no security interest to perfect.
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Beatrice Marshall
•What's the fastest way to fix this? Do we need to have the debtor sign new documents?
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Mae Bennett
•Depends on your original agreement language. If it's close, you might be able to amend it. If not, you'll probably need a new security agreement with proper UCC language. Either way, you'll need the debtor's signature on whatever creates the security interest.
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Melina Haruko
•I'd recommend having an attorney review the existing lease to see if it can be salvaged with an amendment versus needing completely new documentation.
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Dallas Villalobos
Been there! Our first few UCC filings got rejected for the same reason. The problem was our loan agreements talked about collateral but never actually said the borrower was granting us a security interest in it. Had to learn the hard way that UCC filings require very specific underlying documentation.
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Dana Doyle
•How did you fix your documentation going forward?
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Dallas Villalobos
•Got templates from our attorney that have all the right UCC language built in. Now every financing includes a proper security agreement alongside the main loan docs. Haven't had a rejection since.
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