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13 Jan 24

How to Read a UCC Lien Search Report

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Last Updated on: 15th January 2024, 04:47 pm

How to Read a UCC Lien Search Report

Reading a UCC lien search report can seem intimidating at first, but it doesn’t have to be! This guide will walk you through the basics so you can understand these reports and make informed decisions. We’ll cover what a UCC report is, what’s in it, and how to interpret the information.

What is a UCC Lien Search Report?

A UCC report, also called a UCC lien search report, shows any UCC financing statements filed against a person or business. These financing statements publicly record a lender’s security interest in collateral tied to a loan or other credit. So in plain English, a UCC report lets you see debts and assets tied to the subject of the search.

What’s in a UCC Report

There’s a lot of info packed into a UCC report! Here’s an overview of key sections:

  • Debtor info: Names and addresses tied to the search subject
  • Secured party info: Names and addresses of lenders/creditors
  • Collateral description: Assets and property tied to the debts
  • Filing information: When and where financing statements were filed
  • Amendments and changes: Updates if terms of the financing statement changed

Now let’s look at each section more closely…

Debtor Information

This section shows the names and addresses attached to the search subject. That could include:

  • Individuals
  • Sole proprietors
  • Business entities like LLCs and corporations
  • Previous legal names if changed

It’s important to scan this section closely to catch any aliases, DBAs (“doing business as”), or related entities tied to the subject. Sometimes financing statements are filed under a variety of names.

Secured Party Information

This section provides details on the creditors and lenders tied to the financing statements. This normally includes names and addresses, but sometimes only lists law firms or filing services. The key things to look for are:

  • Types of lenders: Banks, credit unions, alternative lenders, equipment financing companies, etc.
  • Total number of statements: Gives an idea of the extent of debts

If you see a filing by a bank you recognize, that’s likely a term loan or credit line. Retail installment contracts often get filed by finance companies. And alternative lenders sometimes file UCCs for small business financing like merchant cash advances.

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Collateral Description

This section lists property and assets tied to the financing statements:

  • Consumer goods
  • Equipment
  • Inventory
  • Accounts receivable
  • General intangibles (like patents and trademarks)

Vague descriptions like “all assets” may indicate a blanket lien. The more specific the description, the more narrow the lender’s security interest may be. Also watch for terms like “proceeds and products” which expands the collateral.

Filing Information

Filing information shows when and where financing statements were filed. Details include:

  • Initial filing date and location
  • Lapse date: When the financing statement expires
  • Amendment filing dates: Changes after initial filing
  • Current status: Active, paid off, released, etc.

The filing location corresponds to the state and county of the debtor’s residence or place of business. By law, secured parties must file amendments and changes to financing statements, so this is where you see updates if terms changed.

Amendments and Changes

Speaking of amendments, this section shows any changes made after the initial financing statement filing:

  • Collateral changes: Assets added or removed
  • Debtor changes: Names added or removed
  • Secured party changes: Creditors added or removed
  • Contact, address changes
  • Subordinations giving priority to other filers

Amendments extend the lapse date or “renew” the financing statement. If there are no amendments, the UCC expires 5 years after filing.

How to Interpret UCC Lien Search Reports

Now that you know what’s in a UCC report, here are some tips for analyzing the information:

  • Scan debtor names for variations and DBAs
  • Note types of lenders and number of UCCs
  • Watch for vague, expansive collateral descriptions
  • Check lapse dates and amendment history
  • Look for changes in terms over time

This helps you identify high risk situations like heavy debt loads, multiple blanket liens, and negative amendment trends. To dig deeper, search outside the UCC for related suits, judgments, and foreclosures.

Comparing old and new UCC reports is also useful to monitor changes. For example, seeing new filers pop up could indicate fresh debt obligations.

When are UCC Reports Useful?

Here are a few examples of when UCC lien searches come in handy:

  • Due diligence before lending money or extending business credit
  • Assessing risk when buying a business
  • Verifying collateral is free of hidden liens
  • Examining debt levels and obligations
  • Tracking credit profile changes over time

While UCC reports have their limitations, they deliver helpful snapshots of outstanding debts and pledged assets. Used alongside other records like suits, judgments, and bankruptcies, they form valuable profiles of financial risk.