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What Is A UCC Filing?

Updated: Mar 28, 2022, 12:44pm

A Uniform Commercial Code filing—or UCC filing—is a form of notice that lenders use when securing a borrower’s loan with an asset or group of assets. This enables lenders to seize the listed property as a way of recouping loan funds in the case of borrower default. UCC filings may cover an individual piece of collateral, or a lender can list all of a business’ assets and then only repossess what is necessary to pay off the defaulted loan balance.

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How UCC Filings Work

UCC filings give lenders the first-position right to pieces of collateral covered by the UCC financing statement, pursuant to the Uniform Commercial Code. The Uniform Commercial Code is a set of uniformly adopted state laws that regulate U.S. commercial transactions, including financial contracts and other interstate business.

When a borrower takes out a secured loan or utilizes equipment financing, the creditor files a UCC lien that establishes its right to repossess the equipment or other assets if the borrower defaults. In the case of equipment or inventory financing, filings generally specify the underlying collateral, while other loans may warrant a blanket filing on all of the business’ assets. If the borrower defaults on the loan, the lender can seize the listed collateral to recoup the outstanding balance.

UCC-1 Financing Statement

A UCC-1 financing statement is a type of UCC filing that a lender files with the borrower’s secretary of state to formalize—or perfect—its right to underlying loan collateral. By doing so, the lender provides notice to other lenders of its security interest in the collateral. UCC-1 financing statements are effective for five years, so lenders must renew them to cover longer loan repayment terms. Lenders can also amend UCC-1s to update the collateral securing a loan.

When UCC Liens Are Used

UCC liens are used when a creditor wants to give notice to other lenders of its interest in a debtor’s property. A UCC-1 financing statement is generally filed with the debtor’s secretary of state when a loan is originated. Lenders can attach UCC liens to a wide range of assets, including:

• Large equipment
• Office equipment
• Real estate
• Receivables
• Commercial instruments
• Letters of credit
• Investment securities

Types of UCC Filings

There are two types of UCC filings that can be used to secure collateral during financing. A lien can be placed against specific collateral—like an individual piece of equipment—or generally against a business’ assets. The type of UCC filing used may depend on the type of business loan , loan amount, lender, borrower creditworthiness or other factors.

UCC Lien Against Specific Collateral

Lenders can opt to file a UCC lien against a specific piece of collateral like a piece of equipment or real estate. This is sometimes referred to as a purchase money security interest (PMSI). Liens against specific collateral are most commonly used when a business owner purchases a piece of equipment or inventory with financing.

If the borrower defaults on the financing, the lender has first priority to repossess the individual item to recoup the outstanding balance. However, the lender cannot attach to the company’s other assets.

Blanket UCC Filing

A blanket UCC filing covers all of a company’s assets—not just a single piece of collateral. In the case of borrower default, the lender can repossess and sell assets equal to the value of the outstanding loan amount. UCC-1 blanket liens make loans more accessible to borrowers without big-ticket assets like equipment.

For that reason, blanket liens are extremely common and often used to secure SBA loans, business lines of credit and short-term loans from alternative lenders. Due to the broad scope of collateral, however, this type of UCC filing can make it more difficult for a borrower to qualify for future loans because all of their business assets are already encumbered by the blanket filing.

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How ucc filings affect your credit and ability to obtain financing.

UCC filings are a normal part of getting a business loan that’s secured by collateral and don’t typically impact day-to-day business operations. That said, UCC filings do enable lenders to repossess collateral tied to the UCC-1 financing statement if your business defaults on a loan. Having outstanding UCC filings also can impact your credit and ability to obtain financing. In general, UCC filings can:

• Show up on business credit reports. UCC liens do not directly impact a business’ credit score. However, UCC filings from the past five years show up on a business’ credit report. This means future lenders can see existing loan balances, payment histories and liens—and this information may impact lending decisions. To better control the information on your business’ credit report, review it periodically to ensure old UCC filings have been removed.
• Limit how assets can be used to secure future financing. Having a UCC filing on a business’ credit report can make it more difficult to qualify for future financing. This is because lenders are less willing to secure debt if they only have a secondary position behind another creditor.
• Put collateral at risk of repossession. Business collateral subject to a UCC lien can be repossessed if the borrower defaults on the loan. By taking out a secured loan, business owners run the risk of having their equipment or other business assets seized.

If your business has UCC liens against its assets, it is still possible to get additional financing. Here are a few options to consider:

• Use other collateral. If your existing UCC financing statements only cover specific pieces of collateral, future lenders can instead attach to the business’ other assets.
• Ask the lender to release some assets. Alternatively, if your lender has a blanket filing against your business’ assets—and the value of those assets is far greater than your debts—it may carve out some items that can be used as collateral for future loans. That said, changing loan collateral typically requires refinancing the loan.
• Find a lender that will accept a second-position lien. A final option is to work with a lender that is willing to take out a second-position lien against one or more of your business’ assets. Keep in mind, however, that this is often difficult to accomplish—especially in the absence of excellent borrower qualifications.

How to Remove a UCC Lien

To remove a UCC lien, a borrower must first pay off the outstanding loan balance. Once paid off, the lender should release the collateral within one month by filing a UCC-3 Financing Statement Amendment with the secretary of state. This removes the UCC-1 filing and terminates the lien.

