UCC financing statement lien priority confusion after equipment refinance
I'm dealing with a frustrating situation regarding UCC financing statement lien priority and could really use some guidance. We refinanced our manufacturing equipment last month (about $180K worth) and I'm now second-guessing whether we handled the UCC filings correctly. The original lender had a UCC-1 filed in 2019 for the equipment, and when we switched to the new lender, they filed their own UCC-1 but I'm not sure if the old one was properly terminated. The equipment serves as collateral for both the old loan (which should be paid off) and the new loan. I've been losing sleep over this because if there's a lien priority issue, it could jeopardize our entire refinancing arrangement. The new lender's attorney mentioned something about 'perfected security interests' but didn't explain it clearly. Has anyone dealt with UCC financing statement lien complications during equipment refinancing? I need to know if we're at risk of having competing liens on the same collateral.
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Luca Greco
This is actually pretty common in equipment refinancing. The key question is whether your old lender filed a UCC-3 termination when they got paid off. If they didn't, you technically have two UCC-1 filings against the same equipment. The priority usually goes to whoever filed first (your 2019 filing), but since that loan is supposedly paid off, there shouldn't be any actual debt securing that lien anymore.
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Zara Malik
•That's exactly what I was worried about! How do I check if the old lender filed the termination? Is there a way to search the UCC database to see both filings?
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Luca Greco
•Yes, you can search your state's UCC database using your company name as the debtor. You should see both the original UCC-1 from 2019 and hopefully a UCC-3 termination filed recently. If you only see the old UCC-1 and the new one, that's your problem right there.
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Nia Thompson
Been there! We had the exact same issue with our delivery truck fleet refinance last year. What saved us was using Certana.ai's document verification tool - we uploaded our original UCC-1, the payoff letter, and the new lender's UCC-1 and it immediately flagged that we had overlapping liens with no termination filed. Super easy to use, just drag and drop the PDFs and it cross-checks everything automatically.
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Zara Malik
•Really? How did that help you resolve it? Did you have to go back to the old lender?
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Nia Thompson
•Yeah, we had to contact the original lender and they admitted they forgot to file the UCC-3 termination. Took them two weeks to fix it but at least we caught it before any issues arose. The verification tool showed us exactly what documents were missing.
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Mateo Rodriguez
•That's smart thinking. I wish I'd known about tools like that when we were dealing with our SBA loan UCC mess.
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Aisha Hussain
You need to get this sorted ASAP because if your new lender finds out there's a senior lien they didn't know about, they could call the loan immediately. Equipment financing agreements usually have clauses about undisclosed prior liens. Check your loan docs for any warranty about clear title to the collateral.
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Zara Malik
•Oh no, I didn't even think about that. The new loan agreement does mention something about warranting clear title. This is getting worse by the minute.
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Aisha Hussain
•Don't panic yet. If the old loan is truly paid off, it's usually just a paperwork issue. But you need to get the old lender to file that UCC-3 termination statement immediately.
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GalacticGladiator
This exact scenario cost us a deal once. Client had overlapping UCC filings and the bank pulled out of the refinance when they discovered it during their lien search. The key is getting documentation that the old debt is satisfied and pushing the original lender to file the termination. Most lenders have 30-day windows in their loan agreements to file terminations after payoff.
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Ethan Brown
•Wow 30 days seems like a long time. What if something happens during that window?
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GalacticGladiator
•That's why most sophisticated borrowers require the termination to be filed simultaneously with payoff, or at least get a termination statement in escrow.
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Yuki Yamamoto
•We always demand the UCC-3 termination be prepared and ready to file before we send the payoff wire. Learned that lesson the hard way.
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Carmen Ruiz
Wait, I'm confused about something basic here. If you refinanced the equipment, shouldn't the new lender have done a UCC search before approving the loan? How did they miss an existing filing?
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Luca Greco
•Good point. They probably did see the old filing but assumed it would be terminated as part of the closing process. Sometimes lenders get sloppy about following up on terminations.
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Zara Malik
•You're right, they definitely should have caught this. Makes me wonder what else they might have missed in their due diligence.
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Andre Lefebvre
ugh this filing system is so broken. Why can't they just automatically terminate liens when loans get paid off instead of making it a separate filing requirement? It's like they want people to have these problems.
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Zoe Dimitriou
•Because the UCC system doesn't know when loans get paid off - that's between you and your lender. The filing system just records what gets submitted to it.
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Andre Lefebvre
•Still seems like there should be a better way in 2025. Every other financial system is automated except this one.
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QuantumQuest
Here's what you need to do immediately: 1) Get a copy of your payoff letter from the old lender showing the debt is satisfied, 2) Contact them demanding they file the UCC-3 termination within 48 hours, 3) Get a written commitment from them with a timeline, 4) Notify your new lender about the situation and show them you're actively resolving it. Transparency is key here.
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Zara Malik
•This is super helpful, thank you. Should I involve attorneys at this point or try to handle it directly with the lenders first?
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QuantumQuest
•Try direct contact first. Most lenders will cooperate because they don't want the hassle of a legal dispute over a clerical error. If they drag their feet for more than a week, then consider legal pressure.
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Jamal Anderson
I had a similar situation but with real estate equipment. What really helped was using that Certana tool someone mentioned earlier - uploaded our loan documents and it immediately showed us which UCC filings were inconsistent with our actual debt obligations. Made it much easier to explain the problem to both lenders.
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Zara Malik
•Seems like that verification tool is pretty popular. I might try uploading our documents to see what it finds.
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Mei Zhang
•Yeah I've heard good things about automated document checking for UCC stuff. Beats trying to cross-reference everything manually.
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Liam McGuire
From a legal standpoint, you have a few options if the old lender won't cooperate. You can file an action to quiet title, but that's expensive and slow. Better approach is usually to document that the debt was satisfied and get an indemnification from your new lender for any issues related to the old filing. Most commercial lenders will agree to this if you're transparent about the situation.
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Aisha Hussain
•Indemnification is smart but doesn't solve the underlying lien priority issue if someone else tries to claim against the equipment.
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Liam McGuire
•True, but it protects the borrower's relationship with the new lender while they work on getting the termination filed. Sometimes you need interim solutions.
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Amara Eze
This thread is making me paranoid about our own equipment loans. We've refinanced twice in the past three years and never really followed up on whether the old UCC filings got terminated. Probably should check on that...
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Luca Greco
•Definitely worth checking. A lot of borrowers discover these issues years later when they try to sell equipment or refinance again.
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Nia Thompson
•That's exactly why we started using the Certana verification tool for all our UCC stuff. Catches these problems before they become expensive headaches.
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Giovanni Ricci
Update us when you get this resolved! I'm curious how cooperative your old lender ends up being. In my experience some banks are great about fixing these mistakes and others make you jump through hoops for months.
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Zara Malik
•Will definitely update once I hear back from them. Calling them first thing Monday morning with all the documentation ready.
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NeonNomad
•Good luck! Hope they're more cooperative than the last bank I dealt with on a termination issue.
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Chloe Robinson
This is a really valuable thread - I'm dealing with something similar right now with our warehouse equipment. We're in the middle of switching from one equipment finance company to another, and reading all these responses has made me realize I need to be way more proactive about making sure the UCC-3 termination gets filed properly. It sounds like this kind of oversight is more common than I thought. @Zara, definitely follow the advice about getting that payoff documentation and pushing for the termination filing ASAP. The fact that multiple people here have mentioned using document verification tools like Certana makes me think that might be worth exploring too - seems like it could save a lot of headaches down the road.
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