UCC search for personal property - missed equipment lien almost cost us the deal

Good point about the name variations. I've seen UCC-1 filings get missed because the search was done on 'ABC Corporation' but the filing was indexed under 'ABC Corp' or 'A.B.C. Corporation'. The search logic isn't always perfect.

That's probably what happened here. The seller's legal name has changed twice since 2019 due to corporate restructuring. The UCC-1 was filed under the old name and our search only used the current legal name.

Two weeks isn't bad - I've seen deals fall apart completely over undisclosed liens. At least you caught it before the money changed hands.

True, but it was stressful. The seller was furious because they claimed they had paid off that loan years ago but the lender never filed the termination. We ended up having to track down the original lender and get them to file a UCC-3 termination statement.

That's our biggest fear right now. The seller is claiming they paid off the loan but can't find the documentation. We're trying to contact the lender directly but they've been unresponsive so far.

Never heard of that service. How does it work exactly? Do you just upload the search results or do you need the actual UCC filings?

You can upload your search results and it analyzes them for gaps or inconsistencies. But the real power is when you upload the actual UCC-1 and UCC-3 documents - it verifies that everything matches up properly and flags any discrepancies in debtor names, filing numbers, or collateral descriptions.

Couldn't agree more. I've started insisting that borrowers provide their own UCC search reports in addition to what we run internally. Sometimes they catch things we miss and vice versa.

That's smart. I'm going to start doing that too. The more eyes on the search results, the better. These missed liens can kill deals or worse, create liability issues down the road.

The lien is still valid and enforceable even if it doesn't show up in searches. The UCC requires proper filing, not proper indexing. If the filing was done correctly but the search system missed it, that's not the secured party's problem - it's yours.

That's terrifying. So you could do everything right in your due diligence and still get burned by a lien that exists but isn't discoverable?

Exactly. That's why thorough UCC searches are so critical and why many attorneys recommend using multiple search services or conducting searches in multiple jurisdictions if the debtor has operated in different states.

How much extra time do you typically add? We're already running behind schedule on this deal.

I usually add 3-5 business days to account for multiple searches and any follow-up research on questionable filings. Better to be safe than sorry when you're dealing with hundreds of thousands of dollars in equipment.

Continuations can be tricky because they extend the original filing but sometimes get indexed separately. Always good to search for UCC-3 continuation statements in addition to the original UCC-1 filings.

Exactly. The continuation extended the lien for another five years, but it was filed under a slightly different version of the debtor's name. Our initial search missed it completely.

That sounds like exactly what we need. Is it expensive? We're already over budget on this deal.

It's worth it for the peace of mind. Much cheaper than having a deal fall apart or missing a lien that could cost you hundreds of thousands later. The automated verification catches things that even experienced attorneys sometimes miss.

If you're having doubts, definitely run another search. It's a small cost compared to the potential risk. Better to be overly cautious with UCC searches than to discover a problem after closing.

Yeah, you're right. I'd rather be safe than sorry. Going to run another search tomorrow morning through a different provider.

We did ask about liens, but the seller either didn't know about this one or wasn't being completely honest. Either way, it's a lesson learned about the importance of thorough searches.

Unfortunately, sellers don't always have complete knowledge of all liens against their assets, especially if they've refinanced multiple times or had complex lending relationships. That's why independent verification is so important.

I've seen cases where the seller genuinely didn't know about a lien because their accounting department never properly tracked it or the lender filed it without proper notice. The UCC filing system is the definitive record, not what the seller thinks they know.

That's exactly the kind of thing we're trying to avoid. Going to check it out. Thanks for the follow-up!

No problem. The automated cross-checking is really helpful for catching things that might slip through manual review, especially when you're dealing with complex corporate structures or multiple name changes.

That's a great point about corporate history searches. I never thought to systematically search predecessor entities, but it makes total sense given how often companies go through restructuring these days. The merger scenario you described is exactly what I'm worried about with our current deal - the seller mentioned they went through some kind of corporate reorganization a few years back but weren't specific about the details. I'm going to request that complete corporate history documentation you mentioned. Thanks for sharing that approach!