Notably, UCC filings typically expire after five years without express action by the lender. For that reason, many lenders do not actively terminate UCC filings—instead waiting for them to lapse naturally. To combat this, borrowers can submit a formal request to the lender to remove the lien. The lender then has 20 days to file a termination statement or send the borrower a termination statement to file. If no termination request is filed or sent by the lender after 20 days, the borrower can file a UCC-3 form requesting termination.

Frequently Asked Questions (FAQs)

What is the difference between a lien and a ucc filing.

The main difference between a lien and a UCC filing is that a UCC filing is what creates a lien against a borrower’s business collateral. Depending on the type and scope of the UCC filing, the lien may be against an individual asset (in the case of a UCC lien against specific collateral) or a group of assets (in the case of a blanket UCC filing).

Why do companies file UCCs?

Companies file UCC statements to perfect—or formalize—their interest in a borrower’s collateral. A UCC filing gives other lenders notice that the lender has a first-position lien on collateral if the borrower defaults on their loan. A subsequent lender can take a second-position lien against the same collateral, but will only be able to seize that collateral if the first-position lien has already been satisfied.

What does the UCC filing document do for a creditor?

The UCC filing document establishes a creditor’s right to collateral that is used to secure a borrower’s loan. The filing puts future lenders on notice that the filing lender has first claim to the collateral in case of debtor default.

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What Is a UCC Filing?

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A Uniform Commercial Code filing, also known as a UCC filing, is a document that lenders use to establish their legal right to assets that a borrower uses to secure a loan. This notice allows the lender to seize the borrower’s collateral in the case of default.

UCC filings can cover a specific piece of collateral, or lenders can file a blanket lien, which applies to all of a borrower’s assets. Filing a UCC lien is a common practice among lenders when they issue small-business loans .

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How does a UCC filing work?

A UCC filing is the official notice lenders use to indicate that they have a security interest in a borrower’s assets or property. The UCC filing establishes a lien against the collateral the borrower uses to secure the loan — giving the lender the first-position right to claim that collateral as repayment in the case of default.

UCC liens are typically filed using a UCC financing statement, also called the UCC-1 financing statement.

This document is submitted to the secretary of state’s office in the state where the business (i.e., the borrower) is located. The UCC-1 financing statement identifies the assets or properties the lender has claim to, and lets other creditors know of its security interest in that collateral.

UCC liens can be filed on a range of personal and/or business assets, including but not limited to real estate, inventory, receivables, vehicles, machinery and equipment.

Once a UCC lien is filed with the secretary of state’s office, it becomes public record, meaning anyone can go online and search for active filings .

Although the specifics can vary from state to state, UCC filings usually last for five years. If your loan is still active after that period of time, your lender can apply for a continuation of the lien. The lender can also file amendments or addendums to the statement, if necessary.

» MORE: Compare the best secured business loans

The Uniform Commercial Code is a set of laws that govern commercial transactions across the U.S. These uniformly adopted state laws help promote and simplify interstate business. Article 9 of the Uniform Commercial Code provides guidelines for transactions secured by assets or property, resulting in the term UCC filing.

How a UCC filing impacts your business

Simply having a UCC lien is not bad for your business — it serves as an official notice to other creditors that your lender has a security interest in one or all of your assets. However, if you end up defaulting on that business loan, or need additional funding, the UCC filing could have an impact in several ways.

Business credit

Although your business credit report will show any UCC filings taken out on your business within the last five years, these liens don’t typically impact your business credit score . If you make late payments or default on your loan, though, your credit can be negatively affected.

Company assets

When a lender files a UCC lien, some or all of your assets (depending on the type of lien) are at risk if you fail to pay back your loan. As long as you repay your lender, your assets will remain safe. On the other hand, if you don’t repay your loan, the lender can seize your assets to recover its losses.

Additional financing

A UCC filing indicates that a lender has the first position to claim your collateral in the case of default. If you decide to apply for additional financing, your new lender can search to see if your business has any liens against it. In many cases, lenders are hesitant to take second position on a company’s assets and may deny your business loan application — or offer limited funding — if you have an active UCC filing.

Types of UCC filings

There are two types of UCC filings that can be used to secure a business loan. The UCC filing a lender uses can vary based on a variety of factors, including the type of business loan , your company’s qualifications and the individual lender itself.

UCC lien on specific collateral

Lenders can file a UCC lien on specific pieces of collateral, such as real estate or equipment. If you default on your business loan , the lender can claim these assets to recoup its losses, but not any other company assets.

Specific collateral liens tend to be used for special-purpose loans, such as equipment financing or inventory financing . If there are existing liens on specific assets, you may have trouble using those same assets as collateral on future loans.

Blanket lien

Rather than claiming a specific piece of collateral, a blanket lien covers all of a business’s assets, including things like accounts receivables, equipment, vehicles and inventory. If you default on your loan, the lender can claim (and/or sell) any of the assets it needs to cover its losses.

Blanket liens are more commonly used for standard bank loans, SBA loans and online loans.

How to remove a UCC filing

Your UCC lien can only be removed by the lienholder (lender), and is usually only done after you’ve repaid the loan. A UCC lien is typically active for five years — if your loan term extends beyond that, your lender may choose to renew the lien. If you repay your loan before the five years is up, any UCC filing on that financing can remain active until you have it removed.

You can remove a UCC filing by asking your lender to submit a UCC-3 form to terminate the lien. If you find a UCC lien listed on your credit report that shouldn’t be there, you can dispute it with the secretary of state’s office or credit bureau (e.g., Experian, Dun & Bradstreet) to have it removed. You will likely need to show proof that you’ve repaid the loan and swear an oath that you’re telling the truth.

