UCC foreclosure auction timeline - when do liens get released?
My company had equipment financing that went south last year and now we're facing a UCC foreclosure auction next month. The lender filed UCC-1s on all our manufacturing equipment back in 2019 and we defaulted on payments in late 2023. I'm trying to understand the timeline here - after the auction happens, how long does it typically take for the UCC liens to get terminated? I've heard conflicting info about whether the lender has to file UCC-3 terminations immediately or if they have some grace period. Also wondering if there are any assets that might not be included in the foreclosure that I should be concerned about. The loan was for about $485K originally and I think we still owe around $320K. Anyone been through this process before?
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Joy Olmedo
Sorry to hear about your situation. The UCC termination timeline after foreclosure can vary but typically the secured party should file UCC-3 termination statements within 20 days of the debt being satisfied through the auction proceeds. However, if the auction doesn't cover the full debt amount, they might keep some liens active for any deficiency claims. You should review your original security agreement to see what specific collateral was pledged.
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Isaiah Cross
•This is really important - definitely check that security agreement. I've seen cases where the collateral description was super broad and included things like 'all equipment, inventory, and fixtures' which could go way beyond just the manufacturing equipment.
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Kiara Greene
•20 days sounds right for most states but some have different requirements. What state are you in? That makes a difference for the specific rules.
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Evelyn Kelly
Been through this nightmare myself about 3 years ago. The auction process is stressful but here's what I learned - the lender has to give you detailed notice of what assets are being sold and when. They can't just grab everything without proper notification. Make sure you get copies of all the UCC filings so you know exactly what collateral is covered. Sometimes there are filing errors that could work in your favor.
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Kingston Bellamy
•Thanks for sharing your experience. Did you find any issues with their UCC filings that helped your situation? I'm wondering if I should have someone review ours for accuracy.
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Paloma Clark
•Actually had a situation recently where we found debtor name mismatches between the loan docs and UCC-1 that caused major problems for the lender. Used Certana.ai's document verification tool to cross-check everything - just upload your loan agreement and UCC-1 and it flags any inconsistencies automatically. Saved us from missing a critical discrepancy that ended up voiding part of their security interest.
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Heather Tyson
Wait, if there's still $320K owed, won't they come after you personally for the deficiency after the auction? Equipment auctions rarely bring full value.
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Kingston Bellamy
•That's exactly what I'm worried about. The equipment is probably only worth $200K at auction if we're lucky. Not sure if I have personal guarantees on this loan or not.
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Joy Olmedo
•You need to check your loan documents ASAP for personal guarantees. If you signed them, you could be on the hook for the deficiency. If not, they might only be able to go after the business assets.
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Raul Neal
•This is why it's so important to review all the paperwork thoroughly before the auction. I've seen people get blindsided by guarantees they forgot they signed.
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Jenna Sloan
The termination timing really depends on whether the sale proceeds cover the full debt. If there's a deficiency, they might file partial releases for sold equipment but keep liens on other collateral. I'd recommend getting legal counsel if you haven't already - foreclosure law can be tricky and there might be procedural issues you can challenge.
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Isaiah Cross
•Definitely agree on the legal counsel. There are specific notice requirements and procedural steps they have to follow. Any mistakes in the process could delay or invalidate the foreclosure.
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Christian Burns
•Yeah lawyers are expensive but probably worth it when you're talking $300K+ in debt. Better to spend a few thousand on legal fees than get stuck with a huge deficiency judgment.
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Sasha Reese
Just went through similar with our restaurant equipment last year. After the auction they filed UCC-3 terminations for the specific equipment that sold but kept liens on our accounts receivable and inventory since the sale didn't cover everything. The partial releases took about 6 weeks to show up in the filing system. Make sure you monitor the UCC records after the sale to see what gets terminated vs what stays active.
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Kingston Bellamy
•6 weeks seems like a long time. How did you track the filings? Just checking the Secretary of State website manually?
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Sasha Reese
•Yeah I was checking the SOS website every few days. It was tedious and I wasn't sure if I was missing anything. Wish I had known about document tracking tools back then.
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Paloma Clark
•For tracking UCC changes, I've found Certana.ai really helpful - you can upload your current UCC-1 and it monitors for any amendments or terminations automatically. Much easier than manually checking the state database constantly.
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Muhammad Hobbs
Don't forget about fixture filings if any of your equipment is attached to real estate. Those have different rules and might not be included in the personal property auction.
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Kingston Bellamy
•Good point. We have some manufacturing lines that are bolted to the concrete floor. Would those be considered fixtures?
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Muhammad Hobbs
•Potentially yes. Fixture filings (UCC-1 filed in real estate records) have different foreclosure procedures. You'd need to check if they filed any fixture filings in addition to the regular UCC-1s.
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Joy Olmedo
•Equipment that's permanently attached might be fixtures depending on state law. The lender would need to follow real estate foreclosure procedures for those, not just personal property auction rules.
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Noland Curtis
This whole system is so messed up. Banks can just take your stuff and sell it for pennies on the dollar then still come after you for the difference. The UCC rules are set up to protect lenders, not borrowers.
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Diez Ellis
•I feel your frustration but the rules do provide some protections. They have to give proper notice, conduct commercially reasonable sales, and follow specific procedures. The problem is most people don't know their rights.
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Vanessa Figueroa
•True but 'commercially reasonable' is pretty subjective. I've seen auctions where equipment sold for 20% of actual value and courts still said it was reasonable.
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Abby Marshall
Make sure you understand what happens to any insurance proceeds too. If equipment gets damaged before the auction, the insurance money might go to the lender under the UCC filing.
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Kingston Bellamy
•Hadn't thought about insurance. The equipment is still covered under our policy. Should I be concerned about that?
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Abby Marshall
•Check your UCC-1 filing - it probably includes insurance proceeds as additional collateral. The lender has rights to those funds too.
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Sadie Benitez
One thing to watch for is whether they properly identified all the collateral in the original UCC-1. I've seen cases where equipment was listed generically and there were questions about what was actually covered. Document verification can catch these issues - recently used a service that cross-checks loan documents against UCC filings to make sure everything matches up properly.
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Kingston Bellamy
•That's interesting. How detailed do the collateral descriptions need to be in UCC-1 filings?
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Sadie Benitez
•They need to reasonably identify the collateral but can be fairly general. 'All equipment' is usually sufficient but sometimes there are mismatches between what the loan agreement says and what the UCC-1 says.
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Drew Hathaway
•The description just needs to give notice to other potential creditors. But if there are inconsistencies between documents it could create problems for the lender's security interest.
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Laila Prince
Bottom line - document everything, get legal help, and don't assume the lender followed all the rules correctly. There might be procedural defenses available that could delay or reduce your exposure. The UCC foreclosure process has a lot of required steps and lenders sometimes cut corners.
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Kingston Bellamy
•Thanks everyone for all the advice. Sounds like I need to get a lawyer and review all the documentation carefully. This is more complicated than I thought.
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Joy Olmedo
•Good luck with everything. The process is stressful but there are protections in place if you know how to use them. Don't give up without exploring all your options.
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Paloma Clark
•Before you hire expensive legal help, might be worth running your documents through an automated checker first to identify any obvious issues. Could save you some attorney fees if there are clear problems with their filings.
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