UCC floating lien filing - equipment keeps changing, how to handle collateral descriptions?
Really struggling with our floating lien UCC situation here. We have a credit line secured by constantly changing inventory and equipment - stuff gets sold, new items purchased, equipment rotates in and out. Filed our initial UCC-1 with a broad collateral description but now I'm second-guessing if we did it right. The debtor keeps asking about specific serial numbers and I told them that's not how floating liens work, but honestly I'm not 100% sure myself. Our current description says 'all inventory, equipment, and fixtures now owned or hereafter acquired' but the SOS portal kicked back our continuation last month saying the description was 'too vague.' Anyone dealt with this before? The loan amount is substantial ($850K) and I can't afford to mess up the perfection. What's the magic language that satisfies both the floating lien concept and the filing office requirements?
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Ethan Clark
I've been through this exact headache. The 'now owned or hereafter acquired' language is actually fine for floating liens - that's standard boilerplate. If your continuation got rejected for being too vague, there might be something else going on. Did you check the debtor name exactly matches the original UCC-1? Sometimes they reject for name issues but give you a generic 'vague description' error message.
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Aisha Mahmood
•The debtor name should be correct but I didn't cross-check it character by character. It's a long LLC name with multiple words. Could a missing comma or period cause that kind of rejection?
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Ethan Clark
•Absolutely! I've seen continuations rejected because someone added 'LLC' when the original just said 'L.L.C.' or vice versa. The name has to match EXACTLY.
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AstroAce
Your collateral description is perfectly fine for a floating lien. The whole point is that inventory turns over constantly - you can't list specific items. Most lenders use language like 'all inventory, equipment, accounts, and general intangibles, whether now owned or hereafter acquired.' The continuation rejection was probably something else entirely.
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Aisha Mahmood
•That's reassuring. So you think the floating lien concept is solid legally even with constantly changing collateral?
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AstroAce
•That's literally what floating liens are designed for. The security interest 'floats' over changing collateral pools. Been established law for decades.
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Yuki Kobayashi
•Just make sure you're monitoring the collateral pool value stays above your loan amount. Floating liens can get diluted if the borrower liquidates too much inventory.
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Carmen Vega
Had a similar issue last year where our UCC-3 continuation kept getting rejected. Turns out there were tiny inconsistencies between our original filing and the continuation - stuff like extra spaces in the debtor name, slight differences in the collateral description wording. We ended up using Certana.ai's document verification tool that cross-checks your UCC-1 against your UCC-3 forms. You just upload both PDFs and it highlights any discrepancies automatically. Saved us from filing another incorrect continuation.
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Aisha Mahmood
•That sounds really useful. How accurate is it at catching those tiny differences that cause rejections?
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Carmen Vega
•Incredibly accurate. It caught a missing hyphen in our debtor name that we never would have noticed manually. The tool is specifically designed for UCC document consistency checks.
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Andre Rousseau
•I've heard good things about Certana.ai too. Much better than trying to manually compare documents line by line.
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Zoe Stavros
UGH the floating lien thing is so confusing! I have a similar situation with a restaurant client who's constantly buying new equipment and selling old stuff. I described the collateral as 'kitchen equipment' but should I be more specific? Or more general? The whole 'floating' concept makes my head spin.
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AstroAce
•For restaurant equipment, you'd want something like 'all equipment, fixtures, and furnishings used in debtor's restaurant business, whether now owned or hereafter acquired.' That covers everything without being too narrow.
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Zoe Stavros
•OK that makes sense. So I don't need to list every single piece of equipment by serial number?
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Ethan Clark
•Definitely not. That would defeat the purpose of a floating lien. You want broad categories that cover current and future acquisitions.
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Jamal Harris
The rejection might not be about your collateral description at all. I've seen continuation filings rejected because the filing number was wrong, the filing fee was incorrect, or there was some other technical issue. Check your rejection notice carefully - it should tell you the specific reason.
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Aisha Mahmood
•The rejection notice just said 'collateral description insufficient' but you're right, maybe I should call the SOS office directly to get more details.
