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13 Jan 24

Avoiding Frivolous UCC Lien Filings Against Your Business

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Last Updated on: 17th January 2024, 04:51 am

Avoiding Those Annoying UCC Lien Headaches

Getting hit with a bogus UCC lien filing can be a real pain for small business owners. I feel your frustration — some people just file these things willy-nilly without caring about the headaches they cause. Let’s talk about what you can do to protect yourself and your business from these frivolous claims.

What the Heck is a UCC Lien Anyway?

A UCC lien is basically a legal claim against your property. The Uniform Commercial Code (yeah, super boring name) is the law that governs these kinds of liens in all 50 states.
When properly filed, a UCC financing statement gives the filer a security interest in the property listed. But the problem comes when someone files a bogus lien just to harass you. Not cool!

Why Would Someone File a Fake Lien?

There’s a few reasons the grinches out there might slap a fake lien on your business:

  • They have a personal beef with you
  • They are going through financial problems themselves and want to take it out on someone else
  • They are just plain crazy or delusional

Some people also file these liens to try and get fast cash settlements. They count on the business wanting to make the problem go away quickly.
The lesson? Don’t give into the ransom – fight these liens!

Watch Out for These Red Flags

Before you panic about any UCC filing against your biz, check for these common signs of a fraudulent lien:

  • You don’t recognize the filer’s name
  • There is no legitimate basis for the lien
  • The amount claimed is outrageous or ridiculous
  • It comes after a personal dispute with the filer

If you spot any of those – you likely have a bogus lien on your hands.

Don’t Let It Sit – Act Fast!

Getting legal help ASAP is critical for defeating fake liens. The longer a bogus lien sits there, the more headaches it can create for borrowing money, selling property, etc.
As soon as you confirm the lien is fraudulent, it’s go time. Here’s what to do:

  1. Consult a business attorney about your options
  2. Send a demand letter requesting the filer remove the lien
  3. File a lawsuit if they refuse to release the bogus claim
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Also file a complaint with the state attorney general’s office. They may prosecute filers of fraudulent liens.
And report the bogus filing to the three credit bureaus – TransUnion, Equifax, and Experian. This can help minimize any damage if the scammer tries anything sneaky.

Sue Their Butts Off!

Don’t show any mercy on these unethical lien filers! In most states, you can sue them for damages caused by fraudulent liens.
Things you can recover through a civil lawsuit:

  • Lost profits
  • Attorney fees
  • Reputation harm
  • Emotional distress
  • Punitive damages (to punish them)

So make them pay! Consult with an experienced business litigator to go after everything you can in court. It will warn off future scammers looking for easy paydays.
Most state laws also let you collect triple damages if their lien filing was found to be fraudulent. Now we’re talking!
And don’t forget to ask the court to order the jerk to pay your legal fees too.

File Criminal Charges Too

Padding your wallet through a civil lawsuit is nice…but for bonus points – make them suffer criminal penalties too!
In most states, knowingly filing a fraudulent UCC lien is a felony. Punishments can include:

  • Fines (often $10,000+)
  • Jail time
  • Probation

So why not give the local prosecutor’s office a ring about it?
Jail time probably won’t happen over a single bogus lien. But if they have a history of fraud…you could help lock them up and throw away the key!
Most prosecutors get pretty fired up over UCC lien abuse cases. Especially when upstanding business owners like you are the victims.
So ask them to cuff the scoundrels!

Prevent Those Pesky Liens

They say that revenge is a dish best served cold. In this case – revenge is ensuring the swindlers can never file another fake lien again!
Many states allow courts to declare “vexatious filers” prohibited from submitting any more liens without permission.
Judges can also order notifications sent to any business these filers target in the future. That way you can nip bogus liens in the bud going forward!
Another way to shield yourself is by creating a UCC protective filing. This gives notice that any unauthorized liens against your property are invalid.
If the scoundrels try it again…their fraudulent lien can be terminated right away!
You can also take out an insurance policy to cover defense costs if the nightmares ever return.

Don’t Take Lien Abuse Lying Down!

As you can see, you’ve got plenty of options to fight back against UCC lien abuse criminals.
Don’t let them file bogus claims without consequences!
With the right blend of civil lawsuits, criminal charges, and preventative measures – you can turn the tables big time.
I’m rooting for all you small business owners out there dealing with this junk. You’ve worked too hard building something from nothing to let these crooks steal your livelihood.
Now go get justice…and your payback! Wishing you big wins in court and lots more success ahead!

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