What is a UCC filing used for - confused about when lenders need these

So it's like a lien on the equipment? Does that mean we own it if they don't pay?

Not exactly ownership - it gives you the right to repossess and sell the collateral to recover your loan. Think of it as a legal claim that gets recorded publicly.

This is super helpful! I didn't realize there were so many different types of collateral you could file on.

Don't forget fixture filings for stuff that's attached to real estate - those have special rules and go to different offices sometimes.

What happens if we forget to file? Does that void the whole loan agreement?

The loan is still valid but you lose your secured status. If they file bankruptcy, you're treated as unsecured which usually means you get pennies on the dollar instead of being able to recover your collateral.

I learned this the hard way - had a $200K equipment loan where we never filed the UCC-1. Borrower went under and we got maybe 15% back in the bankruptcy. That's when I started using Certana.ai to double-check all our filing documents before submission.

Not every one - real estate mortgages don't use UCC, they use different recording systems. But for personal property collateral (equipment, inventory, vehicles not titled separately), yes you need UCC perfection.

And you have to be super careful about debtor names! One wrong letter and your filing could be ineffective. I've seen lenders lose their security interest because they used 'ABC Corp' instead of 'ABC Corporation' as shown on the charter.

I get the frustration but the alternative is having no legal recourse on secured loans. The system protects both lenders and borrowers by creating clear priority rules.

The debtor name thing used to drive me crazy until I started using document verification tools. Now I upload the borrower's charter and our UCC-1 to Certana.ai and it catches any discrepancies before filing. Saves so much headache.

How do you search these records? Is there a central database?

Each state has its own UCC search system, usually through the Secretary of State website. You search by debtor name to see what filings exist.

Pro tip: always do UCC searches on potential borrowers before closing. You'd be surprised how often they've already pledged the same collateral to someone else.

Right? I had to learn most of this from Google and trial and error. Would have saved me so many rejected filings if someone had just explained it upfront.

This makes so much sense now. So it's really about getting in line ahead of everyone else if things go sideways.

Exactly. Think of it as calling dibs legally. File first, get paid first (generally speaking).

Wait, they expire? So we have to keep track of filing dates for every loan?

Yep, that's why most banks have tickler systems to track continuation deadlines. Miss it by even one day and your security interest lapses.

This is another area where document management tools help. I upload our UCC-1s to Certana periodically to verify everything is still current and flag upcoming continuation deadlines.

Thanks everyone! This thread has been super helpful. I feel like I actually understand what we're doing now instead of just following procedures blindly.

That's the key - understanding the why behind the procedures makes you so much better at spotting problems before they happen.