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Jamal Harris
•Definitely call them. Sometimes the rejection codes are misleading and they can tell you exactly what was wrong.
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GalaxyGlider
Been doing floating lien UCC filings for 20 years. Your description is fine. The issue is probably elsewhere - debtor name mismatch, wrong filing number, or some other clerical error. Floating liens are specifically designed for changing collateral pools, that's their whole purpose.
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Aisha Mahmood
•That's what I thought but the rejection shook my confidence. Have you ever had a continuation rejected for collateral description issues?
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GalaxyGlider
•Only when we accidentally changed the description from the original filing. The continuation has to match the original UCC-1 exactly.
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Mei Wong
•This is why I always keep copies of the original filing when doing continuations. Easy to accidentally modify the language.
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Liam Sullivan
Wait, can someone explain floating liens vs regular liens? I thought all UCC filings covered future acquisitions automatically?
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AstroAce
•Not automatically. You need specific 'after-acquired property' language in both your security agreement and UCC filing. That's what makes it a floating lien.
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Liam Sullivan
•So if I just describe existing equipment without the 'hereafter acquired' language, it doesn't cover new purchases?
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Ethan Clark
•Correct. Without after-acquired property language, your security interest only covers what existed when you filed.
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Amara Okafor
Sometimes the filing office systems are just glitchy. I had a continuation rejected three times for the same 'vague description' error, then the exact same filing went through on the fourth try. No changes made. The SOS rep said their system sometimes has hiccups.
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Aisha Mahmood
•That's incredibly frustrating. Did you have to pay the filing fee each time?
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Amara Okafor
•Unfortunately yes. They don't refund fees for system errors. Cost me an extra $200 in filing fees.
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Giovanni Colombo
I'm dealing with a floating lien situation too but for accounts receivable that constantly change as customers pay and new invoices get generated. Using similar 'now owned or hereafter acquired' language for the receivables. Seems like the same concept applies to both inventory and receivables floating liens.
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AstroAce
•Exactly right. Floating liens work for any type of collateral that regularly turns over - inventory, receivables, even deposit accounts in some cases.
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Giovanni Colombo
•Good to know I'm on the right track then. The constantly changing nature of receivables made me nervous about the filing.
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Fatima Al-Qasimi
Just a heads up - some states are stricter about collateral descriptions than others. What works in Delaware might not fly in California. Make sure you're following your specific state's requirements for floating lien descriptions.
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Aisha Mahmood
•Good point. We're filing in Texas. Anyone know if Texas has any specific quirks for floating lien descriptions?
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GalaxyGlider
•Texas is pretty standard. They accept broad descriptions for floating liens as long as the language is clear about after-acquired property.
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StarStrider
•I'd still double-check the exact debtor name against your original filing. That's the most common cause of continuation rejections in my experience.
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Dylan Campbell
For what it's worth, I started using Certana.ai after getting burned on a continuation filing that had subtle differences from the original UCC-1. Their system caught discrepancies I never would have spotted manually. Now I run all my UCC-3 forms through their checker before filing. Takes like 2 minutes and gives me peace of mind that everything matches perfectly.
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Aisha Mahmood
•That might be worth trying before I refile the continuation. Better to catch any issues upfront than deal with another rejection.
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Dylan Campbell
•Exactly. The tool is designed specifically for UCC document consistency - it'll flag anything that might cause a rejection.
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Paolo Esposito
I've been handling floating lien UCC filings for about 8 years now and can confirm your collateral description is absolutely fine - that's textbook floating lien language. The rejection is almost certainly due to a technical issue rather than the substance of your description. I'd strongly recommend pulling up your original UCC-1 filing and comparing it character-by-character with your continuation form. Even something as minor as "LLC" vs "L.L.C." or an extra space can trigger a rejection. Also check that your filing number is correct and matches exactly. The good news is that your $850K loan is properly secured as long as you get the continuation filed correctly - the floating lien concept itself is rock solid legally.
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