Removing a UCC lien on a loan that you’ve repaid can help you qualify for other business funding options.

» MORE: How to check your business credit score

UCC liens can only be removed by the lienholder, or lender once you have paid off your loan. If you have a false lien appearing on your report or one that hasn’t been removed after you’ve repaid your loan, you can dispute it with the secretary of state’s office, the lender or the credit bureau.

However, in many cases, the terms UCC lien and UCC filing are used interchangeably.

Most UCC filings last for five years, but this time frame can vary based on your state and type of transaction. If your filing expires and your loan is still active, the lender can submit a continuation through the corresponding secretary of state’s office.

UCC filings do not impact your personal credit score. Although UCC filings from the past five years will show up on your business credit report, they don’t typically impact your business credit score unless you fail to make payments and default on your loan.

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BEST PRACTICES WHEN PREPARING UCC FILINGS

The  Uniform Commercial Code (UCC)  is a set of laws governing commercial transactions, like the sale of goods. In addition to commercial transactions, the UCC covers secured transactions, also called security interests, in which lenders hold the right to seize a borrower’s collateral should the borrower default on a loan. The UCC also addresses negotiable instruments. Negotiable instruments refer to a specific document, such as a check, that is used to guarantee payment by a set date.

If you deal with any type of commercial transaction, you should know which UCC filings apply to you and the best practices for filing UCC forms.

ARE UCC FILINGS STANDARD ACROSS EACH STATE?

It is important to note that each state or jurisdiction may have specific laws about secured transactions, commercial transactions, and negotiable instruments. However, the UCC is described as uniform because it provides stability and consistency amongst companies operating in different states. Therefore, the UCC makes laws uniform from one state to the next.

There are  several types of UCCs . However, the most basic and common is UCC-1. A UCC filing can be described as a financing statement. Essentially, UCC filings are legal forms that creditors file to provide notice that the creditor has a security interest in the personal or business property of a debtor. Personal property is usually used as collateral in a secured transaction, such as a loan.

If you have any questions about which UCC forms your company may have to file,  our experienced commercial lawyers  can better help you to understand when a UCC filing is needed and its processes.

WHY ARE UCC FILINGS IMPORTANT?

Not all commercial transactions will require a UCC-1 filing. For example, if someone pays for a product or service using cash, there is no loan or debt. Hence, a UCC filing would not be necessary. However, if you decide to lend money or provide financing and someone incurs a debt, then a UCC-1 filing may be needed.

A UCC-1 financing statement is important because it protects the lender. While a person may intend to repay a loan or debt, unforeseen circumstances can affect their ability to fulfill their promise of paying that debt. A UCC-1 filing ensures that you are a secured party.

In other words, if something occurs that will prevent a person from paying their debt, such as death or bankruptcy, then your UCC-1 guarantees that you will receive either all or some of what is owed to you once a court divides the debtor’s assets.

IMPORTANCE OF BEING A SECURED CREDITOR

Secured creditors are one of the first parties to receive their owed debt. On the other hand, if you do not file a UCC-1, you may be considered an unsecured creditor and may never receive any form of payment or collateral.

If the borrower has more than one lender, the first lender to file will be the first in line for the borrower’s assets. Receiving one of the first places in line to ensure payment motivates lenders to file a UCC-1 as soon as the loan is originated.

In summary, filing a UCC-1 provides protection and reduces the risks of making loans or entering into a lease agreement.

INFORMATION INCLUDED IN A FINANCING STATEMENT

Certain information must be included when filing a UCC-1 . The filing should always indicate whether the debtor is an individual or a company. Basic information regarding the company should be included in the filing as well.

The borrower’s name must match that organization’s name in the public record. For example, the name must be the same as the name on the company’s articles of incorporation or operating agreement. Regarding filings for individuals, the name must match the name on an unexpired driver’s license in the principal place of residency. The lien can only be perfected if names match exactly.

Some states, such as Delaware, have safe harbor laws which allow multiple names to be accepted even if the name is not listed on the driver’s license.

DESCRIPTION OF COLLATERAL

The  UCC states  that a description of personal or real property is sufficient as long as it reasonably describes the property, whether specific or not. However, some states may not consider a “super-generic” description adequate to reasonably describe the collateral or property listed.

The UCC provides  examples of a reasonable description , which should reasonably identify the collateral and include:

• A specific listing;
• The category of the type of collateral;
• Type of collateral, as defined in the UCC;
• The quantity;
• The computational or allocational formula or procedure; or
• Any method that objectively determines or identifies the collateral.

If any of this information regarding the borrower, lender, and description of collateral is excluded, then the filing could be rejected. This will then make it difficult for a lender to collect on the loan in the event of a default.

WHERE TO FILE

Because of recent changes to the UCC, the location of the collateral no longer determines where a UCC-1 filing can be filed. Filings are usually made with the secretary of state’s office in the state where either the individual debtor lives or the debtor’s organization is registered or incorporated.

If real property is included in the collateral, then a UCC-1 should also be filed with the county recorder’s office in the county where the debtor’s real property is located.

Secretaries of states have websites that make filing a UCC-1 much simpler. The websites include instructions and what forms are needed to complete the filing. There are national UCC-1 forms available. However, to prevent any issues in the future, it is always best to use forms specific to your jurisdiction.

