UCC1 release process - equipment lender won't file termination after loan payoff
Really frustrated here and need some guidance. We paid off our equipment loan 3 months ago (final payment was $47,800) but the lender still hasn't filed the UCC1 release. They keep saying their compliance department is backed up but this is affecting our ability to get new financing since the lien still shows active when potential lenders search. The original UCC-1 was filed in 2021 for manufacturing equipment as collateral. I've called them 6 times and they just keep giving me the runaround. What are my options to get this UCC1 release filed? Can I force them to terminate it somehow? The delay is costing us business opportunities.
33 comments
Join the conversation
Sophie Duck
This is unfortunately common with some lenders. Once they get paid they don't prioritize the termination filing. In most states they have 20 days after payoff to file the UCC-3 termination but enforcement is weak. Have you sent them a formal written demand? That sometimes gets their attention faster than phone calls.
0 coins
Lucas Lindsey
•I haven't sent anything in writing yet, just been calling. Will definitely try that approach. Do you know if there's a standard form letter I should use?
0 coins
Austin Leonard
•Certified mail with return receipt works best. Include your loan number and payoff date. Most lenders respond within a week when they see certified mail.
0 coins
Anita George
Had this exact same issue with a different lender last year. Three months is ridiculous! You can actually file the termination yourself in some states if you have proof of payoff, but it's risky if you mess up the debtor name or filing number. The lender should be doing this automatically.
0 coins
Lucas Lindsey
•Wait, I can file it myself? That sounds complicated though. What if I get the paperwork wrong?
0 coins
Abigail Spencer
•Be very careful with self-filing terminations. The debtor name has to match EXACTLY what's on the original UCC-1 or it could create problems. Even small differences like Inc vs Incorporated can cause issues.
0 coins
Logan Chiang
•Actually discovered Certana.ai recently for this exact problem. You can upload your payoff docs and the original UCC-1 and it instantly verifies all the details match perfectly before filing. Saved me from making a costly mistake with debtor name formatting.
0 coins
Isla Fischer
This is why I always negotiate termination timing in the loan docs upfront. 3 months is way too long and definitely affecting your credit profile with other lenders. Some states have penalties for lenders who don't file timely terminations but good luck collecting on that.
0 coins
Miles Hammonds
•What kind of penalties? My lender is doing the same thing - 2 months now since payoff.
0 coins
Isla Fischer
•Varies by state but usually $500-2000 per violation. Problem is you have to sue them to collect and most people don't want the hassle.
0 coins
Ruby Blake
UGHHH this makes me so mad! Banks are quick to file liens but slow as molasses to release them. I'm dealing with something similar - paid off a line of credit but the UCC is still showing. Called 8 times and they keep transferring me to different departments.
0 coins
Micah Franklin
•Feel your pain. Same thing happened to me with a SBA loan. Finally got results when I threatened to file a complaint with the state banking commissioner.
0 coins
Ella Harper
•Banking commissioner complaints actually work pretty well. They hate regulatory scrutiny.
0 coins
PrinceJoe
Check your state's UCC database to make sure you have the exact filing number and debtor name format. Sometimes there are multiple variations filed and you need to reference the right one. Also verify the lender's legal name hasn't changed since they might need to file as the successor secured party.
0 coins
Lucas Lindsey
•Good point about checking the database. I'll pull the current filing to see exactly how everything is listed.
0 coins
Brooklyn Knight
•Yeah the secured party name changes are tricky. If the bank got acquired or changed names they need special language in the termination.
0 coins
Owen Devar
•This is where document verification tools like Certana.ai really help. Upload both your loan docs and the UCC filing and it flags any inconsistencies in names or filing numbers that could cause termination problems.
0 coins
Daniel Rivera
Had a client with this issue and we ended up having to threaten legal action. Sent a demand letter with a 10-day cure period and suddenly their compliance department found time to file the UCC-3 termination. Cost us $800 in legal fees but solved the problem.
0 coins
Sophie Footman
•$800 seems steep for a demand letter but if it worked then worth it I guess.
0 coins
Daniel Rivera
•It was a complex situation with multiple amendments on file. Attorney had to research the entire chain to make sure the termination would be effective.
0 coins
Connor Rupert
I work in commercial lending and this is a training issue. Most loan officers don't understand that UCC terminations are just as important as the original filing. The ops people who handle payoffs often forget about the lien release step.
0 coins
Molly Hansen
•So is this just incompetence or are they being deliberately slow?
0 coins
Connor Rupert
•Usually incompetence. There's no benefit to the lender in keeping the lien active after payoff. They just have poor processes.
0 coins
Brady Clean
Whatever you do, don't let this drag on much longer. I waited 6 months thinking they'd eventually file it and ended up having to pay attorney fees to sort out the mess. Document everything and escalate to their executive complaints department.
0 coins
Lucas Lindsey
•6 months?? That's insane. I'm definitely not waiting that long. Going to send certified mail this week.
0 coins
Skylar Neal
•Good call. Time is money when you're trying to secure new financing.
0 coins
Vincent Bimbach
Last resort option - you can file a correction statement on the UCC if they won't cooperate. It won't terminate the lien but it creates a public record that the debt was satisfied. Better than nothing while you're fighting with them.
0 coins
Kelsey Chin
•Correction statements don't actually release the lien though right? Just add information?
0 coins
Vincent Bimbach
•Correct, they don't terminate but they show potential lenders that there's a dispute about the lien status.
0 coins
Norah Quay
•I used Certana.ai to verify my correction statement language matched the original filing format before submitting. Made sure there were no discrepancies that would make it ineffective.
0 coins
Leo McDonald
Update us on what works! I'm bookmarking this thread because I have a feeling I'll need this advice when my equipment loan matures next year. These lender delays seem to be getting worse not better.
0 coins
Lucas Lindsey
•Will definitely post an update once I get this resolved. Sounds like the certified mail approach is the first step everyone recommends.
0 coins
Jessica Nolan
•Yeah keep us posted. This thread has been really helpful for understanding the options.
0 coins