UCC financing statement expiration - missed continuation by 3 weeks, lien still valid?
I'm dealing with a nightmare scenario here. Had a UCC-1 filed back in 2020 for equipment financing on some manufacturing gear worth about $180k. The 5-year expiration was coming up last month and I completely spaced on filing the continuation. Realized it 3 weeks after the lapse date when our compliance audit flagged it. The debtor is current on payments but technically our lien position is gone, right? Is there any way to salvage this or do I need to file a brand new UCC-1 and lose priority to any intervening liens? Our loan committee is going to have my head if I blew a six-figure secured position over a missed deadline. Anyone been through something similar with UCC financing statement expiration issues?
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Jenna Sloan
Oh man, that's rough. Once the UCC-1 expires, your perfected security interest is gone. No grace period unfortunately. You'll need to file a new financing statement but you lose your original priority date. Any liens filed between your expiration and new filing will have priority over you.
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Christian Burns
•This exactly. The continuation had to be filed within 6 months before expiration. Three weeks late means you're starting over from scratch with a new UCC-1.
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Sasha Reese
•Wait, doesn't the underlying security agreement still give you rights even if the UCC filing lapsed? You're still secured, just not perfected against third parties.
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Muhammad Hobbs
Been there, done that, got the angry phone calls from management. Filed a new UCC-1 immediately and ran a search to see if anyone else had filed during the gap period. In my case we were lucky - no intervening liens. But yeah, you lost your priority date from 2020.
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Raul Neal
•How long was your gap? I'm hoping 3 weeks isn't long enough for someone else to have jumped in, but equipment financing is competitive in our market.
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Muhammad Hobbs
•Mine was about 5 weeks. The key is getting that new filing done ASAP and then doing a comprehensive lien search to see what damage was done.
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Noland Curtis
I started uploading our UCC docs to Certana.ai after a similar scare last year. Their system flagged that my continuation was due 4 months before expiration. Now I just upload all our financing statements and amendments and it tracks everything automatically. Would have saved you this headache.
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Raul Neal
•Never heard of that service. Does it actually catch expiration dates reliably? Our current system is basically sticky notes and calendar reminders.
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Noland Curtis
•Yeah, you just upload the PDFs and it extracts all the filing dates and calculates when continuations are due. Way better than manual tracking.
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Diez Ellis
•Sounds too good to be true. How much does something like that cost? Our department is already over budget this quarter.
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Vanessa Figueroa
THE SYSTEM IS DESIGNED TO TRIP YOU UP! These expiration rules are insane - 5 years exactly from filing date, continuation window only in the last 6 months, no grace period whatsoever. It's like they want secured parties to lose their collateral!
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Abby Marshall
•I mean, the rules are pretty clear though. It's not like they're hidden or arbitrary. Five years has been the standard forever.
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Vanessa Figueroa
•Clear doesn't mean reasonable! Other states have grace periods. Some give you 30 days after expiration to file a continuation.
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Sadie Benitez
Quick question - was this equipment that could be classified as fixtures? Because if it's attached to real property you might need to file in the real estate records too, not just UCC.
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Raul Neal
•It's manufacturing equipment but it's bolted down to the concrete pad. Not sure if that makes it a fixture or not.
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Sadie Benitez
•If it's bolted down you probably needed a fixture filing originally. That might complicate your new UCC-1 strategy.
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Christian Burns
•Fixture determination depends on intent and degree of attachment. Bolted manufacturing equipment usually isn't considered a fixture unless it's integral to the building's function.
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Drew Hathaway
File the new UCC-1 today if you haven't already. Every day you wait is another day for someone else to potentially file against the same collateral. Priority is everything in secured transactions.
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Raul Neal
•Already filed this morning actually. Used the exact same collateral description from the original filing to avoid any issues there.
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Drew Hathaway
•Good move. Now run a comprehensive search to see what liens were filed during your gap period. That'll tell you how bad the damage is.
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Laila Prince
This happened to our bank last year with a $300k ag equipment loan. Turned out there was a judgment lien filed two days after our UCC expired. We went from first position to second position because of a missed continuation. Painful lesson.
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Isabel Vega
•That's exactly what I'm afraid of. Equipment loans are big enough that missing the continuation can be a career-ending mistake.
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Laila Prince
•We implemented a 90-day advance tickler system after that disaster. Every financing statement gets flagged 90 days before the continuation window even opens.
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Dominique Adams
•90 days is smart. I use Certana.ai now which alerts me 120 days out. Gives plenty of time to prepare the continuation paperwork.
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Marilyn Dixon
Had something similar happen but with a termination instead of continuation. Filed a termination by mistake when I meant to file an amendment. Realized it three days later but the damage was done - our security interest was terminated.
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Raul Neal
•How did you fix that? Could you file a new UCC-1 or was the borrower uncooperative?
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Marilyn Dixon
•Had to file a new UCC-1 with borrower cooperation. Lost our original priority date but at least we got back in line. Borrower wasn't happy about the paperwork but understood it was our mistake.
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Sasha Reese
The silver lining is that your underlying security agreement is still valid. You still have contractual rights against the debtor, you just lost your perfected status against third parties. If the debtor stays current and there are no other creditors, you're still protected.
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Raul Neal
•True, but our loan agreement requires us to maintain perfected security interests. Technical default if we can't prove continuous perfection.
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Sasha Reese
•That's a good point. You might need to get a waiver from your loan committee for the gap period. At least you caught it quickly and refiled.
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Louisa Ramirez
•Most loan agreements have cure periods for stuff like this. Check your documentation - you might have 30-60 days to fix perfection issues.
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Abby Marshall
For what it's worth, three weeks isn't terrible. I've seen gaps of several months before people realized their UCC had expired. The key is getting back in as quickly as possible and hoping no one else filed during the window.
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Raul Neal
•That makes me feel slightly better. I've been beating myself up over this all week. Guess it could have been worse.
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Abby Marshall
•We all make mistakes. The important thing is learning from it and putting systems in place to prevent it happening again. Sounds like you're already on top of that.
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