While completing the forms required for filing, it is very important that you read all instructions carefully and that you use the debtor’s exact legal name and contact information.

Prices and fees for filing a UCC financing statement may vary by jurisdiction. There may also be additional fees for each debtor listed on the filing. Be sure to check prices and determine the total cost before completing a filing.

CONDUCTING RELEVANT SEARCHES

When the UCC filing is complete, it is made public. As a result, users can search the pertinent databases to see whether a UCC lien is held against a specific debtor. For the exact name of the debtor, they can also search the secretary of state’s website in the state where they live or where the company is registered. Similar search features can be found in commercial UCC search engines.

When searching, it is crucial to emphasize that the debtor’s name must be correct. When it comes to an organization, the name can be verified by searching the secretary of state’s website for the organization’s incorporation documents. For an individual, it is recommended to attempt multiple different name variations to make sure the search returns all pertinent information, especially in a safe harbor jurisdiction.

WHAT ARE UCC-3 FORMS?

UCC-3 forms have multiple purposes. Companies can use this form for:

• Assignments
• Continuation
• Termination

However, it is crucial that when filing a  UCC-3 form , you only use one form for one purpose (i.e., only one of the purposes mentioned above). If a form contains both an amendment and an assignment, or an amendment and a continuation, the state will likely reject the form.

Always be sure to file the forms in a logical sequence. If the company adds a new debtor, you must add the debtor first before filing a continuation form.

Further, ensure that you have permission from all secured parties involved before making any changes.

MISTAKES TO AVOID WHEN PREPARING UCC FILINGS

Minor errors on UCC filings can result in a rejection which can have a negative impact on the priority of the lender’s interest in the collateral. Some mistakes are more damaging than others, but knowledge of any of these common  mistakes  can reduce the risk of your filing being rejected. Here are some of the common mistakes made while preparing UCC filings:

• Indicating the incorrect names of the debtor in the name field.  Reviewing the charter document and any changes for registered organizations and the unexpired state-issued driver’s license or unexpired state-issued ID for individual debtors is the best method to ensure that you have the correct debtor’s name. The name on the UCC filing must match the name of these sources.
• Providing the incorrect UCC-1 file number.  The UCC-1 file number on an amendment filing (i.e., on a UCC-3 form) must be provided with extra care by filers. The state can reject the filing if there isn’t a matching number in their database.
• Failure to include all of the debtor or lender’s information, name, or changes to address.  To index the filing in their records, most states treat changes to the debtor or secured party’s name or address as “new parties.” Therefore, the filing must have the necessary debtor or SP information, or you will be at risk of being denied. You must also include the debtor’s name when reporting a change of debtor address.
• Attempting to file continuations outside of the permitted six-month continuation window.  Continuations can only be filed six months before the lapse date. Any attempt to submit a continuation statement before that deadline will be rejected. Even though a filing office may accept a UCC-3 continuation after a lapse, a court would probably conclude that the original filing lapsed and was not continued due to the statute’s explicit phrasing. Section 9-515(c) says,  “The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless  before  the lapse a continuation statement is filed…Upon lapse, a financing statement ceases to be effective and any security interest…that was perfected…becomes unperfected…”  (emphasis added).

You might want to consider hiring a skilled service provider to file your UCC financing statements given the difficulty and significance of correctly completing a UCC financing statement form. Doing this can steer clear of pointless delays, denials, and other challenging situations.

Contact our legal team  here at  Newburn Law  today to understand how we can help you.

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The Perplexing World of Uniform Commercial Code Demystified! Pt 1: UCC Filings – What are they and where to file?

Posted by josh twilley, may 6, 2020.

This post was updated on January 25, 2021.

The Uniform Commercial Code (UCC) can be perplexing. This post is the first in our multi-part series exploring UCC-1 filings, specifically what they are, and where to file.

A UCC-1 Financing Statement (an abbreviation for Uniform Commercial Code-1) is a legal form that a creditor files to give notice that it has or may have an interest in the personal property of a debtor. For example, if you lend money as part of a loan, or offer credit for the lease or purchase of equipment of any kind, you may file a UCC-1 The UCC-1 protects the creditor’s interest should the debtor default on the loan.

Filing the UCC-1 in a timely manner is very important too. As a secured party, you want to make sure the filing is filed before any other to secure your interests.

This all begs the question: Where do you file? The chart below lists out the most common debtor types and corresponding UCC filing protocols:

Next up, Part II of our UCC series: understanding the “proper” way to complete a UCC-1 Financing Statement .

And as always, information within this post is intended for general information purposes only. Incserv and its employees cannot offer legal or financial advice. Please consult with your legal counsel for assistance in how this information may or may not affect you and your business prior to making any decisions. The above information (and any attachments) should be judged accordingly.

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UCC Filings

Uniform Commercial Code (UCC) filings allow creditors to notify other creditors about a debtor’s assets used as collateral for a secured transaction. UCC liens filed with Secretary of State offices act as a public notice by the "creditor" of the creditor's interest in the property.  View state UCC pages by scrolling through the list below to the state/territory of interest.

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Today’s 3-in-3 Topic is: UCC Filings and Consignment

Today’s 3-in-3 Topic is: UCC Filings and Selling on Consignment

Today’s 3-in-3 features UCC Specialist, Elizabeth Hunt. Read on to learn more about consignments and how UCC filings can secure consignments and reduce your risk.

