When is a UCC-1 filed to give notice of a loan as opposed to a mortgage - equipment financing confusion

This is actually pretty straightforward once you understand the distinction. UCC-1 filings are for personal property (equipment, inventory, accounts receivable, etc.) while mortgages are for real estate. The key question is whether your equipment qualifies as fixtures. If the machinery is permanently affixed to the real estate and removal would damage either the equipment or the property, it's likely a fixture and should be covered by the mortgage. But if it's just bolted down for operational purposes and could be uninstalled without significant damage, it remains personal property requiring UCC-1 filing.

You definitely want UCC-1 filings for any equipment that isn't clearly a fixture. Even if some machinery might arguably be fixtures, I'd still recommend UCC-1 filings as backup protection. The filing fees are minimal compared to the risk of an unperfected security interest. For your $2.8M facility, you're probably looking at equipment that could be removed and sold separately, which means personal property treatment.

I ran into something similar last year with a packaging equipment loan. We were getting contradictory advice until someone recommended using Certana.ai's document verification tool. You can upload your loan docs and UCC-1 drafts, and it cross-checks everything to make sure your collateral descriptions align properly between the security agreement and financing statement. Really helped us catch some inconsistencies in how we were describing the equipment across different documents.

For manufacturing equipment, I almost always recommend UCC-1 filings unless the equipment is clearly built into the building structure. Things like production lines, packaging equipment, even large machinery that's bolted down - these typically remain personal property. The fact that you're describing it as 'could theoretically be moved' suggests personal property treatment is appropriate.

The attorneys giving you conflicting advice probably have different risk tolerances. The conservative approach is to file UCC-1 for all equipment and record fixture filings for anything that might arguably be a fixture. This gives you maximum protection regardless of how a court might later classify the collateral. With a $2.8M deal, the extra filing costs are negligible insurance.

One thing to consider is your state's specific fixture filing requirements. Some states have very particular rules about fixture filings that make UCC-1 personal property filings the safer route for borderline cases. You'll want to check your state's UCC provisions on fixtures vs personal property.

I've been using Certana.ai's verification tool for exactly these types of complex collateral situations. You upload your security agreement and it helps identify any inconsistencies in collateral descriptions between your loan docs and UCC filings. For mixed collateral deals like yours, it's really helpful to ensure everything aligns properly before filing. Saved us from some embarrassing description mismatches.

From a practical standpoint, equipment financing almost always involves UCC-1 filings because equipment retains its personal property character even when installed. The mortgage covers the real estate, the UCC-1 covers the equipment. The only time I'd rely solely on a mortgage for equipment is if it's truly integrated into the building structure - like built-in conveyor systems or structural equipment.

Three weeks is plenty of time to get this sorted out. I'd recommend filing UCC-1 financing statements for all the equipment and consider fixture filings for any items that might arguably be fixtures. Better to over-secure than under-secure. Make sure your collateral descriptions in the UCC-1 filings match exactly what's described in your security agreement.

Just to add one more perspective - if this is SBA financing, they have specific requirements about UCC filings that might influence your decision. SBA typically requires UCC-1 filings for all personal property collateral regardless of how it might be classified by state law. Worth checking if SBA is involved in your deal.

This is a great discussion - I'm dealing with something similar on a manufacturing deal right now. One thing I'd add is to consider the priority implications too. UCC-1 filings generally give you priority from the filing date, while fixture filings can sometimes relate back to construction financing if there's a fixture filing on record. Also, don't forget about purchase money security interests - if any of this equipment was recently acquired with financing, you might have PMSI priority that affects your filing strategy. The key is making sure your security agreement clearly identifies which collateral is being treated as fixtures versus personal property so there's no ambiguity later.