The Uniform Commercial Code (UCC) under Article 9 governs how a lender obtains a security interest against a debtor's personal property for the payment of debt. Under Article 9, a borrower is called the "debtor" and the lender is called the "secured party." Filing a document called a UCC-1 Financing Statement secures a lender's lien against a borrower for specific collateral used as payment to the lender. The filing of a UCC-1 to secure collateral is termed "perfecting" a lien.
Step 1
Determine the jurisdiction for filing the UCC-1. A UCC-1 for personal property should be filed with the Secretary of State where the debtor is legally incorporated or organized. A National UCC Financing form is typically accepted by most filing offices. If a UCC-1’s collateral is real property (e.g., mortgages or fixtures), the UCC-1 is typically filed in the county recorder's office where the debtor’s real property is located.
Step 2
Complete the UCC-1 form according to the instructions. If the National UCC Financing form is not accepted by a jurisdiction, download the appropriate UCC-1 form required by the state or county where the UCC-1 will be filed. Contact the filing office and inquire if there are any specific state laws regarding how the form should be completed. Many state websites include useful UCC information under their business or corporate sections.
Step 3
Correctly identify all information about the debtor on the UCC-1 form. Ensure the debtor’s exact legal name, address and organization number are correctly stated on the UCC-1 form. A company’s organization documents, which are filed where the company is organized, often include this information. If the debtor is an individual, obtain his name and any pertinent information from a legal instrument, such as a birth certificate or driver's license. Disputes over UCC filings can occur over incorrect debtor information.
Step 4
Complete secured party information on the UCC-1 form. Since the filer of a UCC-1 is typically the secured party, all information such as secured party name and corporate address should be readily known to the filer. As with the debtor section, ensure all information on the form is complete and accurate.
Step 5
State all the assets pledged under the applicable loan agreement that the debtor is obligated to pay the secured party. Typically a legal instrument such as a credit agreement will specifically state the collateral to be pledged under a financing statement. Liens may simply be for “all assets” or for specific goods, which are defined by Article 9. Review Article 9 to ensure the collateral is stated correctly.
Step 6
File the UCC-1 in person, online or by mail with the appropriate filing office. Third-party service of process companies review, submit, track and retain record of filed UCCs for an additional fee. If you are unfamiliar with the process of completing and filing a UCC, it may be best to seek legal counsel or utilize a service of process company as a safety measure against any errors.
Step 7
Obtain a file-stamped copy of your UCC-1 from the office where the UCC-1 was filed. Request an original, if available, or a copy of your filing for your records. A file-stamped UCC-1 states the filing date and number. The file-stamp is important information if other secured parties file liens against the same debtor. Disputes over UCC filings can occur over which secured party filed first or had "priority" over all other filings.
Step 8
Determine the expiration date of your UCC-1. Most UCC-1s expire five years from the date of filing. So, five years from the file-stamped date, a lien will no longer be enforceable under the UCC. If you need to extend your lien beyond the expiration date, file a UCC-3 Amendment within six months of the UCC-1 expiration date. Contact the filing office for the appropriate form and repeat similar steps for filing a UCC-3 as for filing a UCC-1.
Warnings
- Filing “priority” is one of the most important tenets of the UCC. If a debtor has multiple liens for the same asset, the perfected UCC-1 filed and time stamped before all other liens has priority over other filed UCC-1 claims of the asset.
- While the UCC is a federal law, many states have adopted their own statutes regarding UCC filings. For example, Illinois requires UCC forms to be completed in uppercase 11-point font only. Be sure to contact your state for any specific laws that govern the UCC; if possible, seek legal counsel.
Tips
- Seek legal counsel to ensure that your filing is complete, accurate and valid for filing.
- A UCC-3 is an amendment form for the UCC-1. The UCC-3 form can add, delete, assign, change or terminate the debtor or secured party and collateral listed on a corresponding UCC-1.
- The International Association of Commercial Administrators has contact information for UCC-1 filing offices throughout the United States (see Resources).
- Canada’s equivalent of the UCC is the Personal Property Security Act (PPSA).
References
Tips
- Seek legal counsel to ensure that your filing is complete, accurate and valid for filing.
- A UCC-3 is an amendment form for the UCC-1. The UCC-3 form can add, delete, assign, change or terminate the debtor or secured party and collateral listed on a corresponding UCC-1.
- The International Association of Commercial Administrators has contact information for UCC-1 filing offices throughout the United States (see Resources).
- Canada’s equivalent of the UCC is the Personal Property Security Act (PPSA).
Warnings
- Filing “priority” is one of the most important tenets of the UCC. If a debtor has multiple liens for the same asset, the perfected UCC-1 filed and time stamped before all other liens has priority over other filed UCC-1 claims of the asset.
- While the UCC is a federal law, many states have adopted their own statutes regarding UCC filings. For example, Illinois requires UCC forms to be completed in uppercase 11-point font only. Be sure to contact your state for any specific laws that govern the UCC; if possible, seek legal counsel.
Writer Bio
Ashley Scibelli began writing professionally in 2006 and has contributed to "City Living Magazine." She graduated with a Bachelor of Arts in English and political science from College of the Holy Cross. At Holy Cross, she contributed and edited the news and features sections for "The Crusader."