“What is a consignment?”

Elizabeth : A consignment is when the owner or the consignor retains title to the consigned goods that are delivered to the consignee.  The consignee will then hold the goods for sale or for use.  Once those goods are sold, the consignor’s rights then attach to the proceeds.

“Does consignment carry risk?”

Elizabeth : Yes, consignment does carry risk, specifically if the consignor doesn’t take the necessary steps to protect their ownership of their goods. Without the additional security of a UCC Financing Statement, the consigner could lose their rights to their goods and the proceeds.

“How can a consignor protect the consigned goods & what steps should they take?”

Elizabeth : Consignors can protect their goods by complying with Article 9 of the Uniform Commercial Code and filing a UCC-1.

If you are consigning goods, follow these important steps:

• First, you should have a consignment agreement signed by both you (the consignor) and your customer (the consignee). This agreement should include the terms and conditions of the consignment, a clause granting the security interest, and a detailed description of your consigned goods.
• Second, you need to make the agreement public record by filing the UCC-1 Financing Statement in the consignee’s state of organization.
• Third, you should conduct a UCC search and send authenticated notification letters to the prior secured parties. This notification informs prior secured parties that you have, or expect to acquire, a Purchase Money Security Interest in your consigned goods.

Once these steps have been completed, the consigned goods are protected against competing claims. It is important you complete this process prior to releasing your goods, because anything delivered prior to perfection of your security interest may not be secured from prior secured creditors.

3-in-3 Takeaway

The takeaway from this segment is that if you are consigning product, make sure you file a UCC. When filing the UCC, you should search and notify all other creditors of the goods located at your customer’s business that you hold title to those goods.

Perfection is key; make sure the process is complete prior to delivering your goods so you’re secured moving forward.

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UCC eFiling facilitates the electronic filing of UCC documents via the Authority eFile Portal. As with paper-based filings, electronically filed UCCs are perfected statewide. For a complete list of participating counties, click “Participating Counties” on https://efile.gsccca.org .

To eFile UCCs, filers must register at the Authority eFile Portal. Once registered, filers may eFile with any participating Clerk’s office. A filer guide is available under the Support Tab at https://efile.gsccca.org which walks the filer through the registration process, filing a UCC online, submitting payment for the filing, and other elements of the filing process.

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Ucc article 9 assignment filings: distinguishing fact from fiction.

What this is: There is a misperception concerning what UCC3 Assignment filings accomplish. Basically, these filings have a limited purpose Under Article 9 of the UCC.  

What this means: In this article we will explore the purpose and function of UCC3 Assignment filings, clarifying common misconceptions. We will explain how these filings authorize a new secured party to make amendments to a financing statement .

Are UCC3 Assignment Filings Actually ‘Assignments’?  

The general definition of an “assignment” in business terms is “a written agreement for the transfer of one’s title, legal rights or property from one person to another.” Does an Article 9 UCC3 Assignment filing meet this definition? Actually, there is some confusion concerning what a UCC3 Assignment filing accomplishes.  

What is the Purpose of a UCC3 Assignment Filing?  

A UCC3 Assignment is an amendment filing that is an “assignment of powers” from one secured party (the assignor) to another secured party (the assignee). It is filed to authorize a new secured party to file any UCC3 amendments to the applicable financing statement.   

Simply stated, a UCC3 Assignment authorizes another secured party (assignee) to file UCC3 amendment(s) to the initial financing statement. There is no transfer or reassignment of the collateral/security interest taking place by the filing of a UCC3 Assignment. By the filing of a UCC3 Assignment, a new/added secured party is given the right to amend the Financing Statement in the public record going forward. After this UCC filing is made, the assignee secured party now has the power/authorization to file any type of amendment necessary to maintain the initial financing statement on file with the filing office.  

In addition to this, there are several reasons why there is a significant amount of confusion concerning how UCC Assignments actually work.   

Can an Assignment Be Completed on an Initial UCC1 Financing Statement?    

Yes, assignments can be reflected on a UCC1 Initial Financing Statement too. Those reviewing UCC filings should notice that there are “Assignor Secured Party’s Name” checkboxes on the UCC1 Addendum (UCC1Ad) and UCC1 Additional Party (UCC1AP) Forms. This is informing the public that the secured party(s) is the party listed on the face page of the UCC1 along with any additional secured parties (if any) included on the UCC1 Addendum and/or UCC1 Additional Party forms, are the secured parties. The party listed as the “Assignor Secured Party” is simply indicating who the secured party was prior to the UCC filing. If the “Assignor Secured Party’s Name” box is checked, this party is not a secured party of record and should not be indexed on the jurisdiction index by the filing office as a secured party. However, some jurisdictions do include the “Assignor Secured Party” as an additional secured party on the public record index even though they technically are not a secured party based on the checkbox indicating “Assignor Secured Party’s Name.”   

A Common Misunderstanding About UCC3 Assignments    

A UCC3 Assignment does NOT assign the security interest in the collateral, in full or in part, to another secured party. Accordingly, on the surface, it is easy to see why some presume that a UCC3 Assignment means that the collateral described on the Financing Statement is now “transferred” or “turned over” from one secured party (assignor) of record to another secured party (assignee). It is easy to draw this conclusion since it seems logical based on the generally accepted definition of an Assignment. But, as mentioned above, a UCC3 Assignment results in the Assignee secured party having “…the right to amend the identified financing statement or the right to amend the identified financing statement with respect to some (but not all) of the collateral covered by the identified financing statement.” The collateral pledged in the security agreement is not what is being “assigned” in an Assignment filing.  

