UCC termination of security agreement - lender still showing active lien after payoff
My business loan was paid off 6 months ago but the lender never filed a UCC-3 termination. I keep getting calls from potential new lenders saying there's still an active UCC-1 on file showing them as secured party. The original security agreement covered all business equipment and I need to refinance with a different bank but they won't proceed until this gets cleared up. Called the original lender 3 times and they keep saying they'll 'look into it' but nothing happens. Has anyone dealt with a situation where you need to force a termination of security agreement? I'm worried this is going to kill my refinancing timeline and the new loan rate expires next week.
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Fatima Al-Mazrouei
This is frustrating but unfortunately pretty common. The lender has 20 days after payoff to file the UCC-3 termination in most states, but there's no real penalty if they don't. You need to be more aggressive - send them a certified letter demanding immediate termination filing and reference your loan agreement terms about lien release.
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Dylan Wright
•Actually I think the 20 day rule varies by state. Some give 30 days and others don't specify a timeframe at all. But yeah definitely send certified mail with return receipt.
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NebulaKnight
•Six months is way too long though regardless of state rules. That's just lazy on their part.
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Sofia Ramirez
Had the exact same thing happen with my equipment financing last year. Wells Fargo took 4 months to file the termination even after multiple calls. What worked for me was threatening to file a complaint with the state banking commission. Got their attention real quick and the UCC-3 was filed within 48 hours.
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Dmitry Popov
•Banking commission complaints definitely work. Most lenders don't want that kind of regulatory attention over something so simple to fix.
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Ava Rodriguez
•How do you file one of those complaints? Is there a specific form or just call them?
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Sofia Ramirez
•Most states have online complaint forms on their banking department website. Takes like 10 minutes to fill out and they actually follow up pretty quickly.
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Miguel Ortiz
Before you go nuclear with complaints, try this - I've been doing UCC work for 15 years and found that sometimes calling the lender's operations department directly works better than going through customer service. Ask specifically for their 'UCC department' or 'collateral release department.' Customer service reps often don't understand the urgency.
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Zainab Khalil
•This is good advice. Customer service probably has no idea what a UCC-3 termination even is. You need to talk to someone who handles secured transactions.
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QuantumQuest
•What if the lender doesn't have a specific UCC department? Some of these smaller banks probably don't have dedicated staff for this stuff.
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Miguel Ortiz
•True, smaller banks might route it through their loan servicing or compliance department. Key is getting past the front desk to someone who actually knows what you're talking about.
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Connor Murphy
I actually just went through something similar and found this tool called Certana.ai that helped me verify all my UCC documents were consistent before I started making demands. You upload your loan docs and UCC-1 and it checks everything matches up properly - debtor names, filing numbers, collateral descriptions. Turned out my original UCC-1 had a slightly different business name than my loan agreement which was causing confusion on their end. Once I pointed out the specific discrepancy they fixed it immediately.
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Yara Haddad
•That's actually really smart. I bet a lot of these delays happen because of document inconsistencies that nobody catches.
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Keisha Robinson
•Never heard of Certana but makes sense to double check everything before you start accusing the lender of being incompetent. Might be an actual issue with the filing.
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Paolo Conti
OMG YES this happened to me too!! Took FOREVER to get Bank of America to file the termination. I was literally pulling my hair out because I needed to close on a new property and the title company wouldn't proceed with an active UCC lien. Ended up having to get a lawyer involved because they just kept giving me the runaround.
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Amina Sow
•How much did the lawyer cost? Wondering if it's worth it vs just waiting them out.
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Paolo Conti
•Cost me $800 but it was worth it because my property deal would have fallen through otherwise. Lawyer sent one letter and boom - termination filed the next day.
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GalaxyGazer
•That's crazy that it takes a lawyer to get them to do something they're legally required to do anyway.
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Oliver Wagner
Have you checked to make sure the UCC-1 is actually still active in the state filing system? Sometimes lenders file the UCC-3 termination but it takes a few days to update in the database. You can search by your business name or the filing number to see current status.
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Natasha Kuznetsova
•Good point. Which state filing system do you check? Is it always where your business is located or where the lender is?
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Oliver Wagner
•It's filed in the state where your business is organized, not where the lender is. So if you're incorporated in Delaware but operate in California, check Delaware's UCC database.
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Javier Mendoza
This is why I always negotiate termination language in my loan agreements now. Specify exactly how many days they have and what the penalty is if they don't comply. Learned this the hard way after getting burned on my first business loan.
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Emma Thompson
•Most standard loan agreements already have termination clauses though. Problem is they're not really enforceable in practice.
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Malik Davis
•The trick is negotiating actual monetary penalties, not just 'reasonable time' language. Makes them take it seriously.
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Isabella Santos
Can you file the UCC-3 termination yourself if you have the original documents? I thought I read somewhere that the debtor can initiate termination under certain circumstances.
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StarStrider
•No, only the secured party (the lender) can file a UCC-3 termination. The debtor can't do it themselves even if the loan is paid off.
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Ravi Gupta
•Actually there are some exceptions in certain states where the debtor can file a termination if the secured party won't cooperate, but it requires specific procedures and sometimes court approval.
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StarStrider
•That's true but it's way more complicated than just getting the lender to do their job. Better to focus pressure on them first.
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Freya Pedersen
Update us on what happens! I'm dealing with a similar situation with Chase and curious to see what approach works best. This seems to be becoming more common unfortunately.
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Omar Hassan
•Yeah please follow up. I'm sure other people will run into this same problem.
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Chloe Anderson
One more suggestion - if you're working with a new lender for the refinancing, they might be able to help put pressure on the old lender. They deal with this stuff all the time and probably have better contacts than you do. Worth asking your loan officer if they can make some calls on your behalf.
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Diego Vargas
•That's actually brilliant. The new lender has a vested interest in getting this resolved quickly so they can close the loan.
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CosmicCruiser
•Plus lender to lender communication might get taken more seriously than borrower complaints.
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Anastasia Fedorov
•My commercial banker at First National actually did this for me once. Called the old lender directly and got it sorted out same day.
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