UCC search report examples - need help understanding what to look for

This is solid advice. I'd add that you should also check for fixture filings in the real estate records if there's equipment permanently attached to buildings. Those won't show up in standard UCC searches.

Good point about fixture filings - I hadn't thought about checking real estate records separately. How do I know if equipment qualifies as fixtures versus regular personal property?

Fixtures are generally equipment that's permanently attached or integrated into the real estate. Think HVAC systems, built-in manufacturing equipment, etc. When in doubt, search both UCC and real estate records.

Wait, so I need to search in Delaware even if the company operates in Texas? They're incorporated in Delaware but all their operations are in Texas.

Exactly! Delaware for the corporate entity, but you might also want to check Texas for any local subsidiaries or if they have fixtures. The main search goes where they're incorporated though.

This is why I always run searches in multiple states just to be safe. Better to over-search than miss something that kills the deal.

That sounds incredibly useful - I'm already spending way too much time trying to make sense of these search results. Does it help identify which filings are actually problematic for the acquisition?

Yes, it highlights active liens and helps you understand what collateral is actually encumbered. Much better than trying to decipher legal descriptions manually.

Never heard of Certana but that sounds like exactly what I need for my current deal. Manual document review is killing me.

How do I make sure I'm seeing all the amendments? Do they show up in the same search or do I need to search separately?

They should show up in the same search results as long as you're searching by debtor name. Look for the filing number sequence - amendments will reference the original UCC-1 filing number.

Good catch. I've seen deals get complicated when amendments broadened the collateral description months after the original filing.

I didn't know title insurance could cover UCC issues. Is that standard or do you need special coverage?

You need to specifically request UCC coverage - it's not automatic. But it can protect you if you miss something in your searches.

Title insurance is expensive though. Sometimes better to just be more thorough with the searches upfront.

How do I tell if a lien has been assigned? Would that show up as a separate UCC-3 filing?

Yes, assignments should show up as UCC-3 filings. But sometimes the paperwork is sloppy and you might need to dig deeper to understand who actually holds the lien now.

I've seen assignments that were filed months after the actual transfer happened. The search results might not tell the whole story.

Is there a way to tell from the UCC filing whether it's a PMSI or not?

Sometimes it's noted in the collateral description but not always. You might need to look at the underlying financing documents to be sure.

PMSI priority rules can be tricky. If it's a significant issue for your deal, you probably want to get a UCC lawyer involved.

Do you have a template for that checklist? I'm worried I'm missing obvious name variations.

I usually include the full legal name, any abbreviations (Corp vs Corporation), with and without punctuation, and any trade names. Also check for typos in the filings - sometimes secured parties mess up the debtor name.

Typos are the worst! I've seen filings with completely wrong debtor names that still get accepted by the filing office.

Any recommendations for search companies? I'm starting to think I'm in over my head trying to do this myself.

I've had good luck with CT Corporation and CSC, but there are others. Just make sure they're searching all the right jurisdictions.

Professional search companies are definitely worth it for big deals. They can usually turn around results in 24-48 hours.

That's a great idea - I hadn't thought about comparing to the financial statements. How detailed does that comparison need to be?

Just look for major loans or lines of credit on the balance sheet and make sure you can match them to UCC filings. Sometimes there are secured loans that weren't properly filed.

Smart approach. I've seen deals where the seller 'forgot' to mention certain security agreements that weren't filed.

Ouch, that's exactly what I'm worried about. I'm definitely going to search real estate records now. Thanks for the warning.

Better to be safe than sorry. The few hundred dollars for comprehensive searches is nothing compared to missing a major lien.

This is why I always budget extra time and money for due diligence. You never know what you'll find.