UCC3 Assignment Filing Requirements  

With a better understanding of what an Assignment conveys, what is required for an effective UCC3 Assignment filing? The following 3 requirements are clearly outlined in §9-514(b) of the UCC, except as otherwise provided in subsection (c):  

• Identifies, by its file number, the initial financing statement to which it relates;
• Provides the name of the assignor; and
• Provides the name and mailing address of the assignee.  

Additional Requirements for UCC3 Real Estate-Related Filings  

Other requirements may be necessary where there are real estate-related filings. Under §9-514(c), where a record of mortgage has been filed as a Financing Statement, the correct method for filing an Assignment is stated as follows:   

“An assignment of record of a security interest in a fixture covered by a record of a mortgage which is effective as a financing statement filed as a fixture filing under §9-502(c) may be made only by an assignment of record of the mortgage in the manner provided by law of this state other than [the Uniform Commercial Code].”  

So, the next time you prepare a UCC3 Assignment for filing or review UCC search results that include UCC3 Assignments, you should have a clearer understanding about the effects of these types of UCC filings.  

Can UCC3 Assignments and Secured Party Additions Serve the Same Purpose?  

Interestingly, all of this raises another question: If a UCC3 Assignment filing empowers a new secured party to file amendments, why prepare and file a UCC3 Assignment? Could a UCC3 Secured Party Addition serve the same purpose? Actually, yes. In this instance, the UCC3 form enables the same type of outcome. A UCC3 Assignment and a UCC3 Secured Party Addition both add a secured party to the public record and either party may prepare and file future UCC3 Amendments.  

And one more important note: Be aware that when reviewing the party in the secured party field, you may not be viewing the actual secured party involved with the transaction. Instead, the party listed on the UCC may be a secured party representative . Article 9 of the UCC makes clear that there is no requirement for a party acting in a representative capacity to indicate so on the financing statement (§9-502(a)(2)). Accordingly, you will sometimes see an indication that the person is acting in a representative capacity, and other times you may not. Therefore, the actual secured party for a Financing Statement may not be shown on the public record and the “secured party” listed on the financing statement may be a representative of the secured party, thus protecting the identity of the secured party.   

Other Reads You Might Enjoy  

What is one example of a common error seen on ucc financing statements  .

We still see UCC filings prepared with the entity name followed by “a Delaware Limited Liability Company” or “DBA” as though it were part of the name. If there is a desire to include a former name, name variation or trade name, insert that party name in the additional debtor name field on the financing statement. The only way to be sure you have the correct debtor’s name is to review the charter document and any amendments for registered organizations and usually the unexpired state-issued driver’s license or unexpired state-issued ID for individual debtors. The name on the UCC filings should be styled to match the name on these sources. Want to learn more? Read our article, UCC Financing Statements: 11 Mistakes to Avoid .  

What is a UCC termination?  

When a debtor has satisfied all debts owed and/or collateral has been returned to the lender, the lender typically files a UCC amendment to terminate the UCC financing statement that established the lender’s priority over the collateral. To read more, refer to our article, UCC Termination Statements Part 1: Preparing and Filing .  

What is a ‘fixture,’ as defined by the UCC?  

“Fixtures” is defined by UCC Section 9‐102(a)(41) as “goods that have become so related to particular real property that an interest in them arises under real property law.” It refers to items that are originally personal property but become attached to and part of real property in such a way that they are considered a permanent part of the property. The determination of whether an item is a fixture depends on factors such as the manner of attachment, the intent of the parties, the item's adaptability to the use of the property and any agreement between the parties involved. Refer to our article, Understanding UCC Fixture Filings and Their Impact on Business Transactions , for more information.

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

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UCC Financing Statement

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UCC Financing Statement (usually called a UCC-1 Form ) is a form that creditors file with states in which they have a security interest in a debtor’s personal property. The financial statement serves a similar purpose as recording a deed for real property : registering debt with a state so other creditors and the government can track legitimate security interests in property. Creditors negotiate with debtors to have senior security interests, and with limited exceptions, creditors that file a UCC-1 Form and related documents will rank above other creditors in accessing assets should the debtor become insolvent . However, if they do not file a financial statement, another creditor may negotiate and register a security interest on the same property. In which case, the new creditor likely will rank above the old creditor because there was no warning to the new creditor about the pre-existing security interest. Most states require the same form with limited variations and typically require basic information about the debt including the parties, amounts, contact information, and sometimes extra documentation. New York uses an old UCC-1 Form that has quite a few differences from all other states, however, such as requiring more information on the form and information in an addendum. 

Under Article 9 of the UCC , the steps of a secured transaction are 1) getting collateral, 2) attachment, and 3) perfection and priority. Filing UCC Financing Statement is one requirement of the perfection step. Perfection determines which party has priority in the collateral, and gives notice to the public who has secured interests in the collateral and who claims first. However, if a security interest wasn’t attached first, it cannot be perfected. Since the attachment clarifies that the debtor has rights to the collateral, the creditor has extended value to the debtor, and they have a security agreement or authenticated record defining the collateral, without it the creditor’s rights in the debtor’s collateral cannot be enforceable against the debtor and third parties. Once attached, the creditor should choose the following ways to perfect their secured interest.

