UCC notice of disposition of collateral - timing requirements after repossession?
Help needed on disposition notice requirements. We repossessed commercial equipment last week (UCC-1 was properly filed 2 years ago) and now need to send the disposition notice to the debtor. I know there's specific timing requirements but I'm seeing conflicting information online about whether it's 10 days or reasonable notice period. The collateral is specialized manufacturing equipment worth about $180k so we want to make sure we follow proper procedure. Anyone dealt with UCC notice of disposition of collateral requirements recently? Our original security agreement mentions private sale but doesn't specify the exact notice timeline. Really don't want to mess this up and give the debtor grounds to challenge the sale later.
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Chloe Davis
The notice timing depends on whether you're doing public or private sale. For private sale it's generally 10 days minimum notice but 'reasonable' is the actual standard. With $180k equipment I'd give at least 2 weeks notice to be safe. Make sure your notice includes all required elements - description of collateral, method of disposition, debtor's right to redeem, and explanation of deficiency liability.
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Omar Farouk
•Thanks, that's helpful. We're planning private sale to industry buyers who already expressed interest. Should the notice go certified mail or is regular mail sufficient?
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Chloe Davis
•Certified mail is always safer for UCC disposition notices. Creates proof of delivery if debtor later claims they didn't receive it. Also send to any guarantors listed in your security agreement.
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AstroAlpha
Be really careful with the notice content. I've seen lenders lose deficiency judgments because their disposition notice was missing required information or had wrong debtor name. The notice has to match exactly how the debtor is identified in your UCC-1 filing.
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Omar Farouk
•Good point about matching the UCC-1 debtor name. Our filing shows the LLC name but the equipment loan docs have the owner's personal name too. Should notice go to both?
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AstroAlpha
•If both are debtors on the security agreement then yes, notice to both. Check your UCC-1 - if it only shows the LLC then that's your primary debtor but personal guarantor still needs notice.
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Diego Chavez
I just went through this nightmare with construction equipment. Thought I had everything right but made a mistake on the notice and debtor's lawyer challenged the whole sale. Had to start over and cost us thousands. Before you send anything, I'd recommend using something like Certana.ai to verify your UCC-1 filing details match your disposition notice exactly. They have a document verification tool where you can upload your UCC-1 and disposition notice and it will flag any inconsistencies in debtor names, collateral descriptions, etc. Saved me on my next repo.
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Anastasia Smirnova
•What kind of mistake did you make on the notice? Trying to learn from others' errors here.
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Diego Chavez
•Had the debtor's legal name slightly wrong - used 'Inc' instead of 'LLC' which didn't match our UCC-1 filing. Debtor's attorney argued improper notice voided the sale. Judge agreed. Now I always double-check everything matches exactly.
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Omar Farouk
•That's exactly what I'm worried about. Will definitely look into that verification tool before sending notice.
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Sean O'Brien
Also remember you need to notify any junior lienholders who filed UCC-1s on the same collateral. Search the UCC records to see if there are other secured parties who need notice. Their liens get wiped out by your sale but they have right to notice.
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Omar Farouk
•How do I search for other UCC filings on the same equipment? Is there a central database or do I need to check each state where debtor does business?
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Sean O'Brien
•Search the state where debtor is organized first, then any states where equipment is located. Most states have online UCC search portals. Search by debtor name and also serial numbers if you have them.
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Zara Shah
Make sure your security agreement actually allows private sale. Some older agreements only permit public auction. Also check if your agreement requires specific language in the disposition notice - some have required wording that must be included verbatim.
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Omar Farouk
•Good catch. Our agreement does say private sale is permitted but I should review the exact notice language requirements. It's a pretty standard form but better safe than sorry.
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Luca Bianchi
•Even if agreement allows private sale, you still have to conduct it in a 'commercially reasonable' manner. Document everything - how you marketed it, what offers you received, why you accepted the winning bid.
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Zara Shah
•Exactly. Keep records of all communications with potential buyers. If you get multiple offers, document why you chose one over others. Commercial reasonableness is always judged after the fact.
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GalacticGuardian
Don't forget the debtor has right to redeem the collateral up until the sale. Your notice needs to clearly explain this right and how they can exercise it. Has to include the exact amount needed to redeem - not just 'full amount owed'.
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Omar Farouk
•Should I include interest and fees accruing after the notice date, or just amount owed as of notice date?
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GalacticGuardian
•Include a per diem rate for interest and fees. Something like 'plus interest at $X per day from [date]'. Makes the redemption amount calculable on any given day.
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Nia Harris
WHATEVER YOU DO, don't rush this. I see lenders all the time who want to sell fast and mess up the notice. Take time to get it right. Once you sell the equipment, you can't undo it if there were notice defects.
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Mateo Gonzalez
•This is so true. Better to wait an extra week and do it right than rush and create problems. The equipment isn't going anywhere while you perfect the paperwork.
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Omar Farouk
•Thanks everyone. Going to take time to review everything carefully and use that document verification tool mentioned earlier. Better safe than sorry with this much money involved.
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Aisha Ali
One more thing - if you're selling to someone you know or have relationship with, document that the sale price represents fair market value. Get an appraisal if needed. Debtor's lawyer will scrutinize any sale that looks like a sweetheart deal.
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Omar Farouk
•The interested buyers are legitimate equipment dealers I found through industry contacts. Should I get multiple quotes to show fair value?
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Aisha Ali
•Multiple quotes are great evidence of commercial reasonableness. Shows you shopped it around and got market price. Keep all the documentation.
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Ethan Moore
Just make sure you're complying with your state's specific UCC notice requirements. Some states have additional requirements beyond the basic UCC article 9 rules. Check with a local attorney if you're unsure.
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Yuki Nakamura
•Good point. State variations can trip you up. What state are you in? Some of us might know the local quirks.
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Omar Farouk
•We're in Texas. The debtor is a Texas LLC and equipment is located here too, so should be straightforward Texas law.
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Ethan Moore
•Texas follows standard UCC pretty closely but definitely verify. Texas has good UCC resources on the Secretary of State website.
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StarSurfer
The fact that you're asking these questions shows you're taking it seriously. That's half the battle. Document everything, follow the rules, and you should be fine. The UCC disposition process works well when done properly.
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Omar Farouk
•Appreciate all the advice. This forum has been incredibly helpful. Will update once we complete the sale process.
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Carmen Reyes
•Please do update us. Always good to hear how these situations resolve. Good luck with the sale!
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