UCC implications when security agreement sale transfers collateral ownership
Going through some paperwork chaos right now and need guidance on how UCC filings work when there's a security agreement sale involved. We had equipment financed under a security agreement, UCC-1 was filed properly about 2 years ago. Now the original lender sold their interest to a new financing company, and I'm getting conflicting information about what needs to happen with the UCC filings. The new company says they need a UCC-3 assignment filed, but our attorney mentioned something about potentially needing a completely new UCC-1 instead? The collateral is the same (manufacturing equipment), debtor name hasn't changed, but the secured party obviously has. Equipment is worth about $180K so this isn't something I want to mess up. Has anyone dealt with a security agreement sale situation like this? What's the correct filing procedure to make sure the lien stays perfected?
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Oliver Weber
Assignment via UCC-3 is typically the right approach when there's a security agreement sale. The original UCC-1 stays in place, you just file a UCC-3 assignment to transfer the secured party interest to the new lender. Much cleaner than starting over with a new UCC-1. Make sure the assignment form includes the original filing number and exact debtor name from the first filing.
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FireflyDreams
•This is correct. UCC-3 assignment maintains the original priority date which is usually what everyone wants in a security agreement sale scenario.
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Natasha Kuznetsova
•But what if there were errors in the original filing? Sometimes a security agreement sale is a good opportunity to fix things with a fresh UCC-1.
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Javier Morales
We just went through this exact situation last month with a security agreement sale of our fleet vehicles. Used Certana's document verification tool to upload both our original UCC-1 and the new UCC-3 assignment to make sure everything aligned properly - caught a small discrepancy in how the secured party name was formatted that could have caused issues. Really straightforward process, just upload the PDFs and it cross-checks everything automatically.
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Emma Anderson
•That's actually brilliant - I never thought about using a tool to verify the assignment matches the original filing perfectly.
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Malik Thompson
•How quickly did it flag the name formatting issue? These security agreement sale deadlines can be tight.
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Javier Morales
•Instant results. The tool highlighted that our original UCC-1 had 'ABC Finance Corp.' but the assignment had 'ABC Finance Corporation' which could technically be seen as different entities.
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Isabella Ferreira
Your attorney might be thinking about a new UCC-1 if there are other changes happening beyond just the security agreement sale. Like if you're also modifying the collateral description or there were problems with the original filing. But if it's just a straight transfer of the security interest, UCC-3 assignment is standard.
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Amina Toure
•No other changes, just the security agreement sale transferring the lender's interest. Collateral and debtor info stays exactly the same.
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CosmicVoyager
•Then definitely go with the UCC-3 assignment route. Keeps your original priority date intact.
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Ravi Kapoor
Be really careful with the timing on this! Some security agreement sale contracts have specific deadlines for getting the UCC assignment filed. Also make sure the new lender's legal name is exactly right on the UCC-3 - I've seen assignments rejected for minor name variations.
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Freya Nielsen
•Good point about the deadlines. What's typical for security agreement sale assignments?
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Ravi Kapoor
•Usually 30-60 days from the sale date, but it varies by contract. Some are much shorter if it's a distressed situation.
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Omar Mahmoud
I'm dealing with something similar but my original UCC-1 might have had the wrong debtor name format (used DBA instead of legal entity name). Should I push for a new UCC-1 instead of just doing the assignment?
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Chloe Harris
•If there's a debtor name issue, you'll want to fix that regardless of the security agreement sale. Maybe do both - correct the debtor name with an amendment and then do the assignment.
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Diego Vargas
•Or just start fresh with a new UCC-1 if the original has problems. Depends on how much you value that original priority date.
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NeonNinja
Make sure you get a copy of the filed UCC-3 assignment once it's processed. The new lender should provide this but sometimes there are communication gaps during security agreement sales. You want proof that the transfer was properly recorded.
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Anastasia Popov
•Yes! And verify it shows up in the SOS database correctly. I've seen assignments filed but not properly indexed.
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Sean Murphy
•How long does it usually take for assignments to show up in the system after filing?
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NeonNinja
•Usually 1-3 business days for electronic filings, longer if they filed paper for some reason.
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Zara Khan
One thing to watch out for in security agreement sales - make sure there's no gap in perfection. The assignment should be filed before or simultaneously with the sale closing to avoid any period where the lien might be unperfected.
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Luca Ferrari
•This is crucial for priority purposes. Even a short gap can cause problems if other creditors are involved.
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Nia Davis
•Most professional lenders handle this automatically but it's worth double-checking the timeline.
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Mateo Martinez
We had a security agreement sale go sideways because the assignment had a typo in the original filing number. Make sure whoever is preparing the UCC-3 has the exact filing information from your original UCC-1. Even one wrong digit can cause a rejection.
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QuantumQueen
•That's exactly why I mentioned Certana earlier - it would catch something like that before you file.
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Aisha Rahman
•How did you fix it once you realized the mistake?
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Mateo Martinez
•Had to file a corrected assignment, which delayed everything by two weeks. Not fun when you're trying to close a security agreement sale.
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Ethan Wilson
Quick question - does the debtor need to sign anything for a UCC-3 assignment in a security agreement sale? Or is this just between the old and new lenders?
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Yuki Sato
•Just between the lenders typically. The debtor usually doesn't need to sign the UCC-3 assignment form.
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Carmen Flores
•Though you should probably notify the debtor that the security agreement sale happened and who the new secured party is.
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Andre Dubois
For what it's worth, I've seen both approaches work (UCC-3 assignment vs new UCC-1) in security agreement sales. The assignment is usually preferred because it's simpler and maintains priority, but sometimes starting fresh makes sense if there are other issues to clean up. Sounds like in your case the assignment is the way to go.
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Amina Toure
•Thanks everyone - this has been really helpful. Going to proceed with the UCC-3 assignment and make sure all the details match exactly.
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CyberSamurai
•Smart choice. Keep us posted on how it goes!
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