Perfection:

Perfection can be obtained through the UCC Financing Statement, purchase money security interests (PMSI), and through possession/control.

UCC Financing Statement: 

• Debtor and secured party’s name,
• Collateral describing, and
• A creditor or other person authorized by the debtor in their security agreement files it.

If there are some errors or omissions that do not comply with the above requirements, the financing statement may still be effective unless such mistakes make the statement substantially deviating and seriously misleading. For example, a financing statement that did not provide the name of the debtor was presumed to be misleading unless the debtor’s correct name was available in the Secretary of State’s office. 

Purchase money security interests (PMSI) 

• Thus, filing a financing statement is not required for PMSI of consumer goods, for it is automatically perfected.
• For non-consumer goods of PMSI, the creditor still needs to fill out the financing statement. If they file it “before or within 20 days after the debtor receives delivery of the collateral, then the security interest takes priority over conflicting interests which arise between the time the security interest attaches and the time of filing.”

Possession or control: 

• Perfection can also be obtained by possessing or controlling the collateral. 

[Last updated in June of 2022 by the Wex Definitions Team ]

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What Is a UCC Filing & How to Remove a UCC Filing

Qualifying for business financing is often a tricky process. To increase your chances of approval, a lender needs to believe that loaning money to your company is a smart financial decision. In other words, your business needs to have an acceptable level of risk in the eyes of a lender.

How can you achieve this level of creditworthiness for your business? Having solid business credit scores and a credible, established business with healthy profits is a great start. You can also check out this guide from Nav for more great tips.

Still, even if you think your business has all its financial and credit ducks in a row, you need to be aware of another potential obstacle which might hurt your chances for loan approval – the UCC filing.

Check If You Have UCC Filings On Your Business Credit Reports

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What Is a UCC Filing?

A UCC filing, also known as a UCC lien or a UCC-1, is a financing statement which lenders can file against your business with your secretary of state. When you take out a secured loan, the lender may file a lien to protect the asset(s) you committed to secure financing. This might be a piece of equipment, a vehicle, property, or even a blanket lien naming all your assets.

A UCC-1 protects a lender’s interests for five years (unless the lender refiles) and will typically be included on your business credit reports . (Remember, you can check your business credit reports and scores with Nav.)

Keep in mind that UCC filings are public records. Therefore, even if a UCC lien doesn’t show up on your business credit reports for some reason, it might still come up if you apply for new business financing.

Why a UCC Filing Could Hurt You

UCC liens aren’t unusual in the world of business financing and, unlike liens on your personal credit, a UCC filing doesn’t indicate that you’ve done anything wrong. Nonetheless, future lenders might be hesitant to approve applications for additional credit until you satisfy your existing lien(s).

Why? Because an existing UCC-1 filing may increase your company’s credit risk from a lending perspective. It signifies that you already owe money to another lender and that your assets are already committed to someone else.

This is an important consideration because the lender with the oldest UCC-1 filing legally has the first claim on the assets. In the event of default, the lender who submitted the second UCC filing would only be able to recuperate funds from the sale of any collateral after the first lender has had the opportunity to do so.

You can learn more about UCC filings here .

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Ways to Remove a UCC Filing

In a perfect world, a lender should remove a UCC-1 whenever you pay off the debt associated with it. Unfortunately, it doesn’t always work that way. You might satisfy a debt in full yet discover that the UCC-1 filing remains in place.

You can check your business credit reports and your secretary of state’s website to search for UCC filings against your company. If you discover an outstanding UCC lien which is still in place after you satisfy a debt, here are some steps you can take to remove the UCC filing:

1. Ask the lender to terminate the lien upon payoff

When you pay off a loan, a good rule of thumb is to immediately submit a request with the lender to file a UCC-3 form with your secretary of state. The UCC-3 will terminate the lien on your company’s asset (or assets) and remove the UCC-1 filing.

Note: this may or may not trigger the removal of the UCC filing from your business credit reports. Dun & Bradstreet, for example, will not remove a closed UCC filing until receiving a request from a customer or until the lien has been inactive for 11 years — whichever occurs first. You should always verify.

2. Visit your secretary of state’s office

If your lender fails to file a UCC-3 form after you satisfy a debt, another option you may consider is making the request yourself. To do so you will generally need to make a trip in person down to your secretary of state’s office. Once there, you will be able to swear under oath that you’ve satisfied the debt in full and wish to request for the UCC-1 filing to be removed.

3. Dispute inaccurate information on your business credit reports

It’s a smart idea to keep tabs on your three major business credit reports and scores from Dun & Bradstreet, Experian, and Equifax. If you discover an outdated UCC filing on your credit reports which has already been released, you can dispute the mistake and ask the business credit reporting agencies to remove it from your reports.  Keep in mind, however, there is no federal law requiring they do so.

Don’t Wait Until the Last Minute

Changes to your business credit reports and your state’s public records take time. If you plan to apply for new business financing soon, it’s wise to make sure you’re well-prepared for the loan application in advance.

Whatever you do, don’t wait until the last minute to try to correct an outdated UCC filing. It’s a mistake which might cost you a loan approval.

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This article was originally written on January 2, 2019 and updated on January 10, 2024.

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Michelle Black

Michelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com, is a leading credit expert with over a decade and a half of experience in the credit industry. She’s an expert on credit reporting, credit scoring, identity theft, budgeting, and debt eradication. Michelle is also an experienced personal finance and travel writer. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).

