UCC lien for solar panels - when does financing company need to file?

Solar panel UCC filings are pretty common actually. The issue is whether the panels are considered fixtures (part of the real estate) or personal property. Even if they're attached to your roof, many lenders still file UCC-1s as personal property just to be safe. The attachment method matters - ballast systems are usually considered removable personal property while penetrating mounts lean more toward fixtures.

Your lender is being smart here. Solar panels occupy this weird gray area between personal property and fixtures. A UCC-1 filing protects them if the panels are ruled personal property, while a mortgage or fixture filing protects if they're deemed fixtures. Many lenders do both - file a UCC-1 for personal property AND a fixture filing. The collateral description usually includes something like 'solar panels, inverters, racking systems, and all related equipment'.

I had a nightmare situation with solar panel liens last year. Filed a UCC-1 but got the debtor name slightly wrong (used the DBA instead of the exact legal entity name). The whole filing was rejected and we didn't catch it for 3 months. Nearly lost priority position. Make sure your lender gets the debtor name exactly right - check it against your articles of incorporation or LLC filing.

The PPA structure complicates things too. If it's a true lease/PPA where you don't own the panels, then the solar company might be the one filing UCC-1s to protect their ownership interest. But if you're financing the purchase, then yes your lender needs the UCC filing. What's the actual ownership structure in your deal?

Watch out for continuation requirements too. UCC-1 filings lapse after 5 years unless you file a UCC-3 continuation. With a 20-year loan you'll need to continue the filing 3-4 times. Make sure your loan docs specify who's responsible for continuation filings and fees.

The attachment method really matters for the fixture vs personal property determination. Ballast mounting systems (just weighted down) are almost always personal property. Roof penetrations with lag bolts lean toward fixtures. Sounds like your mix of both might create some ambiguity which is probably why the lender wants the UCC-1 protection.

Just went through this exact scenario. Our lender filed both a UCC-1 and recorded a fixture filing in the real estate records. The UCC-1 was against our company as debtor covering 'solar photovoltaic system including panels, inverters, mounting hardware, electrical equipment and accessories.' Cost about $500 total for both filings. Definitely worth it for the lender's peace of mind on a $280K loan.

This is standard practice now. Almost every solar financing deal I see includes UCC-1 filings. The technology is expensive enough that lenders want every possible protection. Your $280K system definitely warrants a UCC filing. The good news is it's pretty straightforward - just make sure the debtor name matches your legal entity exactly.

One more thing to consider - if you ever want to refinance or sell the property, you'll need to deal with the UCC lien. Make sure your loan agreement includes provisions for lien releases when the loan is paid off. Should be a UCC-3 termination statement filed within 30 days of payoff.

Bottom line - UCC lien for solar panels is totally normal for financed systems. The lender is protecting their interest in expensive equipment that might be considered personal property. Better to have the filing and not need it than need it and not have it. Just make sure all the paperwork is done correctly because UCC mistakes can be costly to fix.

Thanks everyone for the detailed responses! This has been incredibly helpful. It sounds like the UCC-1 filing is definitely the right move for our situation, especially with the mixed attachment methods (ballast + penetrating mounts). I'm going to make sure we get the debtor name exactly right and ask about both UCC-1 and fixture filing coverage. The continuation filing schedule is something I hadn't thought about - definitely need to build that into our long-term planning. Really appreciate the practical insights from people who've actually dealt with these issues.

One additional consideration for your solar UCC filing - make sure to coordinate with your property insurance and any existing lenders on the real estate. Some commercial property insurers want to be notified about UCC filings on attached equipment, and if you have an existing mortgage, that lender might have requirements about additional liens on fixtures. We ran into an issue where our building lender's loan docs prohibited fixture filings without their consent, so we had to get approval before the solar lender could file. Worth checking your existing loan agreements to avoid any covenant violations.

Great thread! I'm dealing with a similar solar financing situation and wanted to add one more wrinkle - if you're in a state that has adopted the revised Article 9, there are some specific rules about "as-extracted collateral" that might apply to solar panels depending on how they're classified. Also, make sure your lender understands the net metering interconnection agreements with your utility. Some utilities require notification if there are liens on the solar equipment since it affects their interconnection rights. We had our utility initially reject our interconnection application because they weren't properly notified about the UCC filing. Had to submit additional documentation showing the lender wouldn't interfere with utility access or removal rights. Minor issue but caused a 3-week delay in getting connected to the grid.