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30 responses to “ What Is a UCC Filing & How to Remove a UCC Filing ”

Hi i have ucc i want to lifted temporarily To apply to rts factoring company thanks

Unfortunately we can’t do that for you. Hopefully you can pursue the resources in the article to get it taken care of.

I live in Kern County I own my home there is a UCC filing with my address as a debtor I can’t find nobody in Kurton County that understands what a UCC except one law firm Clifford and Brown Who deals with corporate reviewed my file and stated this is definitely fraud but we don’t do residential I have to go into court and have this removed by a judge I don’t know what documents to file into the court

Unfortunately Melissa we don’t have detailed information for each court’s procedures. Usually the court will publish information or answer questions to help you understand what to file.

When I did a background check on myself I found a UCC-1 filing that had been renewed again and again since 2009. The current one does not expire until 2026. I have absolutely no idea what this is for. I have never had a business and have not lived in the state where this was filed since 2005. How do I find out what this is and who filed it? I have been working like crazy to get my credit squared away so I can start an apiary but this threw me for a loop. The filing is under my maiden name Penelope Anne Kaisershot.

Perhaps it’s fraudulent? As the article states, you’ll probably need to start with your Secretary of State’s office to get more information about the UCC filing and to find out how to dispute it. You may need to get an attorney involved if you can’t resolve it yourself. I’m sorry I can’t be more specific – procedures vary by state.

I didn’t know it was filed against my company, but one is from a car that is financed in my name and not the company’s.

Can I find out who filed the UCC-1 on our company?

If you’re not sure, you may need to contact the court in your area to research it.

How do I get my information and phone number off the list of people that keep calling me.

I’m sorry I am not sure I understand your question.

I keep getting phone calls for a business I have no connection to. How do I get my number removed from their list

Have you tried calling the number to talk with them? That might be a good first step…?

You can’t–unfortunately. UCC filings are public record and companies will call you incessantly offering business refinancing, working capital (at very high rates) and teh like. The best way to avoid this is to screen your calls with an app like Robokiller; I use it and it has cut back on the spam calls by 98%. Its 3 bucks a month or 35 bucks for the year which is like a small price to pay to keep your sanity… hope this helps

I don’t own a business but I have a ucc. Is it going to hurt my chance of getting credit??

UCC filings don’t generally show up on personal credit. But I would recommend you investigate to get to the bottom of this.

Can I get a UCC removed if I have never exchanged any business with the company?

You may need to contact the court where it is filed to see if they can help you through the process. If not you may need to get an attorney involved.

I have an imminent refinancing. I have a UCC. Can the lender (a bank) eradicate it upon payment of the payment of dent. Also it pertains to business line of credit, not a loan. The bank also wants the line of credit closed. The is, I believe is incorrect. Please, please advise promptly. The closing is November 6.

I don’t understand your question I’m sorry.

Tafs company Factoring scam to me they send application under agreement I didn’t reading that time Next day reading agreement under application so I told them cancel application they refuse.

They filed UCC on my business Not permission agreement with them. They refuse to release the lien and this was scam to me

filled bk chapter 7 two years ago and just found out of a possible ucc fixture lien on the house . the party putting on the lien never showed up in court.

I received a letter from my lender stating that I have to pay $103.50 for “UCC Termination Charge – WA”

I have paid the loan off in full and the lender closed my account with a $0.00 balance and even reported it to the credit bureau’s as paid off, closed, and zero balance. I bought replacement windows for my house and took a 18 mo. interest free loan. I paid off the loan before the 18 months so no interest was charged. Is this a normal thing to have to pay to have the UCC against my home removed from the lender or are they just trying to get me to pay for them filing a loan protection against me?

A Factoring company filed a UCC on my business without me signing an agreement with them. They refuse to release the lien and was told that the application I signed requesting a “quote” via their website grants them permission to file a UCC-1. Can an application have that much power?

Probably, though the specifics are really a question for an attorney. Have you paid off your advance with them?

As stated in my post. They never advanced me any money. They took money out of my account twice.

My husband passed in April 2015 however prior to his death he borrowed money from a loan company to have our driveway repaired and to have a pool build. He passed before the work got started. The finance company have put a lien on the pool on the property, however there is no pool. The loan was in my husband’s name ONLY and the house was in my husband’s name only however the home belongs to me and my 11 year old son, now. I am trying to refinance however I can’t because of the lien. I also found out the loan company drafted 3 payments out of my deceased husband account 1 week after his death. I have the bank statements. What can I do, because I can’t afford a lawyer? My husband served in the military, 27 years.

Yvonne – I really wish I could help but it sounds like you’ll need some legal advice here. Have you tried contacting Legal Aid in your area? Also don’t rule out getting a free consultation with a consumer law attorney. If the lender acted improperly the attorney may be able to help you on a contingent fee basis, which means you pay them if you win. (They may also be able to refer you to pro bono legal help if you qualify.) Legal Aid directory is here and the National Association of Consumer Advocates is here . I hope you find the help you need.

We are looking to have ucc listing rememoved as well as a person listed who doesnt own the company. How do we accomplish this?

Brian – have you tried the approaches in the article? If so, what hasn’t worked for you?

Assignment of Rents and Leases- File UCC?

Answered by:  Randy Carey

You are asking a State law issue that should be directed to legal counsel, but an assignment of rents and leases is usually perfected in the State's real property records.

First published on 01/16/2022

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